My 5 Biggest Stock Exposures by Value – Q2’17 Update

In mid March this year, the following companies were my five biggest exposures by value. Their respective weightage in my portfolio is also given below:

As @ 18/3/2017
Soilbuild Reit 5.2%
Ascendas Reit 4.2%
Ascott Reits 4.0%
Frasers Com Trust 3.6%
SPH Reit 3.5%

I believe the first thing that strikes you from this table must be that all five of them are Reits. 

Up to May, I had been accumulating Reits which explained the high concentration of Reits in my portfolio then.

The combined weightage of these five was 20.4%. 

(Typically, I try to limit my exposure to a single stock to < 5% by value to achieve my aim of diversification)

So, how does this same table look like at the end of business today?

As @ 14/6/2017
SPH 4.2%
Capitaland Mall Trust 4.0%
M1 3.9%
Keppel Corp 3.5%
SPH Reit 3.5%

Spot the differences?

  1. Yes, the Top Four have been changed out. Only SPH Reit remains at the same fifth position with the same weightage.
  2. The combined weightage of the Top Five is also lower now at 19.1% reflecting my desire to make my portfolio less “top heavy”.
  3. They are not All Reits anymore.

Why the change?

I have been taking profit with Reits in the last 2 months as many of them had ran up quite a fair bit. Take for example,

  • Soilbuild Reit from 64 to 71 cents (+10.9%)
  • Ascendas Reit from $2.50 to $2.70 (+8.0%)
  • Ascott Reit from $1.05 to $1.15 (+9.5%)
  • Fraser Commercial Reit from $1.26 to $1.40 (+11.1%)
  • and others ….

I personally feel that many of these Reits are fully valued and some may even be overvalued.

From a 3 years historical yield perspective, many of them are having their current yields at the lower half of their yield range:

  • Soilbuild Reit at 48% of the range (100% highest historical yield, 0% lowest yield)
  • Ascendas Reit at 28%
  • Ascott Reit at 0%
  • Fraser Commercial Reit at 54%
  • SPH Reit at 57%

I will consider taking some profit from SPH Reit too if it rises any further.

Moreover, the impending higher US interest rate is also weighing on my decision. Reits are by nature sensitive to interest rates. Their valuation is usually inversely correlated to the interest rate.

Having said that, I want to recognize all of them are good companies to own in our portfolio. They have been paying good dividends regularly.  Selling them is just to take some profit.

Like someone once told me, a good company is only worth buying if it is at the right price.

Quietly, I hope I can get them back again at the “right price” soon 🙂

What’s your views ? Are you selling or still accumulating Reits lately?

Financials books to recommend to you:

(Available at Amazon) 

             

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2 thoughts on “My 5 Biggest Stock Exposures by Value – Q2’17 Update

    1. Hi Arthur, thanks for your comment/question.
      One of the reasons why SPH is on the Top is because I have sold the previous top few, so SPH and others started to emerge. Maybe I should have cut loss but I didn’t. I must admit that I was taken by surprised by the accelerated drop.
      Another reason is that I have started accumulating SPH lately near $3.20. I shared the same concern with you that their newspaper business is on the decline. However, it remains profitable at $50 Mil at 1st half year results. SPH is also involved in other profitable businesses like property. In fact, property is now making more money for them than media.
      For last financial year, their cash flow from operations exceeded the total dividend they paid. For this year, based on 1st half year results, I think they will lower the dividend distribution in line with the lower cash flow. It had already shown up in the interim dividend.
      My estimate for SPH dividend this year is 15 cents. At current share price of $3.18, the yield is 4.71%, which is ok.
      The question is whether they can successfully transform themselves while leveraging on their existing monopoly in the print business. For the moment, I think I will hold and selective accumulate SPH if it goes lower. Maybe one day, SPH = Singapore Property Holding 🙂

      Like

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