If I had been asked on first of January 2013 "what is stocks I would recommend to form a portfolio with", I would have given the following names: AIG, Bank of America, Citigroup, China Green Agriculture, First Solar, Nordic Mining, Protective Life Corp, Tesla Motors, Xinyuan Real Estate, Longwei Petroleum Investment Holdings.
You can check that I have mentioned all those names earlier in my blogs posts. In January I quickly combined my favorites together incase needed that info. I never found the moment to check the situation more carefully, but I'm sure the list would have been pretty much the same due to my careful earlier research.
In my heart I'm a value investor. That is the basic of how I choose stocks. It doesn't mean I only invest to value stocks though, I also like technology and growth companies with strong quality etc. But value fundamentals are the basic how I look at every company. Strong future with a strong return is what we always expect from our stocks picks, right?
I had been following all these companies for some months before January and I was happy with what I had found out. Now looking back there is only one company that in the end was a very bad choice. That was Longwei Petroleum Investment Holding, it was in January revealed that LPIH is actually just one those those chinese hoax companies we are so afraid of. It is an old hoax company and seemed very good by all the information I found out about it. But this is why we have a portfolio of stocks instead of one. And in the end this one doesn't matter since rest of my picks are doing much better and are able to cover it. I just have to learn from this experience and use it later.
Most of my picks are up 20-40%. But a few are different. First lets settle the case on Nordic Mining ASA. They are currently still waiting for their final permits (Thank you Norwegian government) so they had to get more money from the markets and this took their stocks price down. Currently I'm still trusting they will eventually get their permit and all ends well. So I'm definitely keeping them in my portfolio for now.
Two other positive surprised in my portfolio are Xinyuan Real Estate Ltd (+68%) and Tesla Motors Inc (+398%). Xinyuan has been doing very well and so far seems to be doing that in the future. So that one is staying in the portfolio for now. Tesla Motors is another case. After some slightly positive news investors got very excited and the stock has gotten up to great highs. To my eyes their stock price is greatly overvalued now and I'm expecting investors to notice this quite soon and sell their shares. Plus current news about a burning Tesla has also frightened the investors so Tesla Motor's stock will be sold from my portfolio. If stock price returns to more sensible levels, I might be buying it back then.
Current price will be used. 3rd of October 2013, spot price is $172,10. Giving us a return of 408,12% ($172,10-$33,87 / $33,87 * 100%) . The company has paid no dividends.
Portfolio Return
Prices used in below are taken on 16th of August and I admit they are not the closing prices of they day, but prices of the moment when I was checking.
Plus this calculation does not contain any possible dividends or changes in exchange rates. I must remember to add dividends at the end of the year.
With a total return of 52% I can be very happy with my picks. Most of these stocks will probably be kept in my portfolio after I re-check the prices incase they are now overvalued (That will be done at the end of the year). After selling Tesla and taking the failed Longwei out of the portfolio I still expect rest of my picks to at least stay in their current levels, or more likely keep going up for now.
Tesla Motor has indeed been a lucky pick. To have seen it risen so suddenly and so high is something an investor can usually only dream of. Even without it returns are still very nice if Longwei is left out as well from killing most of the return. With it total return drops to much lower, but still very acceptable, +13%
I plan to have a minimum of ten stocks in my portfolio but right now I'm a bit too busy to focus on it. So probably portfolio will stay as it is and I will take care of it as year turns. More about that as the moment comes.
