YWR: Q2 Performance Review
It’s Accountability Day.
Are these YWR ideas any good?
Today we review the performance of the YWR portfolios through 1H 2025. This is the performance of the actual positions we own, because some things we write about but don’t own.
As a recap Dirty Dividends was a portfolio we started in 2022 to buy hated European stocks trading at a valuation extreme. It’s evolved since then, but that was how it started. The main sector within this theme was European Banks.
The Cash Dragon theme started in April 2024 as a way to play the recovery in China.
Dirty Dividends
Dirty Dividends is having a great year. +38% YTD.
We are benefitting from a general rerating of European stocks.
Commerzbank +75% YTD
Banco Santander +59% YTD
Unicredit +47% YTD
Barclays +26%
Vinci +25%
These % returns are in local currency not including dividends.
The tobacco allocation is doing well too (Altria and BAT).
Below is the current Dirty Dividend Portfolio and valuations. It basically doesn’t change. I just reinvest the dividends.
Despite its performance the portfolio’s overall P/E is still just 10x with a 4.3% dividend yield.
Our Asia pivot is going slowly (4.6% weighting in the portfolio), but the performance is good.
The Korea ETF (Who am I ETF?), which we bought at the beginning of the year, is +39% YTD, and HKEX is +46% YTD.
What’s not working? Everything to do with commodities and Mercedes.
Glencore -21%. Sticking with it and would love it to buy BP.
BP -7.8%. Can somebody please buy this company for stock?
Mercedes -4.5% This has been a turd, but the dividends have been great. I reinvest them in other things. The Europe/US replacement cycle isn’t happening and all the European car companies are getting beat up in China, which used to be their best market.
The strong performance of the banks means the portfolio exposure to this sector keeps increasing. It used to be 51%, now it’s 61%. Oh well. Meanwhile, we are reinvesting most of the dividends into Asia. I recently added (small) to Ping An and South Korea.
Cash Dragons
I should be happy with +18% YTD, but in reality my stock picking hasn’t been great. The Hang Seng is +23% YTD.
There were no changes to the portfolio. I just reinvest the dividends, although there aren’t many.
Baidu continues to do nothing (+2% YTD). They are in a race to grow their datacenter business faster than paid search is collapsing. Warning to Alphabet. I’ve been holding on to Baidu, but have to say, it is trying my patience.
Las Vegas Sands had a bad 1H. (-14% YTD), although at least they are buying back shares constantly plus paying a quarterly dividend. Macau gaming is growing, but it looks like competition is fierce and regulation has killed the junkets business for good.
Ping An’s Q1 results were a little weak, but OK. There is a big rerating potential there, plus the trend in private pensions which will play out over years. So we will be patient. The stock is +14% YTD.
The exchanges have been the great surprise, although that was what we were expecting (that they would surprise). HKEX (Our China FOMO Play) is +46% YTD, and SGX (An Exchange Master Class) is +18% YTD.
Our biggest position is Tencent (Tencent’s Path to HK$ 1000/share) which had good results and is +23% YTD.
If I told you Trump was going to be elected and there would be a tariff war with China, would you expect the Hang Seng to be +23% YTD? I don’t think so. I expect 2H 2025 is going to be strong too. I have a hunch Xi might be stepping down (for ‘health reasons’, which, if it happens will be fireworks for the Chinese market.
I’ve written about Swire Properties (Trying to be like Australia Dave) and it’s doing well. It’s just annoying I never bought it.
Overall Asset Allocation
This is how it all comes together.
I had a 5% allocation to Treasuries last quarter, but after I wrote Top 10 Nvidia Takeaways I couldn’t help myself. I sold the Treasuries and bought NVDA, META and AMZN, which I labelled the ‘AI’ allocation.
So I’m all in on risk. No cash, no bonds.
The overall portfolio is +20% YTD.
It’s going well. May it continue.
Erik