June 2023 Portfolio Update

 STI Index Fund returns +0.98% (was +0.55% in April)

Hong Kong Tracker Fund returns -2.38% (was -4.7%) 
S&P 500 Index Fund returns  17.8% (was +11%)

My portfolio returns year-to-date is currently was 5.08% (4.8% in April).

Obviously S&P 500 had a tremendous run up in just one month. There are many happy American Exchange investors out there (Nvidia and Tesla, all over the news really). 

The indices are performing exactly opposite to my expectations. I thought that the American indices were too overpriced and the sell down in Hong Kong was torrid last year. If anything, the lesson here is not to bet on market movements.

There is little positive happening in June. 

Notable transactions this month:

1) Sold off minor holdings in RXO, which was a spin off play, for a 25% gain, which annualized to a nice 58%. I had only 110 shares in it, and my plan was to buy more when the prices fall. I can't say that the sell down in my central china positions hasn't affected my impetuous to act, when prices fall a bit back then. I stalled, and this is the result..

The profit was used to... purchase the Applied Series lectures by Mark Meldrum. I am a few days into the Applied Options section of the course and I really like it. 

2) Purchase a small amt of Alibaba (9988) stock to average down my prices. 

This one bears a bit of explanation, but it will not be a foreign one.

With the spin off story gathering pace, looking at Alibaba from the sum-of-the-parts perspective makes sense each day.

There were only a few things I looked at, looking at the last 5 years of earnings to decide on a ball park valuation of its business arms. All figures are RMB, we will convert them to HKD later.

a) Net cash of all borrowings is 305B 
b) It has an equities portfolio of 223B. We discount this by 50% (!) to 110B
c) Equity holdings in Ant Group. Based on its profit announced in the last interim report, Ant G made 6.1B, if we simply annualized this to 12B, and give it a simple 10x multiple, Ant is worth about 120B.

Now this appears too low but I always been pessimistic about the way bankers estimate prices.

d) The golden goose is China Commerce and it will make 160B thereabouts. Given the slowing, though very respectable revenue growth, an 8x multiple is applied and I think it is worth 1280B

e) The cloud business shows signs of slow down and margin squeeze, and henceforth the annualized revenue of 70B is given a 3x multiple only. Hence 210B. I understood that Goldman given it a 41B USD valuation recently (which converts to 290B). But I never trusted bankers.

The entire business operation sums up to 2025B RMB or close to 2200B in HKD.

Alibaba is worth 1700B as of writing.  Hence a bit of purchase is sensible.

Ironically, this trade brought my average price down to... my fair value. 

I have also sold a contract of puts at 70HKD price mark.

***

There wouldn't be any updates for the next two months or so.

I would be candid about my situation and how I feeling. It does feel like pieces of my life are falling apart and the next ones are really really important ones at stake, . I am constantly worried and with something that happened recently, the self-daunting prophecies that I have been fearing for months does appear to come true. 

I am afraid I can't hold it together and keep a straight face sometimes. I yearn to withdraw into a shell where I am not asked to do anything, not to expect anything, and mercifully, not to hope for anything.

I am not in a happy place, and who knows I might need medication soon.

When bad things happen to people, they react in a cold, selfish manner. They stop whatever virtuous thing they might have been doing, and changed their ways perhaps as a way to get even.
This stop not just the virtuous cycle of things, but perpetuate the evil cycle that made this a poor place to live in.

I don't know what to do anymore.