Today’s menu:

• Portfolio performance

• The portfolio ratios

• Company performances: Nvidia, Novo Nordisk, United Health

• Conclusion

Portfolio performance

The compound annual growth rate over 3-years for the portfolio and benchmark are:

• Extraordinary Companies: 20.7% per annum

• World Index: 15.6% per annum

It has been a strong few years of performance in the market. At 20.7% per annum growth, we cannot complain. We’re above Warren Buffett’s long-term record of 19.9%. But lets not get ahead of ourselves, he is the GOAT (Greatest Of All Time), having delivered that performance over 59 years and counting. A virtually impossible record to match.

To compare apples with apples, we would have to check in on our portfolio in 56 years time.

In the meantime, strong market performance has pushed our portfolio into record valuation territory, as you will see in the next section.

The portfolio weights

The table below shows the weights and ratios for all the companies in the portfolio. Since we last looked at the portfolio, Nvidia has been our star performer, thereby increasing its weight by 3.9%. Novo Nordisk has been our worst performer, thereby decreasing it’s weight by 3.8%.

Looking at this table, you will notice that in most categories, the portfolio averages are higher than the World Index averages. That is an indicator that the companies in our portfolio are of higher quality than in the World Index.

The P/E ratio is a valuation measure. A high P/E means that things are expensive. In our case, the portfolio is more expensive than the World Index. This is to be expected - extraordinary companies are more highly valued than ordinary ones.

The real surprise is that the portfolio is on a PE of 38. For comparison, the World Index is on a PE of 24. Our portfolio’s PE ratio has increased with the recent run up in stock prices.

That’s wonderful, except it is getting expensive. That comes with risk.

Stock performances

Let’s look at the performance of a few stocks.

Nvidia (NVDA)

The first graph is the stock price of Nvidia, which is up 91% since the April 2025 tariff saga. That’s right, Nvidia has almost doubled in price and now trades on a PE of 58. Although the temptation to buy is always highest when a stock is going up, I don’t think this is the time to buy Nvidia.

We know Nvidia is a great company and is basically the only supplier of high performance GPUs required for artificial intelligence. But we also know that it is a highly volatile stock, having fallen 80% multiple times in its life. While I don’t plan to add any Nvidia to the portfolio, I would wait for a drop if I was.

Novo Nordisk (NVO)

Oh Novo Nordisk! You are like a bad girlfriend.

I want to love you forever, but you keep breaking my heart 💔 and spending all my money 💰.

This graph shows you Novo Nordisk’s price drawdowns from all-time-high’s. That is a mouthful. Basically - how much did the stock fall from its highest point? The answer is a whopping 64%!

Here are some of the reasons why the stock price has fallen so much:

• Increased competition from Eli Lilly (Mounjaro, Zepbound more effective, fewer side effects).

• Cut in 2025 sales and profit forecasts, mainly due to slower growth for Wegovy and Ozempic in the USA.

• Rise of cheaper copycat versions of their drugs, hurting sales and forcing price drops.

• Disappointing trial results for new obesity drug CagriSema, with less weight loss than hoped.

• Loss in court that might allow generic competitors for Wegovy sooner.

• Medicare not covering weight-loss drugs like Wegovy, reducing access for patients.

• Ended partnership with Hims & Hers, slowing gains in obesity market share.

Thankfully, Novo got some good news yesterday (Saturday August 16, 2025) and is up 10% since Friday. Here’s the good news:

• FDA approved Wegovy for treating MASH, a serious liver disease affecting 1 in 20 US adults.

• Wegovy is the first GLP-1 drug approved for MASH.

• In a 72-week trial, 63% of Wegovy users had no liver inflammation (vs 34% on placebo).

• 37% had less liver scarring (vs 22% on placebo).

• 33% saw both improvements (vs 16% on placebo).

• MASH often has no symptoms until advanced, leading to cirrhosis, cancer, or transplant needs.

• Up to 1 in 3 people with obesity also have MASH.

• This approval creates a big new market for Novo Nordisk beyond weight loss and diabetes.

The most surprising part of Novo's fall from grace is that the company is not doing badly at all. It is still growing and profitable.

Unfortunately, when you disappoint the market, you get dumped.

United Health Group (UNH)

United Health Group is not in our portfolio, but this week investors are going nuts about it. Lot's of them who own it are saying "I told you so”. This is annoying the investors who don’t own it.

What is going on?

United Health has a market capitalisation of $275 billion and it’s stock price has halved (down 51%) in the past year.

So why all the hubbub?

Berkshire Hathaway (Warren Buffett’s company) bought 5 million shares valued at $1.6 billion. Dodge & Cox bought 4.7 million shares valued at $1.48 billion. and Michael Burry (of The Big Short movie fame) bought shares and call options on United’s stock.

(Call options are contracts, which gives you the right to buy the shares in future, at a price agreed upon today. Don’t get overwhelmed by this - basically it means, he can buy the shares in future if he wants.)

Due to all this, retail investors are foaming at the mouth for United. The stock was up 12% yesterday.

This is not the way to invest. You don't buy something because someone else bought it. If it is appropriate for them, it doesn’t mean it is appropriate for you.

Do your own thinking when it comes to investing.

I took a quick look at United on Friday. It's reasonably priced in this expensive market. It might be an opportunity, but I’d have to be sure it was extraordinary before it could get a spot in our portfolio.

Conclusion

Three lessons stick out for me from this look at the portfolio:

1. Be patient: A few months ago, the portfolio was being slammed. Now it is outperforming. If you buy good companies, hang on and give them time to perform their magic.

2. Sometimes it just goes wrong: Novo is a great company and it dominates the diabetic and weight loss space. But things can still go wrong. These times might present investment opportunities or toughen you up for the future.

3. Think for yourself: You have to live with your financial decisions. Don’t let others do the thinking for you. But make sure you understand what you are doing.

I would like to hear what you’re up to.

DM me on social media or email me.