Portfolio management
Run at your own pace
The whole purpose of this blog over the last four and a half years has been to discuss how one goes about successful investing. It has never been about passing on tips or advice about individual stocks to invest in. We all are aware of the old adage: “Give a Man a Fish, and You Feed Him for a Day. Teach a Man to Fish, and You Feed Him for a Lifetime.” My intent has always been to help readers go to school on what I have learned over the years about investing.
The topic today is what our family’s portfolio looks like and how it has performed. I’ve always tracked performance. I firmly believe that if you don’t track your performance, you can’t manage your portfolio.
There would be no sense in me describing the makeup of our financial assets unless readers could see how they have performed. At the same time, there would be no sense outlining our investment performance unless you knew what was in the portfolio to generate that performance.
The object of the exercise today is to give readers a practical view as to how a successful concentrated stock portfolio can be constructed and managed. If you invest in any stocks mentioned and things don’t go well, don’t blame me. You are on your own.
Asset allocation
Over the years our default asset allocation has always been 100% equities. From time to time, I have switched to treasury bills and 2-year bonds. But since the fall of 2002 I have been 100% in common stocks. I invest only in superb companies and then, only if they can be bought at very attractive prices. It is value investing pure and simple with a concentrated portfolio, but the companies must have really good growth prospects. The common thread is that the companies all generate substantial owner earnings. With a couple of exceptions, they are tangible-asset light. Their assets tend to include substantial economic goodwill which is generally not shown on the balance sheet. If you want to learn more about owner earnings and economic goodwill, click on those key words on the scatter Tags Index on the home page.
One common theme is that the companies don’t pay much in the way of dividends. That’s not because they don’t make lots of money. It’s because they reinvest excess capital back in the businesses profitably.
I have only ever owned one mutual fund. That was an equity fund in the 1970s. I have never owned any ETFs with the exception that I bought a miniscule position in one U.S. ETF and two Canadian ETFs to learn about them so as to advise my kids. What is set out below describes the contents and performance of the entire financial assets of my wife and I, i.e. all our retirement savings.
It has worked
This approach has worked. Since our family started saving for retirement in 1972, the compounded total return on our savings has been 13.10%. That’s over a period of 51 years. This compares with 10.48% for the S&P 500 compounded over the same period with dividends reinvested. Our 12-month 2023 total return was 22.53%. This compares with 26.29% for the S&P 500 and 11.75% for the S&P TSX Composite which tracks the Canadian stock market. The Canadian market was a bit of a drag on performance this past year.
What you see is all there is
There has been little turnover in the portfolio. Interested readers can take a look at the portfolio in April 2023 here.
I don’t propose to give any significant explanation around any of the holdings. The investment approach I follow is described in detail in other posts on this blog.
The holding percentages come directly from our discount broker and are as of January 7, 2024.
| Asset Class | % of Current Holdings | |
| Cash & Cash Equivalents | 0.95% | |
| Fixed Income | 0.00% | |
| Canadian Equities | 40.96% | |
| US Equities | 58.09% | |
| International Equities | 0.00% | |
| Other | 0.00% |
Our U.S. Holdings
Company % of total holdings
AMAT NASDAQ Applied Materials Inc 5.89%
Applied Materials is the leader in materials engineering solutions used to produce virtually every new chip and advanced display in the world. Its expertise in modifying materials at atomic levels and on an industrial scale enables customers to transform possibilities into reality. The current board and executive officers hold about $1 B USD common shares. Market cap $123 B USD; position initiated in the spring of 2020.
AMZN NASDAQ Amazon.com Inc 11.21%
The company’s businesses include Amazon Store; Delivery & Logistics; Devices and Services; Amazon Web Services; and Entertainment. The directors and executive officers have their substantial net worth of billions of dollars invested alongside other shareholders. Market cap $1.5 T USD; position initiated in spring of 2020.
CHRW NASDAQ CH Robinson Worldwide Inc 6.98%
C.H. Robinson is one of the world’s largest logistics platforms. It provides freight transportation and logistics, outsource solutions, produce sourcing, and information services to 105,000 customers through a network of offices in North America, South America, Europe, Asia, and Oceania. It provides its customers access to 73,000 transportation providers worldwide, including contract motor carriers, railroads, air freight carriers, and ocean carriers. The directors and executive officers have together some $250 M USD in common shares. Market cap $10.3 B USD; have held the shares for more than five years.
CRM NYSE Salesforce Inc 12.07%
Salesforce is the world’s #1 customer relationship management (CRM) platform. It provides cloud-based CRM applications for sales, service and marketing. The directors and executive officers as a group hold some $8 B USD in common shares. Market cap $243 B USD; have held the shares for more than five years.
SCHW NYSE Charles Schwab Corp 9.67%
The Charles Schwab Corporation is a leading investment services firm with $7.07 trillion in client assets. The founder is chair of the board although in his mid-80s with shareholdings worth some $10B USD. The current CEO has run the company for many years and his equity ownership is worth approximately $175M USD; Market cap of $122 B; have held the shares for more than five years.
ZBH NYSE Zimmer Biomet Holdings Inc 11.78%
Zimmer Biomet Holdings, Inc. is a global medical technology company. The Company designs, manufactures and markets orthopedic reconstructive products; sports medicine, biologics, extremities and trauma products; craniomaxillofacial and thoracic (CMFT) products; surgical products; and a suite of integrated digital and robotic technologies that leverage data, data analytics and artificial intelligence. Zimmer holds the leading share of the reconstructive market in the United States, Europe, and Japan. Roughly 70% of total revenue is derived from sales of large joints, another quarter comes from extremities, trauma, and related surgical products. The impact of Covid on hip and knee surgeries knocked ZBH and its stock price for a loop. Market cap of $25 B: Initiated position in the spring of 2022.
VOO NYSE Vanguard S&P 500 ETF 0.37%
This is the granddaddy of index funds and is designed to track the performance of the Standard & Poor’s 500 Index. It has USD 775B in assets. As explained above, it is a placeholder.
ZIMV NASDAQ ZimVie Inc 0.13%
ZimVie Inc. is a medical technology company. The Company develops, manufactures, and markets a portfolio of products and solutions designed to treat a range of spine pathologies. Was spin-off from ZBH. Market cap $448 M. Holding as an experiment in deep value. Initiated position mid-2022.
Our Canadian Holdings
Company % of total holdings
CCL.B TSX CCL Industries Inc 4.16%
CCL is the world’s largest converter of pressure sensitive and specialty extruded film materials. It employs more than 22,000 people operating over 190 production facilities in 40 countries with corporate offices in Toronto, Canada. The founding family controls the company. Current President and CEO is not a family member. He has steered the company through solid growth over the last decade and holds almost $100 million of common shares and units. Market cap: $9.6 B CAD; have held for more than 5 years.
CIGI TSX Colliers International Group 8.45%
Colliers is a Canadian global real estate services and investment management company. It operates in 67 countries around the world. It is controlled by its founder who is the current CEO whose ownership stake is worth some $245 M CAD. It has an asset light business model with high owner earnings. Market cap: $7 B CAD; initiated holding in spring of 2020.
ENGH TSX Enghouse Systems Ltd 2.01%
Enghouse provides enterprise software solutions focusing on remote work, visual computing and communications for next generation software defined networks. Enghouse was founded in 1984 and has 1,700 employees and just over 50 offices globally. It has a market cap of $1.9 B CAD. The CEO and board chair between them own just over 20% of common shares. Initiated position in the spring of 2022.
NVEI TSX Nuvei Corp 1.75%
Nuvei Corporation provides electronic payment technology solutions to merchants and partners in North America, Europe, Middle East and Africa, Latin America and Asia-Pacific. Its solutions span the entire payments stack and include an integrated payments engine with global processing capabilities and a suite of data-driven business intelligence tools and risk management services. The company has a market cap of $4.6 B CAD. The founder and CEO owns 30M common shares. Initiated position in the spring of 2022.
ONEX TSX Onex Corp 5.53%
Onex Corporation is a Toronto, Canada based investment manager founded in 1984. The firm manages capital on behalf of Onex shareholders, institutional investors and high net worth clients around the world. As of December 31, 2020, Onex had approximately US$44 billion of assets under management. Primarily it engages in private equity investing. It is run by a team that collectively have some $2 B CAD personally invested in the common shares of the company. Market cap $6.9 B CAD; have held for more than 10 years.
RY TSX Royal Bank of Canada 1.87%
Royal Bank of Canada is Canada’s largest bank. It is a Canada-based diversified financial services company. The Company provides personal and commercial banking, wealth management services, insurance, investor services and capital markets products and services on a global basis. Its segments include Personal & Commercial Banking, Wealth Management, Insurance, Investor and Treasury Services, Capital Markets, and Corporate Support. It’s role in the portfolio is to assist a strategy of converting U.S. dollars to Canadian dollars and vice versa, without paying exchange commissions.
TIH TSX Toromont Industries Ltd 9.31%
Toromont Industries Ltd. sells, rents, and services Caterpillar construction equipment and power systems in the provinces of Ontario, Manitoba, Newfoundland, Labrador and Nunavut, Canada. The Company also manufactures and distributes refrigeration and process systems throughout North America. The board chair holds about $140 M of common shares and the CEO about $15 M. Market cap $9.4 B CAD; have held for more than 20 years.
TOY TSX Spin Master Corp 7.21%
Spin Master Corp. is a children’s entertainment company creating exceptional play experiences through a diverse portfolio of innovative toys, entertainment franchises and digital games. It has 28 offices globally. It distributes products in more than 100 countries. The three founders run the company and have about $2 B CAD in common share ownership. Market cap $3.5 B CAD; initiated the position in the spring of 2020.
XIU TSX iShares S&P/TSX 60 Index ETF 0.39%
XIU seeks to provide long-term capital growth by replicating, to the extent possible, the performance of the S&P/TSX 60 Index, net of expenses. It has $11.2B CAD in assets. As explained above, it is a placeholder.
WXM TSX CI Morningstar Canada Momentum Index ETF Common 0.29%
It is a smart beta or factor fund ETF. It has been designed to provide diversified exposure to Canadian issuers which have demonstrated, among other things, positive momentum in earnings and price. As explained above, it is a placeholder.
Conclusion
So, there it is. The portfolio is run in accordance with the investment principles discussed in my blog posts. This is explained in more detail in the Motherlode. I have never had an investment advisor. The research I use is as provided by my discount broker, i.e., no research edge. I have no special access to information, i.e., no information edge. To succeed in investing, ‘do it yourself’ (DIY) investors need to study, practice and work at it. The secret is not so much in stock picking but in having a sound investment process. The edge we have is a behavioral edge. A lot of it is about investment psychology. We are at no disadvantage to the ‘pro’s’. In fact, it may be easier because DIY investors have no client and career pressures and our miniscule trades do not move markets.
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You can reach me by email at rodney@investingmotherlode.com
I’m also on Twitter @rodneylksmith
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Check out the Tags Index on the right side of the Home page that goes from ‘accounting goodwill’ to ‘wisdom of crowds’. This will give readers access to a host of useful topics.
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You can also use the word search feature on the right-hand side of this page to find references in both blog posts and also in the Motherlode.
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There is also a Table of Contents for the whole Motherlode when you click on the Motherlode tab.
Want to dig deeper into the principles behind successful investing?
Click here for the Motherlode – introduction.
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