For those new to SmallCaps.co.za, I talk about a lot of small and mid cap (and even, sometimes, blue chip) stocks on this website. As an active investor myself, I will have positions in some of these stocks. So, as an easy reference point and global disclaimer and all that other nice stuff, I've created a page where I disclose what I currently hold: Keith's Portfolio.
While I originally built this page for transparency purposes, it is interesting to see how popular it actually is. In fact, it is the most visited page on this website. Chatting with Simon Brown, he has found a similar level of popularity with his portfolio page on his website (see here).
So, apparently, people are interested in my portfolio.
And, so, I thought that perhaps a short article on my portfolio might be interesting.
Firstly, while the portfolio disclosure is interesting, what are the weightings of each position?
Ignoring cash, the following are the weightings of my holdings in my portfolio (click to enlarge in a new window):
Like I have said many times before, Satrix Div is my 'beta' instrument and I then approach my portfolio as an index augmentation exercise (see: What is "Index Augmentation"?) whereby I make off-index bets with, mostly, small and mid cap counters that I believe will outperform in a 1 to 5 (to 10) year time horizon.
You will notice BHP Billiton (BIL) and MTN (MTN) sitting in the portfolio. While I mostly find value in the small and mid cap space (and it is this space that I believe have an advantage in too), I am not averse to finding value in larger counters too. MTN already exists in the Satrix Div, so what I am doing here is increasing my weighting in this counter.
Also, I have recently exited Sasfin (SFN) and Argent (ART) as a process whereby I am going to cycle those funds into two other likely counters. I'll let you know what counters once I have bought into the stocks, but what I will say is that one is financial (hence, I am swapping Sasfin's position for the other financial counter) and the other is likely a tech counter. I have revisited my Argent position and while I really like the stock's valuation, as more and more time plays out I am increasingly uncomfortable with exposure to management and related parties with such track records (read the history of Argent here, then read this and then have a look at who the Chairman is...).
Where do I see the market going? Where do I see the Rand going?
Well, as a bottom-up investor, I don't answer these questions. Rather, I seek value and see where my portfolio naturally lies after each individual investment decision. That said, I tend to prefer being Rand-neutral and currently I am finding more value in the cyclical counters (click below image to enlarge in new window), as defensive stocks have been over-bought to, well, very undefensive multiples.
I really have a bone to pick with those investors who throw around the terms "value investing" and "growth investing" as if they were two different things. Value investing is buying an investment for less than it is worth. Growth investing is buying an investment whose growth has not been fully valued by the market. In other words, growth investing is the same as value investing.
In both cases, you are buying the future free cash flows of a company for less than they are worth. Be it high-growth cash flows or low-growth cash flows... So, in other words, there is only value investing.
Make sense? I'm sure there will be many that disagree with this, but such is the nature of the market and its participants.
On that note, it is worth noting that my portfolio is sitting at a PE of 12.8x versus the ALSI's 14.2X and a higher DY of 3.2% versus the ALSI's 3.0%. So, basically, on average my portfolio is cheaper than the market. Note that for this calculation I have given Satrix Div the J203's PE, which is only a rough estimation. Excluding Satrix Div, my portfolio's PE is 11.7x, so this is still quite comfortable.
(Click the below image to enlarge in a new window.)
So, in conclusion, this is my portfolio as of today. Right now. Portfolio's are always dynamic, shifting and organically growing creatures, though, so over time these weightings and exposure will change.
I hope this article was interesting to you and, please, feel free to post your portfolio (or a link to you portfolio) below with your own descriptions and detail in the comment box just below this post. Perhaps some dialog concerning portfolios and not individual positions will do everyone good.