January portfolio update

Hello again to anyone reading the blog. I hope you've all had a good start to the year. January was another good month for my investments: the portfolio rose 11.85%, while my benchmark — the S&P/ASX 200 Franking Credit Adjusted Annual Total Return Index (Tax-Exempt) — gained 0.31%.

Most the gain came from a single stock, Haier Smart Home, which I discussed in last month's update. Early in the month, I sold my shares in Guillemot, Shinoken and ScS Group to buy more of Haier's D shares. I also bought a bit more of Boustead Projects, after the company announced the formation of a REIT. 

My purchases of Haier in early January are up approximately 40% to date, while Boustead is approximately 5% above my average purchase price. While that sounds like a great result, Guillemot shares are up 96% since my sale in early January. I did not think Guillemot shares were expensive at the time I sold them, but I needed funds quickly. And, of the shares I held, I figured that Guillemot was likely closest to fair value. In hindsight, it is clear I was being too conservative in my estimates. I was dumb, and it has been extremely painful to watch Guillemot's rise from the sidelines. Shinoken has also done well since my sale. It's up about 13% after Mohnish Pabrai announced that he had bought a stake in the business and more investors caught on to the story. I still think Shinkoen is cheap, but I haven't yet bought back my stake in the company just yet. ScS, meanwhile, is trading about 1.88% lower than my sale price.

I'm still comfortable with my holdings despite the spectacular performance of the last few months. However, I'm less comfortable with the broader marker. As we saw with the recent GameStop shenanigans, there is a lot of speculation in the market. Should the market fall, I expect my portfolio will probably follow suit.

I'll add one more thing. It's tempting in this current market to focus more on business quality rather than valuation, because that's what is being rewarded. There are lots of examples of style drift from traditional "value" investors, like Howard Marks and Mohnish Pabrai. The cynic in me can't help but think that this is more a consequence of the current market conditions than a paradigm shift in the business world. Over time, I think the approach used by Graham, Buffett, Munger, Li Lu and others — in which investors think of themselves as part owners of businesses, demand a margin of safety, and treat the market as a servant, not a master — will continue to win out. 

My portfolio's results are summarised in the table below. Please note that my returns are pre-tax, include franking credits, and assume dividends are reinvested. These figures have not been audited. Additionally, I do not account for cash in the portfolio. The net result is that my performance is likely somewhat overstated, although I tend to be fully invested. The S&P/ASX 200 Franking Credit Adjusted Annual Total Return Index (Tax-Exempt) is simply the pre-tax total return of the S&P ASX200 Accumulation Index adjusted to include any franking credits received. I have unitised my portfolio to assist in calculating performance. 

	August 3, 2017	January 31, 2021	Since July 1, 2020	Since Inception	Annualised
G&W Portfolio	1.0000	2.1261	37.97%	112.61%	24.06%
Benchmark (SPAX2F0)	61,250.80	84,179.18	15.01%	37.43%	9.51%