Nikkei, Nasdaq charge ahead with Japan fever and AI hype, but The Edge Singapore’s global portfolio maintains outperformance since inception
Timing the market correctly and consistently through economic and business cycles is nearly impossible. The closest investors can get to achieving the common goal of superior returns is to have a proper structure and framework of analysing and valuing stocks, which increases the probability of beating the market over time. Over the years, The Edge Singapore, specifically through articles in its Global Portfolio and Financially Savvy sections, has demonstrated and articulated the methods of studying and selecting stocks whilst stressing the importance of understanding one’s individual risk and return profile.
We created The Edge Singapore’s virtual global portfolio to educate and inform investors on how to invest. The portfolio’s investment strategy is centred around value investing, where we identify and select companies that are trading below their intrinsic value. The intrinsic value of a company is our subjective valuation of it, primarily based on fundamental indicators and analysis. It must be stressed that the stock picks are not a direct call to buy, but instead part of a framework to guide investors in making investment-related decisions based on their individual risk profiles and objectives.
The Edge Singapore’s 2023 virtual global portfolio started on Jan 30, with a value of US$202,154 ($271,700). Learning and adapting from previous iterations of the portfolio, our 2023 global virtual portfolio consists of 10 fundamentally sound companies that we think are trading well below their intrinsic value. Now, at mid-year, we think one of the stocks is trading at a par to or above its intrinsic value, and hence it will be replaced by another stock trading below its intrinsic value. Readers can follow the virtual portfolio on EdgeInvest if they wish to utilise the information from our latest stock picks and portfolio changes for their own investment research.
For the 4½-month period of Jan 30 to June 16, our 2023 portfolio gained 0.9%, with four winners and six losers. The top performer was CrowdStrike Holdings with 53.0% returns, while the worst performer was Teleperformance with –35.0% returns. With strong winners and heavy losers offsetting one another, our portfolio did decently against comparable benchmarks.
For one, since the start of the year, Nikkei 225, the top performing benchmark, enjoyed a chorus of upgrades from the investment community, in between chasing the hot AI plays on the Nasdaq. Although some outperforming benchmarks’ returns were attributable to a low base effect, fundamental macroeconomic indicators were positive in line with an economic and business confidence recovery.
See also: More upside for Indian equities despite rich valuations
Looking at the overall picture, however, The Edge Singapore’s virtual global portfolio’s performance dwarfs every other comparable benchmark, with 103.9% returns since its inception on Jan 24, 2020. Charts 1 to 3 show the individual performance of each of the stocks, overall performance of the portfolio against other benchmarks, and the performance of the portfolio against other benchmarks since inception, respectively.
For one of the stocks in the portfolio, Denso Corp, a key part of the thesis for investing in the global automotive components manufacturer was that it was an attractive, cheap stock. With its share price rising 39.7%, we think that it is trading slightly above its intrinsic value and hence will be sold. We will be replacing this stock with Globalworth Real Estate Investments, a leading real estate company in Europe. Denso will be sold on June 23, while Globalworth Real Estate Investments will be bought on June 26. A snapshot of a table with the updated stocks will be published after the transactions.
See also:
- Aristocrat Leisure: Pulling in consistent cash flow while earnings expand from online gaming
- Avantor: Underperforming pharma play but financial ratios remain healthy
- CrowdStrike Holdings: Best-performing counter with consistently improving numbers
- Globalworth Real Estate Investments: Undervalued European property play with growth opportunities
- JD Logistics: Cash-flow-positive, fast-growing logistics leader in China
- NCSoft Corp: Missed guidance but fundamentals remain intact and prospects bright
- Sunny Optical Technology Group: Attractive valuations with clear line of sight to better earnings ahead
- Teleperformance SE: Acquisition of rival weighs down share price but sets stage for bigger gains
- The Walt Disney Co: Streaming business stays in the red but theme parks poised for recovery
- Uber Technologies: Riding on sustained improvements, positive outlook ahead
Disclaimer: This is a virtual portfolio for information purposes only and does not constitute a recommendation or solicitation or expression of views to influence readers to buy or sell stocks, including the stocks mentioned herein. This portfolio does not take into account the investor’s financial situation, investment objectives, investment horizon, risk profile, risk tolerance and preferences. Any personal investments should be done at the investor’s own discretion and/ or after consulting licensed investment professionals, at their own risk.
Data for Charts & Tables were sourced from Bloomberg; Stock returns include capital adjustments and dividends, and excludes currency exchange fluctuations.
