Heartland Boy 2021 Investment Performance Review

The time has come for me to perform my annual stock investment portfolio review. For the first time, this has now expanded to include cryptocurrencies since I made my first investment in 2021 via the user-friendly Gemini platform. After a strong performance in 2020, I have lost out to the wider market in 2021. Unfortunately, it was not even close. By the way, I use XIRR (consisting of both realised and unrealised gains/loss) to track and measure my stock performance. My XIRR returns for Year 2021 was 1.8%, significantly below the benchmark Straits Times Index as shown in Diagram 1.

Since I have started investing in 2014, my running track record stands at 4.0% XIRR. Not very impressive at all considering the time and effort that I have put in. Given such a track record, I am beginning to see this more and more as a hobby rather than a tool to enable me to achieve FIRE. Diagram 2 is a summary of all the investment transactions that I have made in 2021.

This is how to interpret the table:

• Profitable transactions are in green while non-profitable transactions are in red
• Prices with a range indicate the lowest and highest prices that I have paid/sold. Similarly, dates with a range indicate that the transactions were conducted over a period of time
• Those with last price and last date are investments that I will be carrying forward into 2022.
• Dividends or any part cash/scrip paid are not indicated in the table

Let’s dive into a deeper analysis of some of the counters that are my portfolio as we welcome Year 2022.

1. Riverstone

Despite posting its most spectacular financial result in 2021, Riverstone’ share price took a beating in 2021. Because it constitutes a significantly large portion (~30%) of my portfolio, it severely weighed down the overall performance. Nevertheless, I feel that it has been unfairly punished as the market tends to place too much emphasis of its future earnings to the outlook of healthcare gloves. In fact, I have utmost faith that its current price of $0.7 is too cheap to ignore for the following reasons:

• As at 1H21, it has net cash of $0.39/share. By my own estimates, this probably would have increased to almost $0.5/share at the end of 2021
• Management is committed to maintaining a minimum dividend policy of at least 40%. Assuming a 50% dividend payout ratio and subtracting the interim dividend of RM 10 sen, I am forecasting a final dividend of RM 40 sen, which is equivalent to S$0.13.
• Sensing a rock bottom valuation, CEO has also resumed buying shares consistently in the 2^nd half of Dec.
• Riverstone is a market leader in the cleanroom segment and ASP continues to remain high as the electric and electronic industry are still experiencing strong demand

For a detailed analysis, do read my report of Riverstone.

2. United Hampshire US REIT

It has been more than a year since United Hampshire REIT IPO-ed. Its trailing full-year dividend represents a 11% yield over my initial cost of investment. Together with the capital appreciation, this has been a solid dividend counter.

Going into 2022, I will be mindful of the income support expiring for St Lucie West. Based on my interaction with the Manager during the 3Q21 business update, there was still 1 vacant unit left to fill. As this is an open-air shopping mall, even 1 vacant unit is quite a big space. However, relative to the overall portfolio, the overall impact should be minimal.

If its share price appreciates to its NAV, I will consider selling and reallocate the capital to undervalued stocks. Otherwise, I am quite contented to continue to collect the fat dividends.

For a detailed analysis, do read my report of United Hamsphire US REIT.

3. Wilmar and Bumitama

I am sure we have all seen grocery bills increased during our recent visits to the supermarkets. Food prices are skyrocketing through the roof due to a combination of higher transportation costs, unpredictable weather and higher demand. I shop for my family’s weekly groceries, so I definitely experience this first-hand.

That is why I am still holding onto Wilmar and Bumitama. Wilmar is an integrated food processing company that encompasses the entire value chain of the agricultural commodity business. Meanwhile, Bumitama is a palm oil producer in Indonesia and this is the current price of Crude Palm Oil. Except for the grave mistake that Bumitama committed by locking in a forward sales agreement at lower than prevailing market prices which was still subject to a newly revised CPO levy, I am confident that it will be reporting record 4Q2021 financial results. Surprisingly, its share price has not moved in tandem.

4. Uni-Asia Group

As aforementioned, the global food inflation was partly due to higher transportation costs. I thought it will help to offset some of the pinch I am feeling by being on the other side of the equation, i.e. to be a ship owner transporting commodities. Uni-Asia, which owns a fleet of dry bulk carriers, is definitely a direct beneficiary of decade-high shipping rates.

Its current share price is almost a double bagger to my initial cost of investment. Even though that is the case, I will continue to hold as freight futures in 1Q22 are still hovering around US$20,000. Recall that Uni-Asia’s breakeven is approx. USD 8,500, and rates in 2020 barely reached US$10,000. Besides, management hinted at rewarding shareholders for a bumper year.

For a detailed analysis, do read my report of Uni-Asia.

5. Yangzijiang

With shipping rates at the highest in over a decade, it is little wonder that ship owners are ordering more ships to capitalise on the boom. As a ship builder, Yangzijiang is a direct beneficiary with current order book at an all-time high. Despite this, I do have some reservations. For instance, plenty of contracts were locked in during 1H2021 when inflation has not reared its ugly head yet. Rising material costs such as steel and aluminium would inevitably lead to a compression of gross margins. I am certainly hoping that they will not eventually deliver these vessels at a loss now.

Yangzijiang is also planning to spin off its investment segment and list it separately on the SGX. I am not sure how these investments are valued on its book currently, so I can’t ascertain the accounting profit. If successful, shareholders will get shares of this newly spun-off entity as special dividends in specie. Regardless, market has already priced in this piece of news.

6. Geo Energy

Price of coal has risen alongside a wider commodity supercycle. When I took note of this, I immediately went back to a counter that I am familiar with – Geo Energy. As a coal producer in Indonesia, it is one of the best proxies to take advantage of the surge in coal prices. Despite all the negativity surrounding coal, it is still a fossil fuel that we cannot live without in the short term. Alternative sources of energy will take time to develop and we don’t simply switch off our lights in the interim.

So far, the signs have been positive. The CEO had publicly come out to say that its shares are undervalued. To reinforce this point, Management has also started share buybacks for the first time. In a short span of time since my investment, Geo Energy has already distributed 4 cents of dividends. That’s already a 17% return on my cost of investment for a half-year distribution. I am forecasting a 4Q final dividend in the range of 5-7 cents. That is another 20% payout ratio on my original cost of investment.

Geo Energy will start the new year having to cope with an export ban, so that is definitely not good news.

For a detailed analysis, do read the reasons why I re-invested into Geo Energy.

7. Lion-OCBC Securities Hang Seng Tech ETF

In an earlier article on Lion-OCBC Securities Hang Seng Tech ETF, I stated that picking individual technology stocks is definitely not my core competency. Yet, I am fully aware of the growth that technology stocks can provide, especially in an economy that is still developing such as China. Therefore, I decided to gain broad-based exposure via an ETF instead.

Chinese tech stocks have taken a serious battering in 2021 as the regulatory authorities tighten its grip. As I am vested via an ETF where the strongest companies will eventually survive, I am not too concerned. In fact, I averaged down recently using my SRS funds. This source of funds is especially suited for the Lion-OCBC Securities Hang Seng Tech ETF as it compels me to think very long term.

8. SEA Limited

I know that I have just stated that I am not good in selecting individual technology stocks, so it is self-contradictory that I have SEA Limited in my portfolio.

Somehow, I am willing to make an exception because I have been very impressed with SEA Limited’s execution in SEA thus far. I have lived and worked in Indonesia for a couple of years and would have never imagined that a fresh entrant can possibly topple giants such as Tokopedia and Bukalapak. Well, SEA proved me wrong. Unlike other e-commerce start-ups, SEA also has a very profitable digital entertainment sector in Garena to subsidise the cash burn in Shopee. This is a very valuable and enviable advantage that its competitors can only dream of.

Since the e-commerce sector in SEA is still very nascent, I thought it will be good to ride on the coattails of Shopee. Again, this is a long-term investment with the hope that it will have a similar outcome like Amazon.

9. Cryptocurrencies

I am no expert in cryptocurrencies, so I definitely don’t have an opinion of specific coins going into 2022. What I do believe is that blockchain and cryptocurrencies are here for the long term and I am placing my “bets” on blue chips such as Bitcoin and Ethereum. My exposure is small at 5% of the portfolio, but any outsized gains (which is entirely possible) may give my portfolio a nice lift.

If you would like to buy/sell cryptocurrencies, I highly recommend Gemini as this is one of the least intimidating cryptocurrency exchanges. Do find out my experience making my first crypto investment in this blogpost.

Conclusion of Stock Performance Review 2021

For those looking to get started on their investment journeys, I would highly recommend low-cost discount online brokerage platforms such as webull, Tiger Brokers or Moomoo. As we commence our investment journeys in 2022, I would like to wish all readers “HUAT ah!”

*Note that this article contains referral links that goes to maintain the sustainability of this blog.