Portfolio Update (Q2 – 2017)

Investing

My stock portfolio is up 13.5% year-to-date (January through June), beating the averages; DJIA +8.67%, S&P 500 +8.49%, and S&P/TSX -0.67%.

As many of you know, my portfolio is primarily invested in Canadian and U.S. stocks, based on my investment strategy – Small/Mid-Cap Capital Compounders, Mispriced Large-Caps, and Speculative Takeovers. Learn more about How I Pick Winners.

My Top 10 Performers in Q2 2017 are posted below. As I stated in my Q1 2017 Portfolio Update, I invested more capital into some of those top performers. I also initiated new positions at the beginning of Q2 – Shopify, Winpak, Pollard Banknote, Pinetree Capital, and Boyd Group.

Top 10 Performers Q2 Returns
YUM CHINA 45.0%
NINTENDO 44.1%
TECSYS 39.7%
ALIBABA GROUP 30.6%
SLEEP COUNTRY 27.0%
PINETREE CAPITAL 24.4%
SHOPIFY 24.1%
PACIFIC INSIGHT ELEC 18.4%
MCDONALDS 18.2%
YUM BRANDS 15.4%

Nintendo is a great example of one of my “Mispriced Large-Cap” holdings. Nintendo has always been a video-gaming powerhouse. I’m still a big fan and I’m almost 30. But its stock lost 80% of its value from 2007 to 2015. The Nintendo Wii was a big hit but then Nintendo seemed to just dwindle from there. It started to look like Nintendo could share the same fate as Sega. But then in 2015 Nintendo’s management made several key announcements, with plans to unlock their Intellectual Property (IP) – Nintendo Theme Park at Universal Resorts, Mobile Games (partnership with DeNA), and talks of movies, virtual reality, etc. This was big news in 2015 because Nintendo has always been apprehensive to venture into new markets. That’s why I initiated my position in Nintendo’s stock in 2015. They’ve got a treasure chest of valuable IP, which I would compare to Disney’s; let’s see it continue to go to work! (I’m up 100% on Nintendo since 2015). You can read more about Nintendo’s IP plans here.

You can see my full watchlist / portfolio in my new book, Capital Compounders (email me if you want a free copy). But also note that I’ve added more stocks to my watchlist – Brookfield Infrastructure Partners, Fairfax India, Waste Connections, Mogo Finance Technology, and Jamieson Wellness.

One of my biggest losers in Q2 2017 was Canopy Growth (WEED). It’s down 25% in the quarter. But I’m still long. I started buying shares in WEED at ~$1/share, when it was trading on the Venture Exchange. There’s still a very significant wealth transfer from drug dealers to licensed producers/sellers happening in Canada that I compare to Blockbuster/Netflix…isn’t capitalism great?

Overall, I’m happy with my performance so far this year. But the tide could turn. In Canada, overnight rates may rise for the first time in 7 years, which could be worrisome given our high consumer/mortgage debt load (~$2 trillion), combined with a lofty housing market, which I wrote about in “The Truth is Out There“. I’m not terribly concerned though as my portfolio is not exposed to the financial sector. Most of my holdings are in technology, consumer, and diversified industries. If I’m up +15% for the year (excluding dividends) that’ll be good for me. But even if the market comes down I’ll just buy some stocks on sale as I’ve done before in other corrections, crashes, and bear markets. I’m building wealth for the long term.

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