Portfolio Performance 2023 And Promising Stocks For 2024

1. Introduction

2023 was a optimistic 12 months for my portfolio with a achieve of 9.94% but it surely was lagging behind the MSCI World for the second 12 months in a row. Since its inception in 2013, the portfolio gained 212.6% (CAGR of +10.92%) vs. 116.1% (DAX) and 136.8% (MSCI World).

The worst 12 months was 2022 with a drawdown of -23.8% (partly attributable to Russian shares) and the very best 12 months was 2021 with a achieve of 87.5%.

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Within the following I’m going to analyse funding errors of 2023 and what labored final 12 months.

2. Inventory efficiency

A big contributor to my efficiency was US financial institution shares which I purchased in March 2023 (C, USB, ZION, WAL). The timing was not excellent since I additionally picked First Republic Financial institution which resulted in a complete loss. One other mistake was promoting too early (which I did a number of instances this 12 months). I offered WAL with a small loss as a result of the financial institution’s destiny was obscure however after promoting the inventory, the restoration began. All in all, shopping for the banking crash in March was a profitable funding with optimistic returns, and my finest performer of 2023, Zions Bancorp (+36.6% (dividends included), USB +29.2%).

My second largest winners had been, surprisingly, German shares, with Sixt SE (OTC:SIXGF) most popular shares up +33.5%, freenet (OTCPK:FRTAF;+31.3%), Deutsche Submit (OTCPK:DHLGY; +30.8%), Siltronic (OTCPK:SSLLF;+30.3%) and MunichRE (OTCPK:MURGY; +28.4%).

My largest losers (other than FRB) had been GUILLEMOT CORP. (OTC:GLMCF; -44.8%), Foot Locker (FL, -15.9%), BB Biotech (OTC:BBAGF; -15.2%), Livent (LTHM; -12.5%) and Volkswagen most popular shares (OTCPK:VWAPY, OTCPK:VLKAF; -9.1%).

I discussed earlier than that promoting too early was one purpose for the underperformance in comparison with the indices MSCI World and DAX. I offered Activision Blizzard in Could earlier than the inventory rose to Microsoft’s buyout supply. Moreover, I offered Lenovo in the summertime with a modest achieve of +48% and a holding interval of practically 9 years, due to decreased earnings and Chinese language-American tensions. Nevertheless, the inventory has gained one other +30%.

Another excuse for the underperformance was my largest holdings, BP (BP) and Himax (HIMX) which simply gained 3.3% and three.1% respectively.

Within the following, I’m going to debate essentially the most promising shares from my portfolio for 2024.

3. Probably the most promising shares for 2024

1. Sixt SE most popular shares (OTC:SIXGF)

Sixt SE has a really robust model and is increasing into the US aggressively. The inventory is valued with a P/E beneath 7, pays a excessive dividend and has proven a powerful efficiency for years.

2. Siltronic (OTCPK:SSLLF)

In my article from October, “A Progress At Affordable Value For The Subsequent Decade”, I argued that the corporate has a powerful place within the wafer market and can revenue from the long-term developments within the pc, smartphone, and electrical automobiles industries. Regardless of rising quick, the inventory is valued beneath 10x CAPE.

3. AerCap (AER)

AerCap has recovered quick from the Corona crash in March 2020 and has carried out properly (+23.6%) since I purchased the inventory in October. The corporate has a powerful market place within the plane leasing enterprise and present order developments for plane together with a excessive demand for air journey will result in larger earnings. The inventory trades for 8x earnings and beneath tangible guide worth. The corporate can also be shopping for again shares regularly.

4. Petrobras (PBR)

The Brazilian oil firm trades for 3x earnings and is considerably undervalued regardless of the latest drop in oil costs in 2023. The inventory gained 24% since I purchased it and gives a excessive dividend yield. A restoration in oil costs will assist the inventory to outperform the market.

5. Livent (LTHM)

The corporate will merge with Allkem (OTCPK:OROCF) to Arcadium Lithium. Each corporations have robust steadiness sheets, optimistic earnings, and synergies with assist to enhance margins and cut back prices. The long-term developments for lithium are intact and can stabilize lithium costs. Though many lithium corporations will enhance lithium provide over the subsequent years, demand development will seemingly outperform provide development and can result in worth will increase once more. With each corporations buying and selling beneath 10x earnings pre-merger, the inventory could be very engaging.

4. Particular state of affairs and long-term holdings

Spirit Airways (SAVE) is the one particular state of affairs inventory in my portfolio and has gained +28.3% to date. The anticipated money supply of $30.45 gives an upside of greater than +85%. The probabilities are 60:40 for a optimistic final result, however attributable to uncertainty, my place within the firm could be very small.

My largest holding can also be the inventory with the longest holding interval of practically ten years, BP. The return is simply 4.6% per 12 months, which could be very irritating, however the inventory remains to be undervalued. The corporate has purchased again 4.23 billion shares in 5 years (practically 20% of excellent shares) with a complete worth of $23.4 billion. These buybacks present the monetary power of BP returning a excessive quantity of free cashflow to its shareholders. The oil worth crash in 2020 and disruptions within the oil business have hit the corporate and the inventory. Nevertheless, stabilized oil costs will seemingly result in additional buybacks, boosting the inventory’s EPS and share worth. I’m optimistic that the inventory will present a greater efficiency over the subsequent years in comparison with the final decade.

ITOCHU (OTCPK:ITOCF) is one other long-term holding which has been a part of my portfolio since 2015 and has contributed properly to my total efficiency. It’s one in all Japan’s largest Sogo Shosha, a big buying and selling firm with a diversified enterprise mannequin. The corporate’s efficiency is beautiful and the administration could be very shareholder-friendly.

The inventory carried out very properly within the final decade, and the dividend has been persistently raised (additionally in 2020), supported by rising earnings.

One other long-term holding is Himax which I purchased in early 2021. The efficiency was disappointing due to excessive stock ranges and a lower-than-expected demand for its merchandise. Present business developments sign a greater enterprise surroundings and Himax can strongly revenue from a normalization within the business due to its robust place. The long-term pattern for its merchandise attributable to bigger shows in automobiles remains to be intact.

5. Last ideas

My portfolio has underperformed for 2 consecutive years now. Nevertheless, the general efficiency is satisfying with a CAGR of +10.92% which shall be my benchmark for the approaching years. I additionally had a number of Russian shares that damage my efficiency in 2022.

After eleven years of investing, the market has taught me to be affected person and to carry on to corporations despite the fact that their efficiency was disappointing in a one- or two-year timeframe. So long as the enterprise mannequin just isn’t damaged and the steadiness sheet is robust, a future restoration is probably going and can greater than compensate for previous underperformance.

Some investments resulted in very dangerous losses or whole losses (First Republic Financial institution, Prosafe, Debenhams), however the diversification of my portfolio, long-term compounders (Itochu, MunichRE, Sixt SE, Vale (VALE), Freenet), and constant dividend funds (2023: 4.9% yield) have helped me to be taught from previous funding errors and to regulate my technique to an ever-changing market and a difficult political surroundings.

Good luck to all buyers in 2024!

Editor’s Word: This text discusses a number of securities that don’t commerce on a serious U.S. trade. Please pay attention to the dangers related to these shares.