PortfolioTicker provides open diary snapshots of market conditions and performance of a small, unleveraged portfolio of NYSE and NASDAQ tech stocks owned by Bunting Pty Ltd.
In 2010 we noticed that many USA tech stocks appeared undervalued as they recovered slowly from the GFC crash. We also noticed that Australia’s mining boom was pushing the AUD to an unusually high level against the USD. This caused us to wonder whether it would be a good idea to buy US tech stocks for their upside, and hope for a further benefit if the AUD were to fall against the USD.
Our first acquisition was Apple on 21 Oct 2010 at $309.00 and a trading rate of AUD = USD0.97480. Our second acquisition was Google at $612.00 and a trading rate of AUD = USD0.98560.
We expanded the portfolio to other tech stocks and grew our holdings as the AUD continued to climb to a peak of USD1.10321 on 28 Jul 2011.
We’ve never sold any stocks in our US portfolio (but we’re more active with our Australian equity portfolio).
Although our portfolio returns are higher than the cost of debt, our portfolio remains unleveraged (we haven’t borrowed money to invest). We’re long term investors and can afford to ride out downturns or interest rate rises without the pressure of margin calls, etc.
Outcomes: Share price performance
As would be expected, our portfolio stocks have fluctuated. Our portfolio is in good positive territory (despite underperformance by Apple and VMware), with some notable milestones listed below.
We have added to our holdings of *asterisked stocks since our initial investment:
- Apple AAPL
- Initial investment: 21 Oct 2010: $309.00*
- 2x achieved: 2 Apr 2012.
- Record high price: 19 Sep 2012: $702.10, before it dropped 44% to $390.53 on 19 Apr 2013.
- Amazon AMZN
- Initial investment: 20 Jan 2011: $190.90*
- 2x achieved: 26 Nov 2013.
- Record high price: 29 Nov 2013: $393.62.
- Ebay EBAY
- Initial investment: 24 Aug 2012: $47.33
- Record high price: 17 Jul 2013: $57.38.
- Facebook FB
- Initial investment: 13 Sep 2012: $20.75
- 2x achieved: 3 Sep 2013.
- Record high price: 18 Oct 2013: $54.22.
- Google GOOG
- Initial investment: 25 Oct 2010: $612.00*
- Record high price: 27 Nov 2013: $1,063.11.
- Linkedin LNKD
- Initial investment: 23 Mar 2012: $97.00
- 2x achieved: 12 Jul 2013.
- Record high price: 11 Sep 2013: $256.14.
- VMware VMW
- Initial investment: 1 Feb 2012: $91.00*
- Record high price: 3 Apr 2012: $114.53.
We’ve avoided buying into tech IPOs to avoid over-pricing and ramping (and frankly we don’t get the entrees to big IPOs anyway). Some examples of our post-IPO investments include:
- Facebook: IPO price $38.00 (18 May 2012), our buy-in price was $20.75 (13 Sep 2012) at AUD = USD1.03820. Facebook’s IPO was priced too high, and we won on this one by waiting for the right price.
- Linkedin: IPO price $45.00 (19 May 2011) and closed its first day’s trading at $94.25! Our buy-in price was $94.10 (23 Mar 2012) at AUD = USD1.03080. Linkedin’s IPO was priced too low, and we missed that opportunity, but we’re still way up on our average buy price, incl subsequent purchases, of $97.00.
- Ozforex: IPO price AUD2.00 (12 Oct 2012), opened at AUD2.59 and closed its first day’s trading at AUD2.56! Our buy-in price was AUD 2.64 on 14 Oct 2013.
On some others:
- Freelancer: a good business, and a good investment for some, but we don’t like the idea that most of the capital is owned by 2-3 people, and public investors are “minority interest”.
- Twitter: like Facebook, we’ll wait until the price falls to a good deal More (that will probably be about $20/share). If it doesn’t get there, then we’ll just wait for the “next big thing”.
Outcomes: Foreign exchange (USD/AUD)
“The foreign exchange market is perhaps another area in which investors should take care. While the direction of the exchange rate’s response to some recent events might be understandable, that was from levels that were already unusually high. These levels of the exchange rate are not supported by Australia’s relative levels of costs and productivity. Moreover, the terms of trade are likely to fall, not rise, from here. So it seems quite likely that at some point in the future the Australian dollar will be materially lower than it is today.”
Reserve Bank of Australia Governor Glenn Stevens, 29 Oct 2013 More
Our valuation rate
Our valuation rate (previously referred to as our trading rate) is the USD/AUD exchange rate used to convert stock closing prices from USD to AUD. It is calculated as the spot exchange rate at 4pm ET (New York) plus 50 basis points.
We’ve invested in two startup funds and mentored startups at an incubator. We’re happy to talk to entrepreneurs who are seriously committed to a tangible business. We don’t fund Silicon Valley holidays.
Australian listed tech portfolio
ASX listed stocks in our growing Australian portfolio include:
- Flight Centre FLT.AX
- Initial investment: 17 Sep 2013: AUD 49.17
- Record high price: 30 Oct 2013: AUD 52.25.
- OzForex OFX.AX
- Initial investment: 14 Oct 2013: AUD 2.64
- Record high price: 25 Nov 2013: AUD 2.96.
- Realestate.com.au REA.AX
- Initial investment: 23 Sep 2013: AUD 37.81
- Record high price: 18 Nov 2013: AUD 42.59.
- Webjet WEB.AX
- Initial investment: 14 Nov 2013: AUD 2.75
- Record high price (post acquisition): 18 Nov 2013: AUD 2.85.
The board game
We refer to our business goal packages in terms of the Monopoly board (our goals have nothing to do with property). We’re now past Whitechapel Road, our income tax is done, and we’re now working on our King’s Cross Station goal – targeting that by the end of 2014.