FY23 was our (wife and I) first full financial year holding shares outside of super and now seems like a good time for a brief retrospective embellished with some brief commentary. Sharing this write up because I've found reading about other folks' personal experiences, approaches and outcomes to be enlightening + idea generative (both in terms of ideas to try and things to potentially avoid!).
Having said that, fully aware that the musings of an inexperienced + unproven investor are of questionable value. Hopefully providing some visibility of the ups, downs and mistakes will at least make the read worthwhile and perhaps normalise others' journey a bit if yours looks anything like ours on the path to directly managing your own investments.
Not sure if this format is ideal but seemed like a reasonable way to snapshot things. Will focus on ASX single-stock portfolio given the Strawman ASX focus, but we also hold various domestic + international ETFs and individual US stocks. Position size percentages mentioned are approx % of ASX invested capital, not current weight as a function of market SP. Gain/loss percentages are approx EOFY market SP vs our average cost base.
We use Strawman, TIKR, InvestSMART (Intelligent Investor, Eureka Report), Sharesight and SelfWealth as our primary paid services/platforms for investment ideas/research/tracking/brokerage.
As of today we're down about 12% on paper and FY23 was about break even cap gain/loss wise as we offset some nice gains to reposition some ideas that were a bit misguided compared to opportunities that became available during the year i.e. the old "should have been more patient instead of investing in lesser ideas" chestnut.
We would be down substantially more if it were not for the performance of 5-10 holdings, the most significant contributors being CTT, TLX, IPD, ACF, DDH, CXZ, MIN, DSE, AKE, MAF. Of those, CTT, TLX, IPD and CXZ were bought with a far greater speculative tilt than the other performers we had established a higher degree of confidence in.
The ASX portfolio is generating ~2.25% yield which we're fully reinvesting + we're investing a variable portion (0-50%) of our monthly combined salary based on perceived buying opportunities vs bills falling due. We are primarily long-focused and have a significant tilt towards smaller cap stocks that we believe are somewhere between modestly to significantly undervalued taking a minimum 3-5yr horizon view.
AMS is our only holding that we currently assume permanent loss of all capital as a base case vs plenty of other red holdings we still expect to eventually come good.
Top 3 realised gains during FY23:
- NEA +59% (1% position, wanted to hold but bought out)
- NTO +58% (3% position, wanted to hold but bought out)
- DRR +14% (1.5% position, short term hold to benefit from the dividend. Took advantage of the "China reopening" narrative to lock in a gain and move capital to EVS @ 12c)
Bottom 3 realised losses during FY23:
- ABY -56% (1.5% position, thought of holding as still think it'll do well long term but ate the loss to switch capital to EVS @ 8-9c)
- AEF -42% (~0.3% starter position taken way too early it turns out, and news kept getting bearish so exited)
- PXA -29% (~0.5% starter position taken on broker recommendation with a complete disregard for valuation; subsequently realised it looked expensive and didn't have a clear enough story to us even though their efforts in the UK could become a gold mine)
Top 3 unrealised gains at EOFY23:
- CTT +315% (speculative ~2% position bought with some conviction of a market overreaction. Been an amazing bet + crazy ride, see straws for some backstory, recently sold ~28% of holding and still deciding whether to hold remainder or not)
- TLX +131% (speculative ~0.8% position, idea from Wilson's Advisory. Was a somewhat emotional-driven investment because of family experience with prostate cancer i.e. I want them to succeed and be awesome. Turns out they're doing well so will happily hold and may add to position if the valuation retreats at some point.)
- IPD +108% (speculative ~1% position, idea from AEF. Added to position @ 13c during recent cap raise and will hold as the future looks bright)
Bottom 3 unrealised losses at EOFY23:
- AMS -78% (~1.5% position bought in after CEO was ejected, kept buying on the way down and ignoring various amber/red flags. Ouch. Pretty much written this one off but can't sell it given the suspension so just have to wait and see what ultimately emerges after all the shenanigans uncovered by the audit)
- TOY -67% (Started nibbling at 5c and have been slowly averaging down to hold a speculative ~1% position; holding as a long term value play)
- MME -66% (Started nibbling at 50c and have averaged down to build a ~3% position, but did not in wildest dreams expect it to be sub-10c. Did not appreciate the implications of the debt capital backing requirements + timetable for refinance. Ouch. Participated in the cap raise @ 8c and still expect it to survive + eventually come good so continue to hold.)
New holdings recently added:
- ~1% EOL @ $2.85 (I like the addition of the follow-the-sun operational service offering and after watching them for years, decided to take the heavily reduced SP as an opportunity to see how they go with their European + maybe RoW expansion)
- ~0.7% DOC @ 4.4c (been a bit of a stinker but they appear to have stabilised their tech problems from last year, the business metrics have continued to look good and the valuation looks crunched, so adding as a very speculative position along side YOJ, SP3 and TOY)
- ~2.5% DDR @ $7.90 (Been on the watchlist a long time. The margin squeeze, cap raise & cut to their Q3 dividend hit the SP hard but seems way overdone. Similar to EGG, expecting it to come good in the fullness of time while paying a tasty dividend in the interim. Will keep adding around the $8 mark)
Existing holdings we've recently topped up:
- EGG (~4% position, buying below $2. Still think the sell off has been extreme and expecting it to come good in the fullness of time while paying a tasty dividend in the interim)
- CSL (~2% position, buying below $270)
- SLH (~2.5% position. Topped up at $1.90 as it continues to look cheap, pays a good dividend and seems to be growing relatively safely, some flagged margin squeeze notwithstanding)
- XTE (~1.5% lower conviction position. Topped up at 40c. Looks cheap trading around book value + seems to have some modest tail winds)
- YOJ (One of our larger + higher conviction speculative bets at ~2%. Added more @ 1.5c. Like the company, story, tech, business model, client wins and addressable market. Hoping they survive to bring their vision to full fruition).