Quiet Contrarian. Ep 8: Trades for August 20

The main theme for the month is a few sales ahead of announcements to take profits on things I felt were overbaked. DTL and APX have been stellar performers of late, and were both looking a bit overpriced, so I sold down portions of my holdings. 

The American economy is looking even more overbaked with TMCGDP going over 180%. My current thinking is if it goes over 200% I will pull my US holdings completely.

Buys

Kathmandu – KMD:ASX – Australia and New Zealand’s GoTo for general outdoor gear. The next few years I expect an increase in their growth trajectory, with the RipCurl acquisition and the noise they’ve been making around building their brand, and moving into international markets. They were punished through Covid, but I expect them to bounce back well.

• Live Document BHS – KMD:ASX (Mockingbird)

Shine Justice – SHJ:ASX – Low liquidity, small amounts of growth (~2-3%), little bit of innovation, pays out a good dividend. The business seems stable, and quite uninteresting. Was bought because it’s incredibly cheap, currently trading at 0.6x book value, which seems like a reasonable price for a stable business with a little bit of growth. 

• Stock Quickie – SHJ:ASX (Mockingbird)

Tassal Group – TGR:ASX – Have been looking at these guys for a while, think they have reasonable growth prospects with their new focus on prawns, and the price is reasonable. Pushed forward my buy order a little bit to beat their annual report, as I was betting on them to beat expectations. This was a bit premature, as they were roughly in line, and there was no real price movement.

• Tassal Group – TGR:ASX – EOFY20 Update (Mockingbird)

Sells

Johnson & Johnson – JNJ:NYSE – Sold out of JNJ as part of my USA pull back. The stock was one of my lower performers. Only returning about 12% overall. In the future, I may try to get access to global health stocks through the ASX, using ETFs such as IXJ:ASX. 

Data#3 – DTL:ASX – Derisked before their announcement. Price has rollercoastered a bit since then, not unhappy with my choice even if it’s currently higher than my sell price. If it gets back to a more sensible 20x PE I’d buy back in.

Appen – APX:ASX – I think they overpaid for the recent acquisition. Their report came out in May, and their RoE has reduced from the mid/high 20s to the 8s. This could just be a switch from a Quality to a Growth strategy, and there could be ALOT of further growth. Or they could have REALLY overpaid for the recent acquisition, permanently crippling their profit margins relative to how much money it’s going to bring in. I still really like the company, and their position, but due to the recent concerns around the acquisition, I decided to de-risk my position. Sold down and got back my initial capital. Will continue to hold the current amount, long term, and look for opportunities to get in more if the price gets more reasonable.