聰明才智越大者，當服千萬人之務，造千萬人之福；聰明才智略小者，當服百十人之務，造百十人之福；至於全無能力者，當服一人之務，造一人之福。
聰明才智越大者，當服千萬人之務，造千萬人之福；聰明才智略小者，當服百十人之務，造百十人之福；至於全無能力者，當服一人之務，造一人之福。
06/27/2025
For Portfolio II, III, IV
CoreWeave (CRWV), GE Vernova (GEV), Netflix (NFLX), Hingham Institution of Saving (HIFS)
Additional 2% of investment for CoreWeave for the Portfolios (II, IV)
Increase the position of both GE Vernova and Netflix to 4% of Portfolios (II, III, IV)
Decrease the position of Hingham Institution of Savings 50% (II, III, IV)
For long term
The development of AI industry is a ongoing process and the span of 5 years is a foreseeable future. The goal for CoreWeave now is to build the position of investment for the company and observe the progress quarter by quarter until its dominance of significant market shares.
For GE Vernova, it is about diversity of investment in energy section other than solar energy.
Netflix should be self explanatory.
Decrease the investment in Hingham Institution of Saving is due to the following reason.
The uncertainty of inflation. Even the inflation will be clear in later days, the interest rate in the marketplace will be affected greatly by other factors.
US currency dominance in the world is changing. In recent days, several countries of different region are moving away from US dollar and Euro is gaining strength. Moreover, countries in Asia are trying to form alliance and move away from US dollar for global trade. Such movement will decrease the creditworthy of US currency.
National debt of the United States is reaching a level of unsustained. Never a business or home hold can have great debt and without bankruptcy. The money of a trillion interest payment can have lots of utilization. Such debt level will definitely reduce the creditworthy of the United States and increase the borrowing cost. Should have the auction of US Treasury been failed, bond market is going to be terrible. So will be the mortgage market.
The real worry for citizen of the United States is the "real interest rate" in the financial market. In the past year, the mortgage rate remains in a elevated level even Federal Reserve reduces fund rate. Such indication points to the higher borrowing cost for ordinary people.
Investment in Hingham should be reduced.
Again, concentration investing involves higher risk of significant loss without the protection of diversity.
Each individual investor should always consider their own investment goal, risk tolerance, investing span and objectives for their investment positions. Investing in securities involved the risk of total losses. Investors should always consult with financial professionals.
06/10/2025
For Portfolio II, III, IV
Cadence Design Systems (CDNS), Synopsys Inc (SNPS), Netflix (NFLX).
Initial an investment of 2% of the Portfolios for Cadence Design Systems (CDNS) and Synopsys Inc (SNPS).
Initial an investment of 2% of the Portfolios for Netflix.
For long term
From daily life to industrial utility, ICs and electronics have been here for more than half of century. In the foreseeable future, utilization of semiconductors is going to be ubiquitous more than ever. From more recent fever of AI development to futuristic robotics, data centers also will be required to pack with more advanced, higher speed equipment. Therefore, semiconductor designers and manufacturing and systems developers have to advance their technologies and products to compete.
Cadence Design Systems and Synopsys are here to help businesses who develop, manufacture semiconductors and create, maintain systems. Both companies compete each other and they are major leaders in developing their software platform which provide tools for design, creation, manufacturing semiconductors and systems.
They are like the picks and shovels providers in gold rush. Cadence Design and Synopsys have been in business before dotcom bubble, but the acceleration of ICs and electronics development has given both companies a great deal of importance in this technology development era. And so far, both companies are in the equal footing in business competition. Equal weight of investment seems a right choice.
There is no research done for Netflix. The business for lower premium and ads-on subscription is a good plus for Netflix. For whom have been subscribers for stream services, this should be a good investment with understood benefit. And there will be more subscribers staying with Netflix if there is a recession.
Again, concentration investing involves higher risk of significant loss without the protection of diversity.
Each individual investor should always consider their own investment goal, risk tolerance, investing span and objectives for their investment positions. Investing in securities involved the risk of total losses. Investors should always consult with financial professionals.
06/02/2025
For Portfolio II, III, IV
CoreWeave Inc (CRWV), GE Vernova (GEV).
Add 2% of investment of the Portfolios for CoreWeave (II, IV) and 2% of investment of the Portfolios for GE Vernova (II, III, IV).
For long term.
No research material is done. To invest in CoreWeave should consider the following.
AI can become powerful tools for business operations, personal advancement. It can be big as PC invention, Internet, and smart phone if it fulfills its promises.
CoreWeave provides a very different kind of cloud platform infrastructure, one with GPU for AI developers, operators and businesses who use AI application. Its cloud is running on GPUs infrastructure differ from traditional data centers which run on CPUs.
CoreWeave right now is a leading provider for GPU cloud infrastructure; however, as always, technology sector is an extreme competitive place. Rapidly building up the platform network and scale up operation is a necessity for CoreWeave to become a dominant AI infrastructure provider and not being eaten alive by Microsoft, Alphabet, Amazon.
Because of this reason, CoreWeave has accumulated $8 billion of debt as first quarter of 2025 before additional $2.0 billion senior note offering. Serving the debt (Cash flow for debt service is 460 million which includes $271 million principal, $189 million interest payment that includes $47 million capitalized interest ) and paying off and serving debt is going to be a tough job for CRWV.
On the positive side, CoreWeave has generated sizable cash flow from operation, $457 million, which excluding working capital changes in 1Q 2025.
Microsoft's contract ends in 2029, and it is one-time deal. Therefore, CoreWeave has to fill the empty spot in 3 and half years.
The following links provide more information.
For GE Vernova, it is a energy consumption necessity. Beside all the electronic devices usage by consumers and business, the new born of AI industry will require huge amount of computing power and energy to run it. GE Vernova is a spin off from General Electrics and is specifies on provide energy equipments and services for all kind of electricity generation, coal, gas, gasoline, nuclear and wind. It is a perfect match for energy-AI mix investment.
Following is from Google AI search:
Building a coal-fired power plant typically takes 3-5 years
Building a gas-fired power plant typically takes 27.5 months-7 years
Building a nuclear power plant typically takes over 5 years for construction only
Building a 100 MW wind farm typically takes 8 to 14 months
Building solar farm takes 8-18 month of construction time.
Again, concentration investing involves higher risk of significant loss without the protection of diversity.
Each individual investor should always consider their own investment goal, risk tolerance, investing span and objectives for their investment positions. Investing in securities involved the risk of total losses. Investors should always consult with financial professionals.
03/06/2025
For Portfolio III, IV
Enphase Energy (ENPH), SolarEdge Technologies (SEDG)
Initiate 4% position for each of ENPH and SEDG
For long term and medium term investment
The price of both companies have been on a down trend for almost two years due to the weakening demand for household solar energy.
The stock price for ENPH and SEDG have probably hit the bottom. However, as today's economic environment, further price depreciation is possible if recession really hits.
Investing in equal weight for both companies is due to following reasons. Enphase's products is slightly better than SolarEdge because products from Enphase are more integrated and streamlined with less possible multiple times of converting between DC and AC. Also, Enphase has a better market position in the United States than SolarEdge whose focus is on Europe. However, SolarEdge's depressed price give a better chance of price appreciation.
Attention should be paid on the business progresses for both companies, especially the solar demand in Europe whose demand for solar energy is weaker than the United States. Both CEOs were very caution in their language of answering questions from analysts. Positive free cash flow is one of important element to watch in their reports in future quarters, particularly SolarEdge.
Again, concentration investing involves higher risk of significant loss without the protection of diversity.
Each individual investor should always consider their own investment goal, risk tolerance, investing span and objectives for their investment positions. Investing in securities involved the risk of total losses. Investors should always consult with financial professionals.
01/29/2025
For Portfolio III, IV
PGF,PGX
Close the position of PGF, PGX of Portfolio III, IV
Capital Risk adjustment
We are close the position of PGF and PGX due to the risk of capital position and murky capital gain outlook.
The uncertainty of global economic outlook and global political confrontation has probably created a shifting of global trades. Moving toward to more friendly business partnerships has become more obvious and more urgent.
And those pressure may continue to build up to the hard-to-contain persistent inflation. Therefore, the interest rate outlook is no longer favorable for PGF and PGX.
Again, concentration investing involves higher risk of significant loss without the protection of diversity.
Each individual investor should always consider their own investment goal, risk tolerance, investing span and objectives for their investment positions. Investing in securities involved the risk of total losses. Investors should always consult with financial professionals.
01/07/2025
For Portfolio IV
Hingham Institution of Savings (HIFS)
Reduce the position of HIFS to 7% of Portfolio IV
Risk adjustment
We believe that hold HIFS in such significant position has lost its appeal because of the risk of elevated uncertainty due to the following reasons
First, the continuous persistence of core inflation is lingering and strong job market continues to fuel spending. Also, there are more uncertain economic factors going into 2025 than 2024. Even the overall economy is healthy, those uncertain factors may restrict consumers' purchasing power and impedes economy growth.
In the financial market front, the bond traders do not have a good expectation for bond market. Traders push 10 year treasury price down resulting yield of 4.5% this week even though Federal Reserve cuts fund rate one quarter of a percentage and predicts two more cuts in 2025.
Furthermore, global economy is slowing down in most of regions except here in the United States. Eventually, our trading partners are going to have some effect on ours. If that is the case, the persistent inflation here will have a bigger impact on financial market.
However, this reduction is temporary. How long is the uncertainty depending on Federal Reserve's interest rate policy aka bring down the interest rate.
Again, concentration investing involves higher risk of significant loss without the protection of diversity.
Each individual investor should always consider their own investment goal, risk tolerance, investing span and objectives for their investment positions. Investing in securities involved the risk of total losses. Investors should always consult with financial professionals.
01/07/2025
For Portfolio IV
Hingham Institution of Savings (HIFS)
Reduce the position of HIFS to 7% of Portfolio IV
Risk adjustment
We believe that hold HIFS in such significant position has lost its appeal because of the risk of elevated uncertainty due to the following reasons
First, the continuous persistence of core inflation is lingering and strong job market continues to fuel spending. Also, there are more uncertain economic factors going into 2025 than 2024. Even the overall economy is healthy, those uncertain factors may restrict consumers' purchasing power and impedes economy growth.
In the financial market front, the bond traders do not have a good expectation for bond market. Traders push 10 year treasury price down resulting yield of 4.5% this week even though Federal Reserve cuts fund rate one quarter of a percentage and predicts two more cuts in 2025.
Furthermore, global economy is slowing down in most of regions except here in the United States. Eventually, our trading partners are going to have some effect on ours. If that is the case, the persistent inflation here will have a bigger impact on financial market.
However, this reduction is temporary. How long is the uncertainty depending on Federal Reserve's interest rate policy aka bring down the interest rate.
Again, concentration investing involves higher risk of significant loss without the protection of diversity.
Each individual investor should always consider their own investment goal, risk tolerance, investing span and objectives for their investment positions. Investing in securities involved the risk of total losses. Investors should always consult with financial professionals.
12/08/2024
For Portfolio IV
Fair Isaac Corp (FICO), CAVA Group Inc (CAVA)
Initial exploratory positions of 1% of the Portfolio IV for each of FICO and CAVA.
These are investment ideas and it is for tracking purpose. There is no further research has been done. And if FICO sound familiar, it is your financial credit score.
Again, concentration investing involves higher risk of significant loss without the protection of diversity.
Each individual investor should always consider their own investment goal, risk tolerance, investing span and objectives for their investment positions. Investing in securities involved the risk of total losses. Investors should always consult with financial professionals.
12/01/2024
For Portfolio IV
Arista Network Inc (ANET), Cadence Design Systems Inc (CDNS), Synopsys (SNPS)
Initial exploratory positions of 1% of the Portfolio IV for each of ANET, CDNS and SNPS
These are investment ideas and it is for tracking purpose. There is no further research has been done.
Again, concentration investing involves higher risk of significant loss without the protection of diversity.
Each individual investor should always consider their own investment goal, risk tolerance, investing span and objectives for their investment positions. Investing in securities involved the risk of total losses. Investors should always consult with financial professionals.
11/23/2024
For Portfolio IV, III
PGF & PGX
Reduce each position to 5% of the Portfolios
Use Treasury bill (3 month and under) ETF as capital reserve
The original objective for capital gain from PGF and PGX in near term has diminished due to following factors.
Core inflation has been persistent than expect.
Global trades uncertainty.
Federal reserve's strong stand for its mandate of getting inflation under control. Also, it should pay close attention to BOJ's decision for its interest rate.
The new expectation here for interest rate cut is that the speed of rate cut will be slowed significantly due to the anticipate for abovementioned factors. Therefore, the chance of satisfactory gain from PGF and PGX is getting low.
In order to preserve more cash in hand, Treasury bill ETF under 3 months maturity is utilized since the interest yield is satisfactory and act as protection for capital. Shorter duration of T-bill allows investors to quickly react to fast change in interest rate regardless up or down.
However, PGF and PGX in the Portfolio II is for income purpose; hence, the price of PGF and PGX is not a concerned factor for long run.
Again, concentration investing involves higher risk of significant loss without the protection of diversity.
Each individual investor should always consider their own investment goal, risk tolerance, investing span and objectives for their investment positions. Investing in securities involved the risk of total losses. Investors should always consult with financial professionals.
11/12/2024
For Portfolio IV
Close the positions
Enphase Energy (ENPH), FXY
Temporarily close the holding of Enphase Energy, close the position of FXY.
Due to the certainty of new administration policy, we close the position of Enphase Energy Inc until the new direction for renewable energy is clear. However, the renewable energy is the favorable trend. This industry just has to settle down for new policy.
Again, concentration investing involves higher risk of significant loss without the protection of diversity.
Each individual investor should always consider their own investment goal, risk tolerance, investing span and objectives for their investment positions. Investing in securities involved the risk of total losses. Investors should always consult with financial professionals.
09/03/2024
For Portfolio II, III, IV
Close the positions
Temporarily close the holding of Semler Scientific
Semler had and still has a good model of business, but the investment in bitcoin put company in a speculative mode.
Gold and diamond have their commercial value and usage. Gold is the best electric and heat conductive material. Also, it has the best malleable and anti-corrosion property. Same as diamond, it has commercial usage as cutting tool, scientific use.
We can not find real commercial utility for bitcoin. The only way to think about bitcoin is that it can be rare-material-like but no commercial use, and it is for trading purpose only. If it is the case, the "desire" for possesion is becoming the most important factor for bitcoin, like rare coins, stamps, arts.
In past couple months, the total number of bitcoin held in public traded bitcoin ETF has been gradually declined. What does it tell us? Do investors find it no value? Do investors think that it is less attractive than other investment tool? Or investors need money for vacations? We are not speculating such thing, but we believe in numbers.
Again, concentration investing involves higher risk of significant loss without the protection of diversity.
Each individual investor should always consider their own investment goal, risk tolerance, investing span and objectives for their investment positions. Investing in securities involved the risk of total losses. Investors should always consult with financial professionals.
07/25/2024
For Portfolio II, III, IV
Increase the positions
Increase the holding of Hingham Institution for Savings (HIFS) to 20% of the Portfolio III.
Hingham Institution for Savings passed a turn point in second quarter of 2024. Its interest margin expanded in the 2Q 2024 which produced higher net interest income. Loan and revenue continue to grow. Also, the bank managed to lower interest expense at very low level quarter to quarter (see Financial Data). In addition, the repriced loans have generated more interest income with higher rate.
The result is that declining trend of net interest income has stopped and the net interest income of 2Q 2024 has turned to growth quarter to quarter. We believe from this point on that interest margin will continue to expand and restore the bank's profitability to the level of early 2022. Due to the fact, Federal Reserve will begin to cut interest rate in the second half of 2024 which will lead to dramatic decline of borrowing cost for HIFS, especially the cost of FHLB Advance (the biggest cost of interest expense). This should be the first solid leg up for Hingham Institution for Savings. Plus, it is the first time we see a major news outlet report on the bank, AP.
Again, concentration investing involves higher risk of significant loss without the protection of diversity.
Each individual investor should always consider their own investment goal, risk tolerance, investing span and objectives for their investment positions. Investing in securities involved the risk of total losses. Investors should always consult with financial professionals.
07/02/2024
For Portfolio II, III, IV
Reduce the positions
Semler Scientific Inc (SMLR),
O'Reilly Automotive Inc(ORLY),
Enphase Energy Inc (ENPH)
Reduce 50% of the holding of Semler Scientific,
Reduce 40% of the holding of O'Reilly Automotive Inc
Reduce 40% of the holding of Enphase Energy Inc
Due to the volatile nature of bitcoin price and uncertain how bitcoin be an investment tool, we further reduce 50% of the holding of Semler Scientific.
For adjustment the weight of components in Portfolios, reduce 40% of the holding for both O'Reilly Automotive and Enphase.
Again, concentration investing involves higher risk of significant loss without the protection of diversity.
Each individual investor should always consider their own investment goal, risk tolerance, investing span and objectives for their investment positions. Investing in securities involved the risk of total losses. Investors should always consult with financial professionals.
06/18/2024
For Portfolio II, III, IV
Reduce the positions
Reduce 40% the holding of Semler Scientific.
Due to the volatile nature of bitcoin price, we reduce 40% of the holding of Semler Scientific.
Again, concentration investing involves higher risk of significant loss without the protection of diversity.
Each individual investor should always consider their own investment goal, risk tolerance, investing span and objectives for their investment positions. Investing in securities involved the risk of total losses. Investors should always consult with financial professionals.
05/08/2024
For Portfolio III, IV
Hold the positions
Semler Scientific (SMLR).
Hold the current position.
Revenue decline is expected as stated in previous report. This revenue decline is due to the reimbursement adjustment from Centers for Medicare & Medicaid Services (CMS). Also, the situation of revenue recalibration will remain in whole 2024. We expect growth shall resume in 2025. It is like a company has a business down year and next year business will return to normal trend.
Furthermore, SMLR participates the decline and efficiently reduces cost, and it generate more profit and cash flow. Company currently has $62 million in hand with $77 million of equity and 7.03 million outstanding share. It means company has most of its assets in cash and almost $10 dollar cash for every share of common stock. A company which is able to accumulate cash and efficiently cut cost is the best company we can hope for in this down turn situation because shareholder's value is in their mind, and it is better than cash burning company.
If the share price drops close to $10, just like Peter Lynch said, we are going to mortgage the house and put in Semler Scientific. However, anyone who feels this steep price is intolerable should reduce or close the position in order to match personal investment strategy. Again, the following red-marked sentence is not insignificant, please read careful and be mindful.
Again, concentration investing involves higher risk of significant loss without the protection of diversity.
Each individual investor should always consider their own investment goal, risk tolerance, investing span and objectives for their investment positions. Investing in securities involved the risk of total losses. Investors should always consult with financial professionals.
05/02/2024
For Portfolio II, III, IV
Temporary close positions
Temporarily close the holding of Xpel Inc in all portfolios. Waiting for cheaper price is the best position now.
Again, concentration investing involves higher risk of significant loss without the protection of diversity.
Each individual investor should always consider their own investment goal, risk tolerance, investing span and objectives for their investment positions. Investing in securities involved the risk of total losses. Investors should always consult with financial professionals.
03/24/2024
For Portfolio III
Close positions and invest in index ETF/Cash
DexCom Inc (DXCM).
Use the processing to invest in index ETF or stay in cash in Portfolio III.
We believe that Xpel's price at current level is still too high and the economic outlook for auto industry is returning to normal comparing to the activity during Covid pandemic. Also, EV market is cooling down dramatically.
Solar industry still has a lot of growth ahead, but the growth rate of solar panel installation has come down from the high of pandemic. Comparing to Enphase, it looks like that SolarEdge is more expensive now. Its products is less advantageous for home installation. Plus, the risk of geopolitics is much higher for SolarEdge investors.
It is proved that the technology of m-RNA is a more advantageous technology for medicine development. However, the factors of declined Covid infection cases, vaccination fatigue, vaccination reluctance has caused the dramatic decline in Covid vaccine sale for Moderna. Even with its fast development of RVS vaccine and flu vaccine, the foreseeable revenue for Moderna can not compensate the current level of stock price.
Cracker Barrel Old Country Store's business is stabilized after pandemic, but its business growth is not on a good spot. At the current level of dividend payout, we believe that CBRL is not able to increase its dividend unless revenue growth is improved.
Again, concentration investing involves higher risk of significant loss without the protection of diversity.
Each individual investor should always consider their own investment goal, risk tolerance, investing span and objectives for their investment positions. Investing in securities involved the risk of total losses. Investors should always consult with financial professionals.
03/20/2024
For Portfolio II, III, IV
Close positions
Close the positions of Signet Jewelers (SIG) on the Portfolio II, III and IV. This is the down cycle for merchant companies, especially for Signet's engagement/wedding business after the prosperity during pandemic.
Again, concentration investing involves higher risk of significant loss without the protection of diversity.
Each individual investor should always consider their own investment goal, risk tolerance, investing span and objectives for their investment positions. Investing in securities involved the risk of total losses. Investors should always consult with financial professionals.
02/13/2024
For Portfolio III
Increase investing position
Increase additional 5% of investment for Hingham Institution for Savings (HIFS) in the Portfolio III.
From time to time, we would like to increase the position of Hingham Institution for Savings for Portfolio III whenever an opportunity is presented.
HIFS is priced below its tangible book value now, and it represents a 2021-earning (prior the beginning of increase of Federal fund rate) to common stock price ratio of approximate 18%. It means that HIFS will earn investors 18% of return annually if investors wholly own the HIFS and the earning remains constantly.
Again, concentration investing involves higher risk of significant loss without the protection of diversity.
Each individual investor should always consider their own investment goal, risk tolerance, investing span and objectives for their investment positions. Investing in securities involved the risk of total losses. Investors should always consult with financial professionals.
02/07/2024
For Portfolio III
Initiate an investing position
Initiate an investment of Enphase Energy Inc (ENPH) to 7% of Portfolio III.
Enphase Energy designs, markets and distributes microinverters and solar batteries and provides services with those products. Enphase's microinverter is different from SolarEdge's string inverter. Microinverters are directly attached to solar panel and convert electricity to alternative current (AC).
The advantage of microinverter is that one solar panel will convert its direct current (DC) to AC individually without effecting other panels' electricity generation if this panel's performance of generating electricity is compromised. Comparing the SolarEdge's, it will require both optimizers and inverters to accomplish the same task.
Currently, products from both Enphase and SolarEdge are the dominants in US market. Both their products have advantages over the other. SolarEdge's developments are more likely suitable for the larger scale of solar producers such as industry and utility.
Again, concentration investing involves higher risk of significant loss without the protection of diversity.
Each individual investor should always consider their own investment goal, risk tolerance, investing span and objectives for their investment positions. Investing in securities involved the risk of total losses. Investors should always consult with financial professionals.
01/12/2024
For Portfolio III
Initiate an investing position
Initiate an investment of Hingham Institution for Savings (HIFS) to 7% of Portfolio III.
Hingham Institution for Savings is one of oldest banks in the Unites States, but it is still a very small business. Slow and steady growth has been benefiting shareholders since the Gaughen family took over the company.
Company primarily focus on commercial real estate loans. This type of loans involves higher risk than residential owner occupies loans. HIFS implements several safeguards to reduce the risk of those loans. It requires that loan-to-value does not exceed 75%, loans must be approved by a selected loan committee, a member of the committee will visit on-site twice annually.
On the deposit side, the company relies heavily on Federal Home Loan Banks for capital to its lending business. It cost the company higher interest expenses than usual customer deposits, but the source of capital from FHLB is much stable than customer deposit.
Also, the company utilizes Network Deposit and DIF to ensure customers' deposit which exceed the FDIC limit.
At this cycle of monetary tightening, HIFS's bottom line has been hurting mainly due to the much higher interest expense paid to FHLB. There is more than 2% of interest margin vanished. However, due to the company's low cost operation, company continue to grow its loan portfolio despite of this cycle of raising interest rate. We believe HIFS will return its profitability and earning growth once Federal Reverse begins to reduce interest rate, and eventually the return of valuation.
Again, concentration investing involves higher risk of significant loss without the protection of diversity.
Each individual investor should always consider their own investment goal, risk tolerance, investing span and objectives for their investment positions. Investing in securities involved the risk of total losses. Investors should always consult with financial professionals.
11/05/2023
For Portfolio II
Increase position in investment
Invesco QQQ Tr (QQQ), SPDR S&P 500 ETF TR (SPY)
Increase each holding of QQQ and SPY to 10% of Portfolio II.
It is very clear that Federal Reserve will most likely not to raise interest rate further. And keep current interest rate on a longer path to achieve the goal of decreasing inflation and slowing economy growth at more gradual pace, a soft landing.
S&P 500 index is still trading at the upper range of its P/E ratio, and companies' earning is growing at a very moderate pace. Therefore, We believe that stock market will advance at a moderate and volatile pace.
Again, concentration investing involves higher risk of significant loss without the protection of diversity.
Each individual investor should always consider their own investment goal, risk tolerance, investing span and objectives for their investment positions. Investing in securities involved the risk of total losses. Investors should always consult with financial professionals.
10/20/2023
For Portfolio III
Reduce position in investment
Reduce 50% of holdings for SolarEdge and Xpel in Portfolio III.
We believe both SolarEdge and Xpel are good business and in good financial condition. However, their high valuation and P/E ratio did not live up investors' expectation now. Cutting loses will be a better strategy. Will these prices be the bottom for both stock shares?
It is uncertain for sure, but as an investor, a decline in price is a sweet opportunity. Cheaper is better for later.
SolarEdge
Renewable energy is still the future and it will continue to grow for sure. But each sector of economy always has its up and down.
As expected, SolarEdge is getting into utility grade inverter market with its advanced technologies. We believe that is SolarEdge's advantage.
Xpel
Should I trust who saved the company from the edge of bankruptcy by using his personal credit card to get through financial hardship or the short seller's words?
How good the film from Tesla would be if the paint on Tesla is bad as said in short sell's report? Will a third party provide the so said film for Tesla and is a 3M film?
Again, concentration investing involves higher risk of significant loss without the protection of diversity.
Each individual investor should always consider their own investment goal, risk tolerance, investing span and objectives for their investment positions. Investing in securities involved the risk of total losses. Investors should always consult with financial professionals.
08/14/2023
For Portfolio III
Increase investing position
Increase the position of Semler Scientific, Inc to 10% of Portfolio III.
In the past decade, Semler Scientific's revenue and profit has few down years, but it is able to come back with even stronger numbers. However, the CMS's (Centers for Medicare & Medicaid Service) decision to not include some Semler's services will effect its business, and its effect can not be accurately assessed yet. Nonetheless, its future is positive and challenged.
Again, concentration investing involves higher risk of significant loss without the protection of diversity.
Each individual investor should always consider their own investment goal, risk tolerance, investing span and objectives for their investment positions. Investing in securities involved the risk of total losses. Investors should always consult with financial professionals.
06/08/2023
For Portfolio III
Capital preservation
Further reduce the position of Signet Jewelers 50% for the Portfolio III.
Again, concentration investing involves higher risk of significant loss without the protection of diversity.
Each individual investor should always consider their own investment goal, risk tolerance, investing span and objectives for their investment positions. Investing in securities involved the risk of total losses. Investors should always consult with financial professionals.
05/30/2023
For Portfolio III
Capital preservation
Close 50% of the position of Signet Jewelers in the Portfolio III due to retailers' slowdown in business.
The effect of raising interest rate has caused consumers to constrain their purchase even the traffic in Home Depot and Costco has slowed down. Also, that consumers shift their spending priority from goods to services put even more pressure on retailers' business.
As the intention of Federal Reserve indicated, there will be no rate reduction at least not until second quarter of 2024 as inflation is stubborn as now unless an acute recession happens.
The retailers will continue to feel the pressure.
Again, concentration investing involves higher risk of significant loss without the protection of diversity.
Each individual investor should always consider their own investment goal, risk tolerance, investing span and objectives for their investment positions. Investing in securities involved the risk of total losses. Investors should always consult with financial professionals.
05/01/2023
For Portfolio II
Avoid the potential real estate downturn
Temporarily close the position of Bank OZK in the Portfolio II due to evaluation.
There are deficits on OZK's balance sheet as 03/31/2023, and these deficits can be a real problem if commercial real estate is in trouble.
Loan/deposit ratio: $22062 million/$22283 million = 99.01%
Uninsured deposit/total deposit ratio is about 35-40%
$1039 million cash on hand is equal to 4.67% of total deposit ($1039 million/$22280 million)
Also, OZK has 22.1% of non-farm/non-residential loans, 39.2% of construction/land development loans. It is hard to real know what will happen if economic continue to slow down as Fed's intent, and slow down spread into commercial real estate. For the safety capital, we close the OZK position in the Portfolio II until fed fund rate reverse and economic condition is clearer.
Again, concentration investing involves higher risk of significant loss without the protection of diversity.
Each individual investor should always consider their own investment goal, risk tolerance, investing span and objectives for their investment positions. Investing in securities involved the risk of total losses. Investors should always consult with financial professionals.
04/24/2023
For Portfolio III
Trying to be a relevant and stand-alone company
This is a very difficult situation and costly decision
After market close today, First Republic Bank announced its first earning report for first quarter of 2023 and took no question from analysts and investors. It reported that depositors pulled $100 billion out the bank, and outflow of deposit was almost stop at the end of March. However, its balance sheet shows that its size of loan portfolio does not decrease but increase more than 3%. It indicates that First Republic is unable to sell its loans to other parties or unwilling to sell it at bargain price. It is most likely that First Republic Bank is trying to stay alive and stand-alone. It will be very difficult. The Bank has to bring in new insured deposit, maintain its cash reserve, cut expenses while maintain its traditional service while interest margin is squeezed by higher interest expense from monetary policy and borrowing from Federal Reserve, JP Morgan Chase and other banks. We expect interest margin will be narrower next quarter.
Addition to its difficulty to increase capital, should big banks be willing to extend the time frame for $30 billion deposit? If not, it is unlikely that First Republic Bank is able to find such huge sum of money to fill the hole. Furthermore, economy is showing more signs of weakness. First Republic's loan portfolio will further deepen into the hole if real estate market gets more troubles.
It will be a prolong struggle to get back $100 billion of deposit, stay alive and rebuilt itself up. Only the investors who are prepared and willing to lose the entirely investment of First Republic Bank should stay with the bank.
Again, concentration investing involves higher risk of significant loss without the protection of diversity.
Each individual investor should always consider their own investment goal, risk tolerance, investing span and objectives for their investment positions. Investing in securities involved the risk of total losses. Investors should always consult with financial professionals.
04/23/2023
For Portfolio III
Value is fully recognized
Reduce the position of MRNA to 2% of Portfolio III
As Covid-19 is spreading like seasonal flue now even there are occurrence of regional epidemic. It is more likely than not Covid-19 and immunity is in an state of equilibrium. Therefore, current market value of Moderna is a fairly represented and reflects the current state of future revenue and profit from Covid-19 vaccine.
The upside of share price of Moderna is narrowed now and likely dependent on the development of new medicines in the pipeline. Even though Moderna and BioNTech have demonstrated the advantage of mRNA over other methods of pharmaceutical development, the time frame of a drug development is long and wide which will not help the advance of stock price. Addition to the prolong drug development, the current general market condition is in a state of volatile and uncertainty. We reduce the holding of Moderna Inc to 2% of the Portfolio III in order to preserve cash for better opportunity.
Again, concentration investing involves higher risk of significant loss without the protection of diversity.
Each individual investor should always consider their own investment goal, risk tolerance, investing span and objectives for their investment positions. Investing in securities involved the risk of total losses. Investors should always consult with financial professionals.
03/30/2023
First, I would like to apologize that a run-away-from-FRC was not recommended. The most regrettable thing for a sergeant is to lead a squad into a killing field and be slaughtered. Any excuse should not be allowed for no action.
Thanks to the Federal Reserve and the FDICs’ swift action and 11 big banks' support, First Republic is still standing. Nonetheless, The options for the First Republic have become smaller and smaller. The secretary of Treasury has expressed support for depositors but not banks. So this option is out. The Federal Reserve is considering the expansion of the emergency lending program to support failing lenders. It also indicates that the government is not willing to bail out First Republic but willing to give it more time. Third, the big banks and hedge funds are not interested in investing into First Republic or acquiring it. 11 banks who injected $30 billion as uninsured deposits are expecting First Republic to pay it back. Therefore, there are only two options that First Republic Bank would have.
First, it is falling to be another victim of mishandling risk management and bank run. Of course, nobody wants to see that happen even the government due to the fact it might trigger another confidence crisis and bank run. Second, it is probably the best option that investors of the First Republic can have. First Republic is to sell a big chunk of its assets and shrink its operation by half at least.
In the past two weeks, depositors withdrew at least $70 billion out of First Republic. All the capital infusion from giant banks and the government to stabilize First Republic are meant to be short term which means First Republic has to pay it back. In order to pay it back, First Republic must sell a large portion of its loan portfolios and debt securities. The pains First Republic is having (investors too) is the market/buyers demand a significant discount for such assets sales. FDIC just agreed to sell a large portion of loans and deposits of SVB to First Citizen Bank of Raleigh at the discount of 23%.
At the discount rate of 23% (with FDIC sharing potential losses from SVB asset sales with First Citizen), First Republic must sell $91 billion worth of assets (on balance sheet of 12/31/2022) for $70 billion of capital. It would cause $21 billion of loss for the First Republic and would wipe out all the shareholders' equity entirely. Another matter is the federal fund rate. The rapid increase of the federal fund rate will continue to pressure First Republic’s net interest margin and make it very hard for the bank to be profitable under current circumstances. The margin between net interest margin and non-interest expense is likely at 0.44% and 0.5%. The room for continuous squeeze from the federal fund rate will pressure this margin and cause operation losses. Headcount reduction should be in the process at First Republic.
The assumptions above are to provide a directional picture of the First Republic. A more complete understanding of the bank has to wait for the first quarterly report of 2023. First Republic will be shrunk to half at least in size if it succeeds in surviving, and it will take years to regain its status prior March 9, 2023.
Again, concentration investing involves higher risk of significant loss without the protection of diversity.
Each individual investor should always consider their own investment goal, risk tolerance, investing span and objectives for their investment positions. Investing in securities involved the risk of total losses. Investors should always consult with financial professionals.
03/22/2023
For Portfolio III
Position increase
Increase the holding of SIG to 20% of the Portfolio III
Again, concentration investing involves higher risk of significant loss without the protection of diversity.
Each individual investor should always consider their own investment goal, risk tolerance, investing span and objectives for their investment positions. Investing in securities involved the risk of total losses. Investors should always consult with financial professionals.
03/13/2023
For Portfolio III
Position close, cash preservation
Close the position of BNTX of Portfolio III
Close the position of TSM of Portfolio III
Close the position of OZK of Portfolio III
Thoughts for the depositors run
BNTX: Closing the position of BNTX in portfolios: 1). To focus on MRNA only; 2). To preserve more cash in portfolios. At this point of development, MRNA has advanced faster than BNTX. Also, at this turbulent time of stock market, we are moving capital to the position for better gains.
TSM: Due to the reasons 1). Future revenue growth will be lower; 2). The profit margin will be squeezed due to the higher expense of operation at Arizona facilities; 3). Politic and geographical conflict risk have increased significantly. It is almost certain China will attack Taiwan to fulfill its long time ambition if China decides to support Russia's invasion of Ukraine with weapons fully.
OZK: A simply move to increase cash reserve for better opportunity.
WARNING: Investors should caution the statements in the followings which are related to First Republic Bank (FRC). It contains assumptions, speculations. Investors should always follow their own researches and studies to guide their investment decisions. Investors should not invest in or continue to hold FRC if they feel uncomfortable or can not sleep at night.
FRC: The crisis of bank runs are real and are happening. It is real scary like 1930s, and investors should be afraid. Such action taken by depositors will lead to serious liquidity problems to FRC. If FRC does not have enough liquidity for withdraw, the faith of FRC will be same as SVB and Signature. Especially, FRC's strategy is to attract lots of wealthy clients for their deposits.
FRC has few options to fulfill mass cash withdraw. It can get capital from bigger banks and Federal Reserve which FRC announced it had more than $70 billion cash in hand on 3/12/2023. Also, suspend of dividend for common stock and preferred stocks is expected until this liquidity crunch is passed. Fire sale of its loan portfolio is last thing investors want to see because it indicates the withdraw is running deeper. And it will hurt company's deposits and loan portfolio further, and FRC would take longer period of time to recovery if it passes this crunch. Furthermore, investors should expect that FRC will generate less loans if not nothing at all in order to preserve cash. It can not be certain how long or how deep the depositors will continue to withdraw their savings.
However, this fearsome crisis also represents a rare opportunity for investors if high risk is tolerable.
Again, concentration investing involves higher risk of significant loss without the protection of diversity.
Each individual investor should always consider their own investment goal, risk tolerance, investing span and objectives for their investment positions. Investing in securities involved the risk of total losses. Investors should always consult with financial professionals.
02/23/2023
For Portfolio III
Position reduction due to the fact change
Reduce the position of MRNA to 5% of Portfolio III
Globally, government and citizen have given up to contain Covid-19 even China government had given up such effort. Citizen are ready to live with Covid-19 and with least vaccination likely.
FDA and CDC are more like than not to designate Covid-19 vaccination as annual event. The result is the reduction on sale of vaccine shoot. We believe the trend and situation is set in unless there is a terrible variant coming up.
The reduction is due to the baseline of its sale of Covid-19 vaccine is adjusted lower. Previously, the anticipation of vaccination will be in 9-month interval. Softwater Investment is still convinced the evidence of medical technologies of mRNA and its results. Therefore, keep a smaller position and participate longer run for the development in pipeline.
Again, concentration investing involves higher risk of significant loss without the protection of diversity.
Each individual investor should always consider their own investment goal, risk tolerance, investing span and objectives for their investment positions. Investing in securities involved the risk of total losses. Investors should always consult with financial professionals.
02/01/2023
For Portfolio III
Two New Positions and assets reallocation
Invesco Financial Preferred ETF (PGF), Invesco Preferred ETF (PGX), First Republic Bank (FRC), BioNTech (BNTX)
Create two new positions of PGF and PGX, each for 5% of Portfolio III.
Increase the holding of FRC to 20% of Portfolio III
Reduce the position of BNTX to 5% of Portfolio III
It is becoming more obviously and clearer than stock market that the future action from Federal Reserve is set, reducing the pace of fund rate increase and holding the fund rate at higher level until the inflation is totally under control. Eventually, the Federal Reserve will have to reduce the fund rate in the future to a level that US consumers will feel comfortable.
Either inflation is under control or economy goes to recession, the Federal Reserve will have to reverse the course of increased fund rate. In other words, the depressed price of fixed income securities will have to walk along side of interest rate and to raise their price to match their interest/dividend yield to the interest rate market. (the yield rate of a security is opposite to its price, yield = interest or dividend paid / price)
Furthermore, the banking industry will enjoy the temporary higher rate and more mortgage applications when fund rate is lowing. Of course, investors would think what if the economy goes recession and housing market goes deeper. However, First Republic Bank is likely to avoid such downfall.
Again, concentration investing involves higher risk of significant loss without the protection of diversity.
Each individual investor should always consider their own investment goal, risk tolerance, investing span and objectives for their investment positions. Investing in securities involved the risk of total losses. Investors should always consult with financial professionals.
01/19/2023
For Portfolio III
Assets relocation
Reduce the position of BNTX to below 10% of the Portfolio III.
BNTX progress is slower than expected which creates extra uncertain for its stock. In order to reduce the price risk, reduction of its stock holding is preferred. Also, increase cash in hand for better opportunities.
Again, concentration investing involves higher risk of significant loss without the protection of diversity.
Each individual investor should always consider their own investment goal, risk tolerance, investing span and objectives for their investment positions. Investing in securities involved the risk of total losses. Investors should always consult with financial professionals.
12/16/2022
For Portfolio III
Increase holding
Increase the position of FRC to 10% of the Portfolio III.
Increase the position of SMLR to 6% of the Portfolio III.
Again, concentration investing involves higher risk of significant loss without the protection of diversity.
Each individual investor should always consider their own investment goal, risk tolerance, investing span and objectives for their investment positions. Investing in securities involved the risk of total losses. Investors should always consult with financial professionals.
12/13/2022
For Portfolio III
Increase holding
Increase the position of SIG to 10% in the Portfolio III.
Management and members of Signet Jewelers continue to execute sound strategies and gain customers satisfactory. Although there are economical headwinds against the company, expectation that Signet Jewelers will perform well is positive.
Again, concentration investing involves higher risk of significant loss without the protection of diversity.
Each individual investor should always consider their own investment goal, risk tolerance, investing span and objectives for their investment positions. Investing in securities involved the risk of total losses. Investors should always consult with financial professionals.
12/07/2022
For Portfolio III
Asset Allocation
Pfizer (PFE), Mastercard Inc (MA)
Close the position of PFE and MA in the Portfolio III
Search for better ideas for the money. It is also a good idea to keep these two positions if investors feel comfortable with them.
Each individual investor should always consider their own investment goal, risk tolerance, investing span and objectives for their investment positions. Investing in securities involved the risk of total losses. Investors should always consult with financial professionals.
11/25/2022
For Portfolio III
New Position
Create a new position 5% of Portfolio III for First Republic Bank
First Republic Bank is a time-approved bank. It has navigated through dotcom bubble of 2001, housing bubble and crash of 2005-2011, financial crisis of 2008. In those time of crisis, it continued to grow their deposit base and loan portfolio. Even company thrived when dotcom bubble busted and many company in CA failed in which company has its majority of customers.
First Republic's strategy is to focus on high income and wealth individual and households. Those borrowers rarely default their loans and more likely have plenty of liquid assets. First Republic not only bring in those ample liquid assets as deposits for loans generation also is able to attract wealth managers for its customers from loan base. Company's unique services are famous among high income and wealth clientele. Company's focus and business model are very straight forward and its executions are very focus and consistent.
First Republic grows its business not rapidly but with above average rate for long span of time. Long term investors should benefit well with their success.
Each individual investor should always consider their own investment goal, risk tolerance, investing span and objectives for their investment positions. Investing in securities involved the risk of total losses. Investors should always consult with financial professionals.
11/13/2022
For Portfolio II, Portfolio I
Accumulation of fixed income and index funds
Invesco Preferred ETF (PGX), Invesco Financial Preferred ETF (PGF), SPDR S&P500 ETF (SPY), Invesco QQQ Trust (QQQ)
Pace of increase fund rate decline
Higher rate stay longer
Bond market stabilize
Economy and job market health and strong
Long term investment
In the past few months, inflation continues to decline slowly but it is on a trend Federal Reserve would like. The better than expected decline on CPI from Oct, 2022 gave the hope that Federal Reserve will soon ease the pace of federal fund rate increase. The reaction from stock market and bond market represents the hope. Even the yield on 10-yrs treasury dipped below 4% in the past two trading days.
It is much clear for bond market than stock market. More likely than not, Federal Reserve will only raise the fund rate 0.5% on December meeting. More or less than 0.5% that will bring negative or positive impact to both stock and bond market. The pace of growth of PCE (personal consumption expenditures) which is an important data to watch before December should decrease continuously (See the TTM rolling change on PCE). As the data suggest (green column and red column), the difference between PCE and CPI continues to shrink since May 2022. Look back on March 2021 (yellow row), PCE had a big jump and the CPI followed and began its acceleration next month (blue column). As information suggest, the PCE is usually around 2% ahead of CPI on TTM rolling and YoY basis when examine the data before the Pandemic. It makes sense that consumers spend more and the price of goods and services will equally be pushed up. Ease on the pace of PCE growth will help continuous decline of inflation and deacceleration of fund rate increase. It is why the interest rate and bond market have a more completed picture now. it is to say that interest rate and bond market is or near bottom. However, it should be expected that higher interest rate will be here to stay, a bite longer (more than one year). It will highly depend on the decline of inflation. The faster decline of CPI, sooner the Federal Reserve will loosen monetary policy. Therefore, the price of PGX and PGF should stay low a while unless interest rate declines faster than expect. Continue to build up the position of PGX and PGF for Portfolio II is good for income increase in the future and retirement.
It is perceivable that economy will continue to growth with a slower pace as long as growth of PCE is in a positive territory. So far, job market is still strong but less robust, even the layoff is moderate in scale for technology sector except for Snap, Meta and Twitter (it will be another situation if Microsoft, Apple do). The average hourly wage continue to rise and average weekly hours is still above pre-Pandemic level. Also, jobs available to employee available is still near 2:1 level. People feel pain and frustrated is not at the economy side but at inflation problem.
However, stock market is another story. Corporation earnings at S&P 500 index and Nasdaq index have been slowly and moderate declining in the past several months, but they are still way above 2021 level (YoY growth). The major question is that bankers, money managers, economists and analysts usually set the tone for stock market, and there will be positive surprise or negative impact on individual stock or market as whole when actual data is announced. That is the story of stock market. Stock market is perspective and expectation but not totally related to fact and data. The stock market now is like you went to buffet in 2021 and eat too much (meaning companies had super earning and market got super charged in 2021), and there is 2022 now. The big jump in stock market on 11/17/2022 reflect that perspective and expectation.
What is the expectation ahead for stock market? Can not say with any certainty. In fact, that job market is strong and increase of consumers spending will ensure the growth of economy; however, longer period of high interest rate will put a downward pressure on spending for both consumers and corporations. What is more certain is slower growth on PCE will lead CPI down, and they will lead stock market to a better mood. Wishful thinking is to get PCE to a 4% level on TTM rolling/YoY basis; in turn, it will lead to 2% inflation.
For Portfolio I, the strategy is always the same, invest in index fund (SPY or QQQ) regularly, because investors are investing in economy as whole (not individual company) and time is on your side.
For more information, visit Federal Reserve St. Louis and download data.
Each individual investor should always consider their own investment goal, risk tolerance, investing span and objectives for their investment positions. Investing in securities involved the risk of total losses. Investors should always consult with financial professionals.
11/07/2022
Update LNPs
Moderna, BioNTech
It is clear now that both Moderna and BioNTech did not develop their own LNP and used third party LNP products. Softwater Investment believes that more likely than not that Moderna and BioNTech will lose the lawsuits. However, the impact on Moderna and BioNTech would not be significant financially. It is more likely that both mRNA vaccine makers have to pay royalty to Arbutus Biopharma for using LNP.
11/02/2022
For Portfolio III
Reduce risk
Semler Scientific (SMLR)
Reduce 50% of current holding of Semler Scientific (SMLR)
It is a result that did not match expectation. Reduce 50% of holding to protect the probability of further decline. However, additional investment will be warranted if price become more appealing.
Each individual investor should always consider their own investment goal, risk tolerance, investing span and objectives for their investment positions. Investing in securities involved the risk of total losses. Investors should always consult with financial professionals.
10/16/2022
For Portfolio II
For dividend
Invesco Preferred ETF (PGX), Invesco Financial Preferred ETF (PGF)
Purchase additional shares of PGX or/and PGF by using monthly dividend paid from PGX and PGF in Portfolio II
The price of PGX and PGF may or may not continue to decline while Federal Reserve continues the proceed of tightening money. But the accumulation of PGX and PGF position will allow the increase of dividend payout with increased yield (if price continues its decline) and additional shares.
Further, the dividend can be used to purchase additional index funds/ETFs when Federal Reserve eases on money tightening and stock market begins to stabilize. We believe this strategy can increase future value growth and paid dividend for the Portfolio II.
In another way, if investors would prefer to have more weight on value growth, the dividend received from PGX and PGF can be utilized for investing in SPY and QQQ now.
Each individual investor should always consider their own investment goal, risk tolerance, investing span and objectives for their investment positions. Investing in securities involved the risk of total losses. Investors should always consult with financial professionals.
09/22/2022
For Portfolio III
Capital preservation
Reduce MRNA to 7% of the Portfolio III.
Reduce BNTX to 10% of the Portfolio III.
After President Biden stated that Covid-19 pandemic was over, Congress is almost not going to fund any Covid-19 related budget. The request for further Covid-19 vaccine shots is murkier in the United States than EU due to the difference in healthcare systems.
From here, MRNA and BNTX should be treated as two totally different investments. In the past year and half, the medicine developments in pipelines from both companies have begun to show differences in progress. To view the pipelines & progress, click: BNTX, MRNA.
We believe BNTX having better progress in their medicine development in the pipeline than MRNA; hence, more weight is putting on BNTX.
Scale back investing in MRNA and BNTX is to preserve capital for future when requirement for Covid-19 vaccine shots on guideline is clearer. Softwater Investment is seeking the probability that 40% of current vaccinated population will continue the shots with older, immune compromised and high risk population having extra shot annually, same rate as annual flu shots in the United States, except for population in China, Russian, Indian, and some regions in Africa and Americas.
p.s. Investors should have zero expectation that China will utilize vaccines from either BNTX or MRNA. Clinical trial for BNTX in China currently was stuck in phase II for original SARS-cov-19 strain.
Each individual investor should always consider their own investment goal, risk tolerance, investing span and objectives for their investment positions. Investing in securities involved the risk of total losses. Consulting with financial professionals is always recommended.
09/21/2022
For Portfolio III
Increase position
Add 2% of the portfolio to the current holdings of XPEL
Add 2% of the portfolio to the current holdings of SMLR
Each individual investor should always consider their own investment goal, risk tolerance, investing span and objectives for their investment positions. Investing in securities involved the risk of total losses. Consulting with financial professionals is always recommended.
09/01/2022
For Portfolio III
Capital preservation
Reduce 50% of current holding of SIG.
Softwater Investment continues to believe that SIG is still undervalued at current price; however, market as usual continue to give a low earning multiple to SIG. In order to come back later, we believe that capital preservation for purchase of SIG later is a good option.
Each individual investor should always consider their own investment goal, risk tolerance, investing span and objectives for their investment positions. Investing in securities involved the risk of total losses. Consulting with financial professionals is always recommended.
08/09/2022
For Portfolio III
Initiation of A New Position
Initiate a position of 4% of the portfolio III for Xpel Inc (XPEL).
Xpel Inc is a small company who provides protective film for multiple purposes. The most significant impression from the company is the CEO and president of the company, Ryan Pape, rescued the company from the edge of bankruptcy. Even more, at that time, he used personal credit card to pay off an obligation that the company had promised, putting his money where his mouth is, and that is what we love . Also, its ability to compete with giant industrial leader, Minnesota Mining Manufacturing, has put Xpel on the top of market place.
However, investors should aware that stock market has put a premium in the stock price of Xpel. The stock price may incur significant pull back if the company's performance is out of investors' expectation.
Each individual investor should always consider their own investment goal, risk tolerance, investing span and objectives for their investment positions. Investing in securities involved the risk of total losses. Consulting with financial professionals is always recommended.
08/02/2022
For Portfolio III
Initiation of A New Position
Initiate a position of 2% of the portfolio III for Semler Scientific Inc (SMLR)
Semler Scientific is a small company with only one significant product, QuantaFlo, which is for detecting PAD (Peripheral Artery Disease). Comparing to QuantaFlo for diagnosis of PAD, the traditional Doppler tests are less convenient and more expensive. Another advantage Semler has is that QuantaFlo is the only competitive product against Doppler test in market for now.
However, SMLR is much fairly valued at this price. Also, due to its small size of business and revenue, investing in SMLR involves higher risk.
Each individual investor should always consider their own investment goal, risk tolerance, investing span and objectives for their investment positions. Investing in securities involved the risk of total losses. Consulting with financial professionals is always recommended.
07/14/2022
For Portfolio III
New Position
Increase the position of O'Reilly Automotive Inc to 4% of the Portfolio III
O'Reilly Automotive continues its outstanding performance. Also, the economy environment and the trend of car ownership continue to favor O'Reilly's business. Due the fairly well valuation of ORLY, moderate position increase is sound.
Each individual investor should always consider their own investment goal, risk tolerance, investing span and objectives for their investment positions. Investing in securities involved the risk of total losses. Consulting with financial professionals is always recommended.
06/23/2022
For Portfolio II
For dividend
Invesco Preferred ETF (PGX), Invesco Financial Preferred ETF (PGF)
Increase each position of PGX and PGF to 10% of the Portfolio II
The dividend received from PGX and PGF can be utilized further for investing in SPY and QQQ later.
Each individual investor should always consider their own investment goal, risk tolerance, investing span and objectives for their investment positions. Investing in securities involved the risk of total losses. Investors should always consult with financial professionals.
06/16/2022
For Portfolio II
For Asset allocation
Vanguard Utilities ETF (VPU), Invesco Preferred ETF (PGX), Invesco Financial Preferred ETF (PGF)
Decrease the position of VPU to 5% of Portfolio II
Increase the individual position of PGX and PGF to 8% of the Portfolio II
The dividend received from PGX and PGF can be utilized further for investing in SPY and QQQ.
Each individual investor should always consider their own investment goal, risk tolerance, investing span and objectives for their investment positions. Investing in securities involved the risk of total losses. Investors should always consult with financial professionals.
06/14/2022
For Portfolio II
For Asset allocation
Vanguard Utilities ETF (VPU)
Decrease the position of VPU by 50%
The decrease for holding of VPU is to increase cash position in order to take advantage of market decline, mainly SP 500 and Nasdaq. We believe market will stabilize when inflation (main focus in Walls Street now) is slowing down as well as the speed of interest rate hike is slowing down.
Combination of increase position of PGF & PGX which paid dividends and decrease position of VPU will increase the position of cash. Cash will provide purchasing power to increase position on SP 500 (SPY) and Nasdaq (QQQ) in near future.
Necessity of holding the position of VPU is different for each individual investor. Each individual investor should always consider their only investment goal, risk tolerance, investing span and objectives to determine their investment positions.
Investors should be aware the inflation now is a global situation. It is everywhere not just in United States because we all connect to each others. Patient is probable the best prescription now. That McDonald in Taiwan announced the running out of French Fried recently is today's global economic.
06/07/2022
Signet Jewelers (SIG)
Increase the position of Signet Jewelers to 10% of the portfolio III
Here in Software Investment, we intent to further increase investment in SIG. Since 2017, CEO Gina Drosos has re-made Signet Jeweler as a corporation of new generation, change company culture, re-focus on business of jewelers. SIG has demonstrated its capability and capacity to outperform the company of 2017.
05/26/2022
For Portfolio II
Tools for Retirement Income - PGX, PGF
Invesco Preferred ETF (PGX) - including broad range of preferred stocks
Invesco Financial Preferred ETF (PGF) - focus on preferred stocks from the companies in financial sector.
Preferred stock is a hybrid product between common stock and bonds, and it usually is included in equity of a balance sheet. However, it should be treated as debt for common stockholders' concern. Preferred stock generally has following characteristics:
It has seniority than common share to claim assets, which is not much, if company go bankrupt or liquidated.
Usually, preferred share does not have voting right but some may be converted into common share.
Most of them pay dividend regularly, but unlike bonds, the board of director can suspend dividend payout if they deem necessary.
Like bonds, preferred share can be called back and cease to exist.
There are about 10 ETFs which manage preferred stocks. iShares Preferred and Income Securities ETF (PFF) has a "Gold" rating from Morningstar.com and the largest NAV. However, we prefer PGX and PGF because their 10-year performance are the top two and are always above the performance of index and category sectors. Also, their distribution is more constant than PFF.
There are concern when invests in preferred stock products. Like any securities, preferred stock price is volatile too. Dividends are always cut first when companies is in need of cash (interest on debts must be paid, but dividend for common and preferred shares are not guaranteed). The suspend of dividend always leads to price decline dramatically because preferred stock does not have the luxury of price appreciation. Another major factor is interest rate. Increase in interest rate usually depress the price of preferred stock which in turn increases distribution yield, especially multiple rates hike now. CDs will become a better choice when interest rate on CDs is equal or better than preferred share can provide.
The link here provide some info about distribution of PGX, PGF, PFF which is gathered from Charles Schwab & Co. Investors should find the similar pattern/trend of distribution and yield of PGX, PGF, PFF comparing the historical chart of Fed fund rate (link). Please aware that the history of ETFs is short comparing the history of Fed Fund Rate.
05/13/2022
Price and Fear
Mr. Benjamin Graham had said Mr. Market always has a swing mood. He had a very happy mood for one and half year. Then, the mood turned sour at the end of last year. Right now, all he sees is troubles.
Inflation is damaging purchasing power, especially, for the lower income class
Inflation is increasing the pressure on corporation's cost which turns into higher product price
Job opening is much higher than employees available for hire (it usually is good thing for economy) which leads to wage increase and increase the demand side of economy.
Supply chain constraints is still in play since pandemic
In addition, Ukraine war is causing supply shortage and fueling inflation further
Moreover, China government implements more lock down due to the surge of Covid-19 further damaging supply chain's recovery
Corporations begin to issue warning, slow hiring or cut cost
Mr. Market can not see the light at the end of tunnel, and all he sees is darkness ahead (market always look ahead, not history). Indeed, his worry is not unfunded. However, Walls Street always sell first ask later even Fed Reserve's has emphasized that economy is strong enough to withstand the impact. Mr. Market still can not control himself.
The silver lining of the stock market decline has created a situation which probably is welcome by Federal Reserve, decrease of demand side of economy. That the wealth is vanished because of the decline has the same effect as increase in interest rate, a decrease of disposable saving. That effectively decreases the purchase power of consumers and put a brake on inflation. The inflation actually, by itself, will create a force that put pressure on consumer spending. Economy is always able to adjust itself to the dynamic with strong resilience.
It is a difficult situation on global supply chain and China's lock down on Covid-19. Due to the constraints of supply chain during pandemic, expectation is that more corporations will try to move manufacturing capacity out of China. However, it takes decades to build the capacity in China, and it will take more than decades to undo it. China authority should reconsider zero Covid-19 policy. Zero Covid-19 policy seems unfeasible due to Omicron and ineffectiveness of vaccines (Chinese government has not approved any vaccine invented by foreign companies). If past experience is a good indicator, the cases in China will be subsided but the probability of resurge is high. Chinese authority will improve and resolve manufacturing constraint because Chinese government understand that they can not walk back to isolation of chairman Mao regime and do not want their economy decayed.
Will we be in recession? It is uncertain. Also, corporations in S&P500 do post slower growth for earning in the past few months. Keep in mind GDP is a different from Corporation earning; it is one of factors.
How can Mr. Market see the light ahead? History. For the past of hundred years, the economy in United States has more than several hiccups, wars, great depression, bubbles, great recession and pandemics. At the end, we come out more than OK.
Strategically, investors have great advantage on their side, TIME, the most important factor of compounding and PRICE, another compound factor. Price is connecting to today's market decline. Imaging stock market as an apple, it sells for $2 dollar one year ago, and it sell for $1 dollar now. Should consumers be more than happy to buy more. In 2022 Berkshire Hathaway annual meeting, Mr. Warren Buffett said that Bershire Hathaway or he will buy more if Apple Inc stock continues to decline.
Will market continue to decline? The answer is uncertain, but the price paid for the same value is becoming more attractive. See market decline as same as on sale at local super market, then investors should have different perspective. Do investors' purchase power increase when market declines?
04/06/2022
Axos Financial (AX), Cracker Barrel Old Country Store (CBRL), Signet Jewelers (SIG)
Decrease current position by 30% for the following securities
Axos Financial (AX)
Cracker Barrel Old Country Store (CBRL)
Signet Jewelers (SIG)
04/06/2022
Axos Financial (AX), Cracker Barrel Old Country Store (CBRL), Signet Jewelers (SIG)
Decrease current position by 30% for the following securities
Axos Financial (AX)
Cracker Barrel Old Country Store (CBRL)
Signet Jewelers (SIG)
03/24/2022 - Moderna Inc. (MRNA), BioNTech SE(BNTX)
Increase the position of MRNA to 17% of the portfolio(III)
Increase the position of BNTX to 17% of the portfolio(III)
Caution: Concentration risk should be considered seriously relate to significant loss, financial burden, tolerance of risk, investment objective before investing heavily in one company. More information for concentration risk on investment from FINRA.
03/22/2022 - Portfolio(I)
It is a good opportunity to add more cash to future retirement @ portfolio(I).
There is not much to consider in what to invest for diversity if the Portfolio(I) is in an employer- or government-sponsored contribution account such as TSP, 401(k), 403(b). It can be more flexible if the portfolio(I) is in an individual retirement account or brokerage account.
Beside our favorite SP500 index funds/ETFs, there are investment elements which can be helpful to strengthen and bring diversity to the Portfolio(I).
SP500 index fund/ETF - SPY - 40% of the Portfolio(I)
Energy/Utility index fund/ETF - VPU (Vanguard Utilities ETF) - 15% of the Portfolio(I)
To increase the weight of energy/utility sector in investment. How frustrate would you feel if there is an outage? How many electronic devices do you have? Also, utility sector is more resilient during economic downturn.
NASDQ index fund/ETF - QQQ (Invesco QQQ ETF) - 25% of the Portfolio(I)
Technology is not only the fast forward sector of an economy but also it is an important element that supports and advances other industries. Therefore, increase investment in this section should bring higher return to the portfolio.
Defense index fund/ETF - XAR (SPDR S&P Aerospace & Defense ETF) - 10% of the Portfolio(I)
It is very obvious why softwaterinvestment.com would include this element in Portfolio(I). The rising power of autocracy around the globe should bring a loud siren and an awake to the dream that autocracy is a friend of democracy. Do not rely on NO invasion from enemy but depend on the full readiness of defense - SUN TZU, The Art of War. So as Portfolio(I)
Manufacture index fund/ETF - VIS (Vanguard Industrials ETF) - 10% of the Portfolio(I)
The choice of manufacture index is the extension of investment in defense. Defense would require a heavy investing in manufacture to bring about production for defense needs.
Other sectors of SP500 are equally important for our economy, such banking, services, hospitality, consumer products. However, from view point of return on investment, the abovementioned sectors should increase overall performance for Portfolio(I).
Note: the ETFs mentioned above, SPY, VPU, QQQ, XAR, VIS are not a recommendation nor an advertisement for the companies who provide those ETF. Nevertheless, they have good rating from Morningstar. As usual, investors should always study the subjects and consider the risks and personal tolerance before investing.
03/15/2022 - Moderna Inc. (MRNA), BioNTech SE(BNTX)
Increase the position of MRNA to 13% of the portfolio(III)
Increase the position of BNTX to 13% of the portfolio(III)
According the guidelines provided by Pfizer Inc and Moderna Inc, the estimated revenue of fiscal 2022 from vaccine sale will be at same level as in 2021. The assumption here is that the level of net income for 2022 should be similar to 2021. At current market price, Moderna is trading at approximate slightly above 2 times of its end-of-fiscal-2022 book value if the assumption is correct. Also, the shares of BioNTech are trading at the level slightly below 2 times of its end-of-fiscal-2022 book value if the vaccine sale of 2022 is realized. From the prospect of value on balance sheet, we, in softwaterinvestment.com, believe the shares of MRNA and BNTX are considered cheap for a long term investment.
We consider the book value is an useful tool although financial world regards it as an obsolete tool. Even some public companies have totally abandon their equity value by buying back too much their own stock which cause the equity value becomes negative.
Softwaterinvestment.com believe that equity is foundation of a company, and it is a safe place to fall back when company's net income slowed as bad time comes.
03/07/2022 - Pfizer Inc (PFE)
Initiate an investment position of 4% of the portfolio(III) for Pfizer Inc (PFE)
Invest in COVID pill and dividend
No study work and financial information are posted on softwaterinvestment.com
03/01/2022 - Moderna Inc. (MRNA), BioNTech SE(BNTX)
Increase the position of MRNA to 10% of the portfolio(III)
Increase the position of BNTX to 10% of the portfolio(III)
01/21/2022 - Signet Jewelers (SIG), Snowflake (SNOW)
Sell majority holding of SIG, and keep a portion of shares as 10% of the portfolios
Sell all shares of SNOW
To preserve cash for future investing power.
12/31/2021 - Stay Positive and Test Negative - CNN
12/29/2021 - Review and Forward
Market continues its ups and downs while maintaining upward trend; however, the value of the portfolios at Softwaterinvestment.com have declined significantly since its peak few months ago. The stock price of a company is usually determined by two major factors, perspective & prospective of a company(either positive or negative), company's performance.
First, investors will react to a company with their perspective & prospective how company will perform and give it a expected price. Second, investors will get the confirmation of their perspective & prospective when the company reports its financial performance. If the confirmation is positive, the price of the company will continue on its trend or little change at angle. Conversely, the trend of the price will reverse its course if the company's performance has a significantly opposite impact on investors' perspective & prospective. For example, at the beginning of the COVID pandemic, market saw a dire situation ahead with not much of resource and clarity for corporations, so market changed its course and declined sharply. Gradually, companies responded to the situation and made their progresses. Month by month, American corporations improved their financial performance and market reversed its courses.
How does the trajectory of the stock price of a company maintain or change? It is always the performance of a company because the performance either confirm or reject the perspective & prospective of investors.
The following is the perspective & prospective from softwaterinvestment.com for the securities held.
Axos Financial (AX): As long as AX continues its management's philosophy and style, the belief in here has not changed and AX shall have better performance in business and stock price than general market in next several years.
Bank OZK (OZK): the trend of continuous movement of retirees to the sunny state has not changed. However, OZK's loans and projects are always larger in size which will lead to higher degree of volatile in business performance. Its business performance would be slightly better than market but less than AX. Moreover, its ability to increase dividend is a huge plus.
Cracker Barrel Old Country Store (CBRL): the slower recovery and growth are expected especially its majority business located in rural areas. Its better growth will be depended on Maple Street Biscuit. Softwaterinvestment.com is looking forward the recovering dividend distribution. The dividend yield will reach low teen comparing the original cost of investment on CBRL if company resumes its dividend payout to pre-COVID level. Its price advance will be less than market from now on. It is a good company for long term as long as its total return maintains at mid-teens level.
MariMed (MRMD): its main attraction is its low price/valuation, and its potential will be depended on the performance of management whose stewardship is not impressed. On the brighter side, the prosperity of cannabis business is the plus. Quarterly observation will be the determination of MRMD holding until management is proven otherwise.
Mastercard Inc (MA): MA will always be one of holding in softwaterinvestment.com. It is in everyone's pocket in U.S. with one form or another. Addition holding is encouraged if there is sharp decline and fair valuation is presented.
O'Reilly Automotive Inc (ORLY): ORLY continues to outperform its rival AutoZone and Advance Auto. Moreover, its business model is proven and able to fence off Amazon.com. Softwaterinvesment.com would like to increase its position if opportunity presents itself.
Signet Jewelers Limited (SIG): SIG has continued its astonishing improvement since 4 years ago. Company keeps surprising investors with outstanding performance. One should have had SIG as one's own company. Comparing $3.82 earning per share of fiscal 2020 to $18.20 per share original cost of investment for SIG, the return of 20.98% (=3.82/18.20) is impressive. Furthermore, comparing the expected earning of more than $10 per share in fiscal 2022 (end on 01/31/2022) to the investment of $18.2 dollar per share, the result is an astonishing return of more than 50% (=10/18.20). It means that investor deposit $100 to the bank of SIG, and SIG pays back $50 dollar or more annually if business performs constantly. Does anyone not want to wholly own such a company? Softwaterinvestment.com would have bought and locked the SIG in a vault in the Headquarter of JP Morgan Chase Bank. However, as individual investors who is unable to wholly own SIG for now must sell a part of holding in order to obtain cash. Therefore, at some point when the price of SIG reaches over its fair valuation, softwaterinvestment.com will sell a portion of current position in order to retain cash for other investments.
Snowflake Inc: SNOW is in the progress as a young company. However, due to its overvaluation, softwaterinvestment.com believes that its business has to catch up with its stock price. SNOW is the holding that most likely to be close if cash reserves become urge necessary.
SolarEdge Technologies Inc (SEDG): SEDG reached its overvaluation a year ago. SEDG will require continuous robust business performance to sustain its stock price advance. Technologies advantage and prosper of renewable energy are on its side. Softwaterinvestment.com will continue to hold the position unless the abovementioned factors change.
Taiwan Semiconductor Manufacturing (TSM): Taiwan's geopolitical risk is always a concern for TSM. However, the leadership in China understands that a military conflict involved Taiwan and United States always presents a potentially huge impact on China's economy and global businesses. Even the capacity and capability of China's military are more than enough to invade Taiwan, China leadership is expected to focus on economy and stability in internal regions unless its internal instability increases. the plans to manufacture facilities oversea announced in this year, AZ USA, Japan, German, will have the diverse effect on geopolitical risk. Softwaterinvestment.com will consider to increase the position on TSM if more than 50% of production is generate from oversea.
BioNTech SE (BNTX) and Moderna (MRNA): Sars-Cov-2 continues its course to spread globally. Choice of vaccination continue its battle with human nature and biological nature. It is the belief in softwaterinvestment.com the battle of COVID pandemic will be the determination of the stocks of BNTX and MRNA in near term. And, of course, the perception of reduction for necessity to vaccinate population beyond 2021 will diminish the prospective of the value of MRNA and BNTX and cause the descending for the stock price of MRNA and BNTX. When will it be clear that vaccination is no longer required? Answer to that question requires time. But the researches show
Antibodies will remain effective in six months after fully vaccinated except for Omicron variant
Antibodies which are obtained by vaccination or infection will be waning especially after six months repeatedly. That is why there are many cases of re-infection.
Booster or extra shoot will increase the level of antibodies which are waning fast after 6 months of fully vaccination.
What are unclear now
Is booster or another shot required to protect global population in order to maintain current status or better?
For how long does the requirement for the continuation of booster or another shot last? As Omicron cause mild symptoms on vaccinated in most cases.
Will government continue to pay the bill of vaccination and other treatments for COVID or insurances have to take over? as Kroger change its policy that unvaccinated has to pay extra monthly insurance premium and without pay for COVID leave unless state says otherwise.
Will COVID evolve more variants and cause more trouble for human?
Will Sars-cov-2 eradicate itself or become a seasonal flu? It is the decision that Sars-cov-2 has to make, we can not
There are so many unknown and discusses. Softwaterinvestment.com will only rely on COVID & its variants and the business performance (not price) to determine the value of MRNA and BNTX despite the noise of vaccination including choice of preventive measure and treatment measure. Month by month, quarter by quarter, if the vaccine necessity is reduced and the business of BNTX and MRNA perform accordingly, the position of BNTX and MRNA should be reduced to reflect the valuation change. However, if the stock prices of MRNA and BNTX reach to a point which the shares become undervalued, softwaterinvestment.com will increase the position of BNTX and MRNA. It is the belief here at softwaterinvestment.com, BNTX and MRNA are the two companies of a generation and future medicines due to their advanced technologies and capabilities. Patient will be a must-needed for investment in MRNA and BNTX.
The importance of idea for BNTX and MRNA here is softwaterinvestment.com would like to manage and maintain the position while navigating the fluid situation of Sars-cov-2.
12/12/2021 - Moderna Inc. (MRNA), BioNTech SE(BNTX)
This is a cautionary list to protect oneself for investment in MRNA and BNTX:
It looks like market's hype about COVID-19 vaccination beyond 2022 is fading.
This situation dramatically increases the market risk on the shares of MRNA and BNTX. Softwaterinvest.com can not predict the share price of MRNA and BNTX.
Individual investors should always consider the burden of financial and psychological tolerance.
Investors should reduce the weight of investment in MRNA and BNTX if the market volatile creates intolerable distress in any way.
However, softwaterinvestment.com believes the value (not price) of Moderna Inc and BioNTech SE have not change (Price is what you pay and value is what you get - Warren Buffett).
Individual investors should consider following questions to address personal need:
How much investment in MRNA and BNTX will make investors feel no stress?
Will the money invested in MRNA and BNTX be needed for other purpose in 1, 3 years or longer?
What is the horizon of investment on MRNA and BNTX, 5 years, 10 years?
Do the money invest in MRNA and BNTX for COVID vaccine only or for the companies?
Will the decrease in value of investment cause financial difficulty?
Is fund invested in MRNA and BNTX for emergent use (which should always keep aside)?
Is this investment for retirement and when will it be needed?
How much loss in investment will cause investors' financial or psychologically distress or both?
What is the strategy if the price of MRNA or BNTX decreases 30%, 50%, or more than 60%?
Individual investors should be able to rest and invest comfortably if the honest answers are given and plans and strategy are in place.
12/01/2021 - Moderna Inc. (MRNA), BioNTech SE(BNTX)
Repurchase back the shares of Moderna Inc and BioNTech SE. The amount to repurchase should be equal to the amount (dollars) sold on 11/05/2021
Consider equal amount (dollar) of investment for Moderna Inc and BioNTech SE
As the operator of softwaterinvestment.com, I apologize to investors here for the impulse, foolish, terrible and panic-like mistakes made on 11/05/2021. The decision to sell those shares of Moderna and BioNTech is not well thought out and is inconsistent with long term investment strategy, and is also against the original studies.
First mistake was that it was against original thought which led to study of MRNA and BNTX. Original thought was as
Global population: 7,800 million
Excluding population of China and Russia:
7,800 - 1,402 - 145 = 6,253 million (assume both countries will not use vaccines developed from other countries
6,253 * 70% = 4,377.1 million (hypothetically, 30% of population would not be vaccinated)
MRNA: 4,377.1 * 20% * 1.5 * $15.00 * 35% = $6,893.93 million
Assume MRNA got 20% of 4,377.1 million population vaccinated
Everyone got 1.5 doses annually
$15.00 per dose
35% of Net margin
Hypothetical revenue: $19,696.95 million
Hypothetical net income: 6,893.93 million
BNTX: 4,377.1 * 50% * 1.5 * $15.00 /2 * 35% = $8,617.41 million.
Assume Pfizer and BioNTech got 50% of the 4,377.1 million population vaccinated.
Everyone got 1.5 dose annually
$15.00 per dose
Pfizer and BioNTech split revenue equally
35% of Net margin
Hypothetical revenue: $24,621.18 million
Hypothetical net income: $8,617.41 million
Those numbers led to the belief that MRNA and BNTX are not overvalued and are good opportunities for investment
One of the original thoughts is assuming COV-19 will last beyond 2022. No pandemic is a good thing, but the terrible reality creates such a situation which leads to this conclusion. And, the real situation today cements the original thought playing out as it was.
The mistake is derived from the thought that the assumed 70% of 6253 million population will be affected by COVID-19 pills from Merck and Pfizer; however, the reality is probably the opposite. Instead, the pills and other treatments should be able to help the gap of assumed unvaccinated 30% of 6253 million population and break-through cases.
Hence, the sale on 5/11/2021 is unwise.
Second mistake is the sale of MRNA and BNTX causes unnecessary short term capital gain with a probable higher tax bracket. Such tax is unnecessary and costly.
Third mistake is the repurchase back actually increases the cost of investment and misses the window of opportunity. The estimated loss of opportunity is about 40% which is about a more than 2-year gain for the S & P 500 index in average circumstances.
Repurchase & Equal Weight
More than 100 years of experience from Pfizer in the pharmaceutical industry and its global network provides tremendous help to BioNTech from global clinic trials, material procurement, production, distribution and connection with other pharmaceutical companies. Their partnership provides more benefit to BioNTech than what Pfizer gets
Even Moderna provided the first dose example, Pfizer’s well established network of global partners accelerates through all stages of processes.
Moderna is getting far behind on clinical trials of every age group. Moderna will get the final answer from FDA beyond 2021 for its vaccine for the age of 5-11. However, BioNTech-Pfizer vaccine got FDA emergency approval for age of 5-11 on 10/29/2021.
Moderna encounters more difficulties to scale up material procurement, production and distribution of vaccines even Moderna’s vaccine has better tolerance for storage.
The advantages BioNTech got from Pfizer is very obvious now. Comparing the financial results between MRNA and BNTX for the past three quarters, BNTX has better results from revenue to net income, especially the delivered doses of vaccines. BNTX (50% of total delivered by Pfizer and BioNTech) has delivered 50% more doses than MRNA did.
However, Moderna will have a better global network than BioNTech after the struggle Moderna encountered these days.
Consider an equal weight investment for both MRNA and BNTX due to the fact that BNTX gets the extra benefit from PFE.
The focus will be on the subject of necessity for booster shoots beyond 2022 to control COVID-19. It looks like we as human beings will have to live with COVID-19 as it becomes an endemic disease. Will an annual booster be required to maintain a dynamic constant state of endemicity? It should be clearer in 2022.
Again, apology for the cost and anxiety of the sale on 5/11/2021.
11/16/2021 - MariMed Inc. (MRMD)
Initial Investment: 4% of the portfolio(III)
Caution before investing in MariMed Inc (MRMD).
MariMed Inc is trading on OTC which has least restrict rules for listing.
Most securities traded on OTC are not covered by traditional sell side security analysts; it means that securities traded on OTC are less scrutinized by professionals and public.
The price of securities traded on OTC almost are very volatile and easily influenced by market.
Due to the nature of MariMed Inc. (MRMD)
It is more likely to be impacted by competitors because of its small operation.
Slow growth is more likely due to the constraint of limited licenses issued by states which would constrain its ability to expand to more locations.
The reasons that MariMed Inc can be a good investment are:
MariMed can provide a long term growth even though it may not be robust.
MariMed begins to have positive free cash flow and has steady growth of revenue in the past few years.
MariMed is small and, the price is low now.
After the observation of activities from cultivation & production facilities and dispensaries in MA & IL, it is Softwater Investment's belief that the business of MariMed Inc is sound and easily seen.
The strategy MariMed Inc deployed is working well. (Help clients obtain cannabis licenses, develop facilities and dispensaries for leasing to clients, generate revenue from rentals and fees for facility management and operation. Acquire clients' businesses and their state cannabis licenses when cannabis adult-use is legalized in the state.)
Of course, there are downsides which are required extra close attention:
The stewardship of management at MariMed Inc. Some of the transactions between MariMed and executives are legit, and they are derived from the arrangement of acquisitions and merges. However, too much always not a good sign. It is necessary to pay attention to the manners.
Due to it small size, it is also a good idea to closely watch its business progress and financial performance.
Financial report for the third quarter 2021 is out. The disappointed number is the expense of $9,481,030 dollars for "General and administrative" (link) of which is 28.55% of revenue. Also, this high cost is derived from stock option compensation of $6,441,744 dollars (link). This high cost is a demonstration of stewardship of management which is a matter of importance that investors should keep in mind until proved otherwise.
11/05/2021 - Moderna Inc. (MRNA) , BioNTech SE(BNTX)
Reduce current position 30% for Moderna Inc and BioNTech SE due to the competition from PAXLOVID, a high efficacy pill against hospitalization or death of COVID-19
Due to the reason that PAXLOVID's 89% efficacy against hospitalization or death of COVID-19, COVID-19 vaccines will be encountered by more competitions which are pills and can be taken by patients at home.
But, why only reduce 30% of current holding of MRNA and BNTX each and not more?
Reasons:
Vaccine is a preventive medicine which is more efficient to against spread of COVID-19 and being hospitalized. It is a personal choice either preventing from sick or be sick & treated.
Vaccination is cheapest option to against COVID-19 comparing other treatments. The New York Times reported that U.S. government will pay for the treatment (the second cheapest) $700 per course for pills from Merck and Pfizer (link). In the future, how are employers, insurers and patients going to pay for the treatment if government stops picking up the bill?
PAXLOVID treatment must be taken at early stage of COVID-19 infection (within 3-5 days of symptom onset, earlies the better). to be effective same as monoclonal antibodies treatment.
This a win for Pfizer even it is a lose to Moderna Inc and BioNTech SE.
But it is a big win for science and human kind.
11/04/2021 - Moderna Inc. (MRNA)
It is a out-of-expectation disappointed quarter.
From past experience, there are going to have waves of downgrades and target-price reduction for Moderna Inc from analysts within several weeks in the future. Each downgrade and target-price reduction is going to put downward pressure on the stock price of Moderna Inc, and it will depress the performance of whole portfolio. Also, fear of uncertainty will be in play.
It is more obvious now that Moderna's capacity to quickly scale up in global reach has hit another road block. That lack of global network and experience has been dragging down Moderna's performance on mass scale of clinic trials and now logistic on production and distribution. Unlike Pfizer, a one hundred and seventy two years old company who has well established global network, its performance on clinic trials, production and distribution has been smooth without much of hiccup. And, BioNTech, Pfizer's partner in vaccine developments, does not have to worry about such problems that Moderna encounters now.
In facts, those drag-down will have significant impact on Moderna Inc's revenue and income; hence, reduced financial strength definitely has negative effect on future development of the Company. But comparing a year ago, Moderna Inc has brighter future ahead.
Beside those bottlenecks, the fundamentals of Moderna Inc has not changed. Its advantage on researches and developments of sciences and medicines may have and should have advanced due to its strong financial boost from sale of Covid-19 vaccines.
Its short term and medium term outlook is dimed slightly, and its stock price will react accordingly.
However, its long term prosperity have not change much. React wisely with stock price fluctuation.
Conference call for 3rd Quarter of 2021 when it is available.
09/10/2021 - Shell Midstream Partnerships LP (SHLX)
Sell 100% of the position of Shell Midstream Partnerships LP.
This investment is a mistake. It should not have happened in the first place.
Lack of concern from management is the major reason that this investment should not be made. Also, the distribution yield should not be the reason to outweigh the lack of intention from management. Management teams are shuffling frequently in Shell Midstream Partnerships, especially CEOs. CEOs in Partnerships are turnover a few times a year like going on and off a merry-go-round, and that is a few times too much. Usually, a ten-year term for CEO is preferred.
The decision to go for yield is a mistake.
08/15/2021 - Valuation
Moderna Inc (MRNA) and BioNTech SE (BNTX ADR)
Valuation, a complex, subjective and often confusing processes and products, is very much in every security analysts' mind. There are so many steps and items to be considered in order to arrive a conclusion, especially the items in crystal ball. There is always a little difference in each step of valuation processes among analysts. The result of little difference adds up to big difference when the conclusion is reached. For the examples of Moderna Inc and BioNTech SE, the gap of difference of analysts' target price is about $300-$400 dollar per share. The target price is in the range of $463-$83 per share for Moderna Inc and in the range of $451 to $133 for BioNTech SE.
Hypothetically, the stock price of MRNA and BNTX should have been traded below $100 or even lower if inoculation is close to 100% in U.S. and Globe. The reason is that Cov-sars-2 would have difficulty to find a host to spread; therefore, there will be no need of Covid-19 vaccine and revenue from vaccine will drop to zero. The price of MRNA and BNTX should and would have gone back to pre-pandemic level. But, how about billions of cash in their balance sheet? We will need more crystal balls. Adding another valuation/target price will only add more confuse into the pot.
The business development of MRNA and BNTX are important and so as evolving of cov-sars-2 and their variants. Paying close attention to what cov-sars-2 have to say and keep saying to human being is much more important than what analysts have to say.
There are few quarterly update in financial data for MRNA and BNTX.
Also the news release from the companies for their latest development for vaccines, Moderna and BioNTech.
07/21/2021 - SolarEdge Technologies - (2021 Review)
Newly updated information is included in Financial Data and Studies.
07/02/2021 - Moderna Inc
In studies of Moderna Inc, effort of trying to find any patent related to LNP yields no result. However, Moderna has been experimenting with various combinations of formulas of LNPs without specifying the ratio of contents. Instead of filing separate applications for LNPs, Moderna has been including LNP formulas within other patent applications. Information regarding LNP in those patent applications may duplicate in some ways between applications. Even though those vague formulas of LNP are included in Moderna’s vaccine or other patents which are not LNP, the percentage of ingredients used in LNP formulas are consistent with the description in both patents US20100324120A and US 8,058,069B2 which are owned by Arbutus Biopharma.
On 07/24/2020, Moderna stated that mRNA-1273 is not incorporated with LNP from Arbutus. Also, Moderna did not pay any royalty or fees related to LNP used in mRNA-1273 to Arbutus according first quarter financial report of 2021 from Arbutus
The following are U.S. patents which involve the description of LNGs used in experiments though some descriptions are stated in claims of patents.
United States Patent: 10,022,435.
United States Patent: 10,973,917. Claim 1, Claim 10, and Claim 20-27
United States Patent: 10,925,935. Invention claims
United States Patent: 10,695,419:
United States Patent: 11,003,366. Many lipid experiments. 2.5% PEG
United States Patent: 10,709,779. 0.5% - 3.0% PEG
United States Patent: 10,383,951. 1.0% - 3.5% PEG
06/28/2021 - CORRECTION ON Moderna Inc and BioNTech SE
The correct increased amount to invest in Moderna and BioNTech should be as following
Increase the position of Moderna to 12% of the portfolio (Portfolio(III))
Increase the position of BioNTech to 8% of the portfolio
Instead of
Increase the position of Moderna to 18% of the portfolio (portfolio III)
Increase the position of BioNTech to 12% of the portfolio.
information for both companies is updated
06/28/2021 - Axos Financial (AX) and Cracker Barrel Old Country Store (CBRL)
•Reduce the position of Axos Financial to 10% of the portfolios
•Reduce the position of Cracker Barrel Old Country Store to 5% of the portfolios
•To increase cash position for further investment.
06/23/2021 - Moderna Inc (MRNA) and BioNTech SE (BNTX ADR)
Increase the position of Moderna to 18% of the portfolio (portfolio III)
Increase the position of BioNTech to 12% of the portfolio.
information for both companies is updated
06/16/2021 - Signet Jewelers (SIG)
Reduce the position of SIG to 30% of the portfolio (portfolio III)
Increase cash position for future investment opportunities
Should have the effect of long term capital gain with lower capital gain tax bracket
06/02/2021 - Moderna Inc (MRNA) and BioNTech SE (BNTX ADR)
Initiate a 5% position for Moderna Inc (MRNA)
Initiate a 2% position for BioNTech SE (BNTX)
Both companies came out on top in the race to create COVID-19 vaccines defeating globally established pharmaceutical companies
WARNING:
Softwater Investment has troubled tracking records for investing in the medical industry. The following is the list of past investments:
Achaogen Inc: Bankruptcy (Chapter 11), totally lost.
Insys Therapeutics Inc: Funder and executives were arrested and charged with RICO conspiracy and wire fraud. Eventually, it went bankrupt. Lose more 60% of investment
Valeant Pharmaceuticals: Pricing scandal, heavy debt. Recovered some losses.
PDL BioPharma: Attained very little gains.
Sirtex Medical Ltd: Gained fairly.
Even COVID-19 vaccines are successful products, both Moderna and BioNTech are the companies with only one successful product which means both companies have to prove they are worthy of advanced researches, advantageous technologies at this price. And that means investment in both companies involve more risks than average.
Why should Moderna and BioNTech be two good choices of investment?
The first reason to invest in Moderna and BioNTech is low valuation. However, the low valuation is very subjective and is mainly dependent on the opinion on how long vaccination is needed. In other words, how long/how many years can Moderna and BioNTech keep producing COVID-19 vaccines for the need to vaccinate the population.
The subjective valuation is fair now or even overvalued if the belief of the need of COVID-19 vaccines will subside beyond 2021/2022, or COVID-19 will disappear on earth, or durability of effective neutralizing antibodies will last many years to come. On the contrary, if the conclusion is that COVID-19 vaccination is necessary every year to contain the spread of COVID-19, the price paid for the shares of Moderna and BioNTech is low and has a distance to run from here.
The second reason is the competitive advantage of mRNA technologies. mRNA technologies from both Moderna and BioNTech have demonstrated their advantages over traditional vaccine developments. They are able to come out on the top at this race defeating Johnson and Johnson, AstraZeneca, Merck or even Pfizer (if Pfizer had not partnered with BioNTech. Of course, BioNTech couldn't have done it without Pfizer's global reach and billions of dollars of financial support).
05/27/2021 - Snowflake Inc
Hold current position
The growth of sale for 1Q 2021 is slowing down comparing quarter to quarter (1Q 2021 comparing to 4Q 2020, for example) which is a disappointment
Add to that is management exercise $151 million of stock options (attain stock shares by exercising stock options) and usually sold them immediately
04/24/2021 - Axos Financial and Cracker Barrel Old Country Store
•Reduce the position of Axos Financial to 13% of the portfolios
•Reduce the position of Cracker Barrel Old Country Store to 10% of the portfolios
•To increase cash position for further investment.
It is hard to operate a business, but it is ideal to own a company and to have operating cash flow in hand for business investment.
Surely, owning 100% of Axos Financial or/and Cracker Barrel Old Country Store would have provided the ability and opportunity of utilizing the operating cash flow generated by revenue for further business expansion and other investments.
Sadly, individual investors don't have such privileges. Again, the best way for individual investors to have cash for further investment is dividend paid out from shares owned or capital from selling current investment; otherwise, debt is one more way to have cash (or other investors willingly put their money in your hands to manage).
It just the way it is and beware the tax consequence for trades.
03/20/2021 - Signet Jewelers
Fourth Quarter Fiscal 2021 highlight from company's 8-K filing
•Total sales were $2.2 billion, an increase of 1.5% to last year. Same store sales ("SSS") grew 7.0%2.
•eCommerce sales increased 70.5% to last year and were 23.4% of sales.
•Brick and mortar SSS were down 4.2%.
•Operating cash flow of $1.4 billion with cash and cash equivalents of $1.2 billion at year end.
•Ending inventory was $2.0 billion, $299 million lower to last year.
•Fully paid down revolving credit facility and FILO loan during the quarter.
It is a very brilliant result at the end of fiscal 2021. Also, the company announced that the board of directors decided to pay a cash dividend to preferred shareholders implying the balance sheet is strong.
There is $1.1 billion of cash and equivalents, $2.0 billion inventory in the balance sheet comparing $147 million debt, and $1307 million account payables and accrued expenses. Moreover, the company generates $344 million cash flow from operation (excluding change in working capital and deferred taxes) in fiscal 2021. Still, the company has $82 million of delayed rent payment from April, May, and June of 2020 and expect to pay down by the end of second quarter fiscal 2022 (July, 2021).
See Financial Data for update.
For the fiscal year of 2021, Signet Jewelers has demonstrated the resilience and perseverance in the difficulty of pandemic. Not only outperform itself financially, more importantly, Signet Jewelers' turnaround builds an all involved new corporate culture which will be the driving force to propel the company forward. It is also happy to see CEO Gina Drosos announces the initiation of a minimum wage of $15 in two years.
Therefore, tracking quarterly reports of Signet Jewelers becomes less important.
From now on, the position invested in SIG and significant events affecting the company will be posted.
02/24/2021 - Axos Financial
Axos Financial announces redemption of 6.25% Subordinate Notes due 02/28/2026.
The Notes will be redeemed on 03/31/2021.
The call value of the Notes is $25.00 (meaning company will pay $25.00 for redemption, not market value).
Ex-Date is 02/11/2021. It means the sale of the Notes today will not effect the payment on 02/28/2021.
02/21/2021 - Shell Midstream Partner LP
Increase investment in Shell Midstream Partner LP (SHLX) for additional few percentages of SHLX of the portfolios
02/13/2021 - Axos Financial and Cracker Barrel Old Country Store
Reduce a few percentages of positions for both Axos Financial and Cracker Barrel Old Country Store. The purpose of reduction for both securities is only to increase cash position.
02/13/2021 - Shell Midstream Partners LP
12/26/2020 - Shell Midstream Partners LP
Initiate an investment position depending on personal tolerance and objectives. See more information here.
09/26/2020 - Signet Jewelers
Increase investment in Signet Jewelers according personal preference and tolerance.
09/04/2020 - Signet Jewelers
Info provided by Q2 2021 indicates a better result after re-opening of stores.
07/30/2020 - Axos Financial
Add an investment amount which is equal to 5% of the portfolios to Axos Financial.
06/05/2020 - Cracker Barrel Old Country Store Inc
The result of the third quarter of 2020 is better than expected.
05/29/2020 - O'Reilly Automotive
Initiate an small investment position in O'Reilly Automotive Inc (ORLY). More information, please click here.
05/29/2020 - Mastercard Inc
Initiate a position of 2 % of the portfolio(III) for tracking purpose. See more information here.
05/18/2020 - Axos Financial
Increase investment position of Axos Financial to 15% of the portfolios.
03/18/2020 - Cracker Barrel Old Country Store Inc
Increase investment in CBRL for an amount equal to 15% of current portfolios value.
03/17/2020 - Cracker Barrel Old Country Store Inc
Initiate an investment position 6% of the portfolios. See more information here
03/16/2020 - Axos Financial
It is a wonderful price to own Axos Financial Inc. Initiate an investment in Axos Financial which is equal to 6% of portfolios and see more information here.
03/11/2020 - Signet Jewelers
Class arbitrary against Signet Jewelers for sexual harassment and work inequality.
02/08/2020 - SolarEdge Technologies
Reduce current holding by 50%
12/06/2019 - Signet Jewelers
Correction for Signet Jewelers. Financial data has been corrected at this time
Initiate an investment in Signet Jewelers Limited (SIG) Also, see information in Position section
10/06/2018 - Rx - Prescription for Jenn
Introduction of defensive investment for passive investing. See more information here.
07/07/2018 - SolarEdge Technologies
It is certain that inverter business will dominate company’s revenue. The industry trend is a favorite factor, and recent California mandate is likely to push other states to adapt the trend in a long run.
Patent infringement is filed against a Chinese company for its inverters. It is not surprising that inverters are highly profitable, fast growing and beneficial to solar panel installers and owners. It is expected that company share price will be highly volatile in the run.
05/07/2018 - Taiwan Semiconductor Manufacturing
Initiation of an investment in world class semiconductor manufacturer, TSM.
Also, see more information here.
05/08/2017 - SolarEdge Technologies
Initial an investment for SolarEdge Technologies. See more information here.