Put in $2000, then purchased:
$500 for BN
$500 for HHH
$300 for META
$447.69 for OWL
$500 for PSUS
$300 for TSLA
$500 for TSM
I was happy to see that my portfolio received over $1000 in dividends for the last two weeks, with OWL contributing over $800. That is 50% of my typical cash contribution of $2000! At some point, the dividends will grow enough to make my contribution too small to matter, and I will stop contributing cash to the portfolio by then. I hope that they can come sooner!
Not much has changed for the stocks in my portfolio since my last update on 08/10, both in terms of the fundamentals and the share prices. The alternative asset managers are still cheap, especially APO, BN, and OWL, and the tech stocks are still doing great for the most part.
Tesla has finally released the launch date for the cybercab, which will be on September 3rd (source). It's not clear what the scope of Robotaxi service with cybercabs will start on day one. I expect they will launch a version that has no wheels but with a safety monitor "driver". A launch date this close means it has done enough successful internal testing, so accidental rates should be very small. We will see the reports coming in the next month or two, then we will have a better feeling on when it will have a larger scale deployment and hurt Uber. While it's news-worthy, it's not a big fundamental change of the company given it's mostly expected. It's just a matter of time. The share price has already taken this into account years ago. I believe Robotaxi will start contributing revenue meaningfully late next year, and Uber will be seriously hurt by then. Given the human jobs displacement it will create, I think it's a long way (5+years) before Robotaxi can substantially replace Uber/Lyft rider hailing service.
I added a bit of TSLA in this portfolio update since the business is going to my expected direction, and the market cap, although still pretty high, still warrant good returns in the long run if Robotaxi goes according to the plan.
Meta has effectively managed the repercussions of the lawsuit targeting Facebook and Instagram, which alleged the platforms fueled teenage addiction and led to heightened social anxiety, depression, and related negative outcomes (news). In terms of dollar amount, it's only at most $18 billion over 10 years, which is not very material for Meta given it earns $60 billion or so each year, and will keep growing. In terms of rule changes, while the changes in the settlement are quite substantial on how Meta apps behave for teenagers, Meta earns less than 1% of revenue from teenagers. Of course, it's not clear how restricting use of the apps for teens affect Meta's business long-term, when the teens grow to be adults. They will definitely get used to using Meta apps less, but we will have to see. Meta did a good job to pressure peer apps to follow the same rules to mitigate market share loss through an open letter to Tiktok and Youtube (source). We will have to see how effective that is. The open letter summarized the rules pretty well:
A two-hour daily time limit
Turning off access to our apps at night as a default
No notifications during school hours
Clear prompts and notifications to teens every 15 minutes of continuous screen time
New parental supervision controls, so parents can decide how their teens use our apps
Meta is trading at about 18x this year P/E, 16x next year, and expected to grow 10-15% every year. Hence, it is pretty cheap.
Pershing Square's Q2 letter to shareholders reiterated Bill Ackman's belief that the Vantage insurance business of Howard Hughes Holdings (HHH) will increase the company's intrinsic value substantially by generating a return of equity of over 20%. From the original text:
If Vantage achieves our goal of achieving a long-term return on equity of 20% or more and reinvests its earnings into the business at similar returns on capital, its book value per share and business value should also grow at a rate of at least 20% per annum. Investors typically value insurance companies that sustain long-term returns on equity above 20% at more than twice their book value. Because we purchased Vantage at an effective multiple of 1.4 times its book value, each dollar of incremental capital we deploy in the business is invested at book value, and a well-managed 20%+ ROE insurer should trade at more than two times book value, we would expect Vantage to grow its intrinsic value faster than the growth rate of its book value over time.
I have a high conviction in Bill Ackman. If not because of the valuation being too high, I would have bought the investment manager Pershing Square (PS) as well.
I believe Paypal is worth at least $75 using a simple 15 P/E valuation. The sale of the company at around $60 would be definitely underwhelming, although I don't mind given there are still good investment opportunities somewhere else, like APO or OWL, or even HHH. It was pleasant to see the stock went up to $60 while it had spent a few months trading below $50. The share price drop back to $53 due to the suitors leaving was an unpleasant anecdote, but I am keeping the faith. I personally like to choose Paypal most of the time when purchasing online due to its ease of authentication and my payment information is already there. Venmo is often used for peer payments, and for small merchants due to the availability of banks I can use with it (e.g. Wealthfront), while Zelle is often fixated on a particular bank and the availability is underwhelming (e.g. Wealthfront doesn't have it). It takes some work for the company to re-accelerate its growth due to the intense competitions and Paypal not owning the end user platform (e.g. iOS, Android), but my bet is on them to figure it out. Paypal should be a fine investment over time.
Transactions
Recent and upcoming dividend distributions
Portfolio performance snapshot
Total return:
One-year return:
Portfolio IRR (calculation): 18.82%
Approximated IRR for an SPY-only portfolio: 19.03%
Individual holdings:
Breakdown by categories (real-time):
Total returns for individual holdings:
Last prices:
Portfolio holdings conviction
The convictions in the table below reflects my current opinions and will guide the future contribution of additional investment to existing holdings. Stocks not inside the table are stocks with subpar return on equity that will be very unlikely to receive more contributions from new money (there can be exceptions for very cheap stocks). All of my writeups can be found here.
Conviction in long-term prospects means how much I believe a company would match or outperform the market (e.g. S&P 500) in the long run. Valuation matters so the conviction generally corresponds to the neutral rating of Valuation. It has the following ratings: weak, moderate, strong
Valuation: greatly overvalued, overvalued, slightly overvalued, neutral, slightly undervalued, undervalued, greatly undervalued
