March portfolio update

Hello again readers. I hope you had a good Easter. March was very quiet and I didn't buy or sell anything. The portfolio ended the month up 1.98% while my benchmark, the SPAX2F0, gained 2.44%.

My largest position, Haier Smart Home D (690D.DE), reported earnings for the 12 months to December 31, 2020. Haier's market cap based on the current D share price is roughly 145 billion RMB and the company earned 8.9 billion RMB for the year. That puts the stock on about 16 times trailing earnings, and earnings will likely grow in coming years as the world continues to recover from COVID-19.

The D shares, of course, rank pari passu with Haier's H shares (listed in HK) and A shares (listed in Shanghai), which trade at much richer valuations. (The D shares currently trade at a 44.18% discount to the H share, implying an upside of 79.14%.) Haier's HK listing documents also outline a potential process for conversion of D shares to H shares but the company has not allowed conversion thus far. While we don't have a clear catalyst to realise the valuation disparity between the D and H shares, I'm still comfortable holding my large position in the D shares at current prices.

During March I read Lee Freeman-Shor's book, the Art of Execution. It is an interesting book with some very useful insights, and I would thoroughly recommend it. It has helped me reflect on some of the leaks in my own investment process.

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	March 31, 2021	Since July 1, 2020	Since Inception	Annualised
G&W Portfolio	1.0000	2.0912	35.71%	109.12%	22.33%
Benchmark (SPAX2F0)	61,250.80	87,489.07	19.53%	42.84%	10.23%