The STRIDE Blog

#17 Little Acorns: Portfolio Up 44% and Still Market Beating

stride-17-little-acorns-portfolio-up-44%-and-still-market-beating-featured.jpgAs Little Acorns enters its third year it's up 44% and still beating all major markets. In this post I’m going to highlight one of my top performing stocks and show you some of my favourite new STRIDE features.

“I always used to tell (Bill) Gates that a ham sandwich could run Cola-Cola,” said Warren Buffett, according to Alice Schroeder in her Buffett biography, Snowball. His logic is clear: go for strong businesses that could survive a rocky patch, even with poor management.

My star ‘ham sandwich’ business right now is Homeritz. This Malaysian furniture manufacturer was one of my original buys back in 2014 and it’s a STRIDE target again. It’s a long term keeper and three years in, I’m only looking at holding onto it.

Homeritz: Best-Case Scenario Value Pick

Homeritz is a great example of a best-case scenario value pick. It's owning stocks like this that has kept Little Acorns consistently ahead of the world's major markets

The chart below shows how this stock price has doubled in value over the past three years. It also shows how STRIDE’s valuation has responded to its financial statements.

Homeritz is a 3D target once again because STRIDE has identified significant strengths in the business, that the stock is currently trading well below its fair value and that the price is timed to rise.

Since STRIDE made its latest value adjustments, the stock has already risen, indicating that this may not remain a target to buy for long.

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Since I bought Homeritz, I’ve received 14.5% in dividends and made 80.2% in unrealised gains. Also, check out its STRIDE scores. Its 100 E score for earnings predictability shows fantastic growth potential – a major factor in its continued great performance.

The green icons beside its name indicate its status as a STRIDE target once again, while the dollar bill means it is a dividend star and the mortar board shows it follows a guru model - in this case, David Dreman.

Here’s how it looks in my STRIDE portfolio. With the new currency comparison feature top right, it’s easy to see the difference that currency fluctuation makes to returns.

The strength of the dollar means my 80.2% unrealised gains in R only equate to 35.5% in USD. This isn’t a concern right now as I’m not planning to sell but it does offer a great insight into the impact of currency swing on my stocks.

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New Year Changes to the STRIDE Platform

I’m a bold investor, as defined by STRIDE’s investor profiles in the Asset Allocation and Portfolio Management eBooks. This means that - as far as value investment portfolios go and while still being low risk compared with other investment models - Little Acorns carries a higher risk profile, because I include businesses across all market caps.

Homeritz is a micro-cap and demonstrates the upside of including this type of business - provided it meets all 3D target criteria and is part of a balanced, diverse portfolio of equal slice sizes.

Volatility is a characteristic of micro-caps but they can and often do outperform large caps. Between July 2006 and July 2016, for instance, the Dow Jones Select Micro-Cap Index returned 65.78%, while the S&P 500 returned 59%.

Below is a screenshot of the Little Acorns portfolio as seen by STRIDE in a graph that illustrates the effect of diversification. Certainly, not all my stocks are a profitable green but those that are both outnumber and out-value the reds.

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I expected a bold portfolio to carry higher maintenance levels to go with its higher risk. I thought I'd have to be very aware of micro-cap stocks, in case they suddenly hit their consider sell and demand attention. This hasn’t been the case. Even with my raised risk profile, I’ve found portfolio management to be mostly a case of watching.

This proves that the value investing ideology of buying great companies at great prices and holding on to them works. Low maintenance also means more time to explore the platform and that’s exactly what I’ve been doing. I thought I’d share some of my favourite new features with you in case you haven’t seen them yet.

Dividend Stars

Whether or not a company pays dividends is a deciding factor for many investors when it comes to stock selection. I really like the dividend stars page because it shows me all the companies with 50 plus D scores (now show me an investor who doesn't like receiving dividends).

The potential problem with 'dividend shopping' is that companies know how attractive regular payments make them to investors. This can lead to irresponsible cash management to protect the dividend payments at the expense of other critical areas of the business: meaning dividends are only attractive if they don't endanger the entire investment.

When STRIDE scores a business for its dividend it doesn’t only look at how much shareholders can expect to receive. The D score reveals the truth behind a dividend, making sure payments are well considered, consistent and sustainable.

If I have cash to spend (as I currently do) I like to start on the dividend stars page and filter to the best targets from there. If there are no clear targets for me here, I can broaden my search across the entire list of stock picks.

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Screener

Another awesome feature on STRIDE is the screener. While this has been a feature for a while, it’s recently been made better than ever.

Here you can create your own lists of stock picks according to criteria you set yourself: scores, sectors, market cap, revenue – you can drill down into some seriously granular detail here to filter out only the businesses you really want to see.

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I particularly like the guru screens. If you’ve ever wondered what Benjamin Graham’s company searches would look like if he was using STRIDE, you can see them here on the pre-filled screen.  

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Portfolio email and overview - gains reported in USD = 44%

Current Value Holdings - 30 Cash Starting Value
$169,807 $129,630 $40,177 $118,000

 

  Company + / - Gain
Top Performer Svolder AB + 105%
Biggest Loser FT Group - 68%
Sold  Innovative Properties  
  C-QUADRAT Investment AG  
Bought Somero  
  The Greenbrier Companies Inc  


The format of the daily update emails has also been updated. The airy spacing and tweaked data is easier on the eye and offers a sharper insight. It’s also responsive, with columns collapsing to suit your device.  

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Topics: 3D Value Investing, Portfolio Management, Little Acorns Portfolio

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3D Value Investing: Triangulating The Best Investment Targets

3D Value Investing uncovers the best businesses for investment, the fair value of those businesses and the best times to buy in and sell out. This approach to long-term investing results in higher returns with lower risk.

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