- The Rule of Acquisition
- Posts
- Dass Capital Extraordinary Companies portfolio up 42%
Dass Capital Extraordinary Companies portfolio up 42%
We look at the portfolio, the new additions and discuss Nvidia
Raj Dass
February 25, 2024
Dear Investors,
The markets have been going crazy this year. When that happens, it is easy to get FOMO (fear of missing out). The temptation is to take a bet on a hot stock.
Remember, your investing goal should not be to make 50% on a hot stock in a year. It should be to make 50-times your money over your investing career.
You can do this by owning a portfolio of companies. This is very easy to do with exchange traded funds (ETFs). Here’s a few ETF names to consider.
• S&P500 - largest US companies
• NASDAQ100 - largest non-financial companies on the Nasdaq
• MSCI World Index - 23 markets, 1500 companies
• Vanguard Growth ETF (VUG)
• Vanguard Information Technology ETF (VGT)
In this edition, we are going to look at the:
Portfolio holdings
Portfolio performance
Portfolio holdings
The table below shows the current holdings in the portfolio as well as each company’s weighting.
Company | Industry | % |
|---|---|---|
Novo Nordisk | Pharmaceuticals | 20.8 |
Berkshire Hathaway | Financial services | 14.0 |
Microsoft | Software | 13.9 |
Mastercard | Financial services | 12.0 |
Visa | Financial services | 12.0 |
Nvidia | Semiconductors | 10.6 |
Broadcom | Semiconductors | 8.8 |
KLA Corporation | Semiconductors | 7.9 |
Removals
Followers of the portfolio will notice that Coca-Cola Consolidated has left after only three months of being in the portfolio. The reason for its departure was not performance, but rather that we had to free up cash for upcoming investments. The company recently reported results and did well, so there was nothing wrong with it.
Additions
Since our last update, we have added three semiconductor industry companies. Each company plays in a different part of the industry.
Broadcom designs mixed signal CMOS devices - that means they make microchips that have both analog and digital circuits on chip. Mixed signal chips are used to process real world signals. For example temperature measurement is an analog signal, but you can convert it to digital if needed.
KLA Corp designs process control equipment used in chip manufacturing. They don’t make chips, they are a supplier to the industry.
Nvidia is doing crazy things these days. They make GPU’s which were used for computer graphics, but have now also found applications in artificial intelligence (AI). These GPUs are well suited to data centers. Nvidia released results this week and their stock price rise has been nothing short of meteoric. It is up 59% for the year and 16% since Wednesday. Here’s the reason why - they are doing 6-times more sales in 5 years:
FY2020: $10.9 billion
FY2021: $16.6 billion
FY2022: $26.9 billion
FY2023: $26.9 billion
FY2024: $60.9 billion
The graph below shows Nvidia’s revenues and revenue growth over the past 10 years. Two things are notable:
In the top graph, there has been a massive upturn in revenue, which is due to the demand from AI.
In the bottom graph, which shows the revenue growth, there have been periods of negative growth. That is because the entire semiconductor industry is cyclical. That makes it quite challenging from an investment point of view because if you buy in at the top, you may end up losing a lot of money.
Nvidia revenue and revenue growth
Investment tip: if you are interested in buying a stock like Nvidia, do it bit by bit over time. That way you can average out fluctuations.
Performance
Over the past year, the Extraordinary Companies portfolio is up 41.5%, while the World Index is up 24%. That is significant outperformance, but it is also above the norm. Don’t get too used to 40% annual returns.
Dass Capital Extraordinary Companies portfolio (blue) vs. World Index (grey)
In my opinion, there are two drivers of performance in our favour:
The portfolio is full of extraordinary companies in terms of their characteristics and business models.
Secular industry trends have provided tailwinds.
That combination has resulted in superb performance.
Join the conversation