Dec 2022 - Time to clean my wounds
December was a bad ending to a bad year. That is as honest as I can describe it. I took the opportunity to further clean out my portfolios in order to optimize my tax returns. I also added to my newest position as it dropped alongside the rest of the market. Other than that, all I can do is pray for a good start to the new year.
Changes to my portfolio this month
This month I have let go of my worst-performing stock of all time - Coinbase (COIN). This is not meant to be a goodbye forever, but a way of tax optimization.
Growth Portfolio
Overview
Unlabeled on the chart: Adobe (1.0%).
Moves
On December 14th I sold my entire position in Coinbase at an average price of $40.12 marking a loss of 89.47%.
Performance
My Growth Portfolio lost a mindbending 25.38% of its overall value this month, massively underperforming the market, which stayed flat.
Dividend Portfolio
Overview
Moves
A small automatic buy order of the Danish Invest Denmark Index ETF went through on the 8th.
On December 14th I exited my position in Orion Office REIT (ONL) at an average price of $9.33. The stock is down over 50% since I received it as a dividend from holding Realty Income (O).
On December 19th I added to my position of Bank of Nova Scotia (BNS) at an average price of $64.09 (CAD), lowering my average to $67.08 from $70.51 prior.
Performance
My Dividend Portfolio fell 1.84% in December underperforming slightly.
Dividend overview
| Name (Ticker) | Received | Amount (USD) |
| Microsoft (MSFT) | Dec 9th | $103.12 |
| 3M (MMM) | Dec 13th | $15.10 |
| Realty Income (O) | Dec 16th | $13.71 |
| Comparison YoY | $131.86 (Dec 2021) | $131.93 (+$0.07) |
Dividends received before taxes. Comparison to the same month a year prior.
Commentary & Review
First and foremost I want to highlight my sale of Coinbase. While it is true this has been a big loser for me, I still like the company. When the company went public via DPO, I mentioned how it was uniquely challenging to value. For this reason, I opened only a minimal starter position, looking to see where the stock went. For a while, their operation stayed profitable and at many points traded at very attractive P/Es. While I would have liked to at the time, I never got around to picking up more shares. This has ultimately ended up benefiting me as the story changed dramatically as 2022 hit the crypto markets hard. Coinbase went from making tons of money to bleeding cash in a matter of a few quarters. Left and right, competitors collapsed, like with the scandals of Celcius and FTX.
Market consensus has now turned sour on crypto, while my thoughts have stayed the same: Crypto has huge potential but is not ready for prime time. I am still looking for just a little bit of exposure to this category in my portfolio - namely 1%, while as of now, outside of a few NFTs I have received for free, my exposure is 0%. I still like Coinbase, particularly as the valuation has come down. I like their CEO, I like that they are regulated and I really like that they continue to invest in new blockchain-based projects. My thesis is that Coinbase will one day be the Berkshire Hathaway (BRK) of crypto and I want to be part of that. So I do plan on becoming a shareholder of Coinbase once again - although it remains a low priority for me, it will hopefully happen this year and with a larger position than the first time around.
While letting go (for now) of one play on the financial sector with Coinbase, I instead increased my position in another. Bank of Nova Scotia now makes up a substantial part of my Dividend Portfolio and I am really happy with that. I still do not have too much to say about this company, other than that I really like the price it is trading in right now, considering its almost untouchable position as one of big five Canadian banks.
The story of the sale of Orion in my Dividend Portfolio is not quite the same. This spinoff had me excited to be part of a dividend-paying organization like this REIT from day 1 but turned out to be a massive disappointment. Many investors predicted the spinoff was simply to get rid of unattractive assets: As an Office REIT, Orion mostly focuses on renting out physical workspaces, which at the time of the spinoff was seen as dead weight. I never quite bought into that, I do not think it is the case. While work-from-home and hybrid-style workplaces will certainly see more acceptance now, compared to before the pandemic, I think the last couple of years have highlighted its downsides as well. I think physical workspaces will be around long in the future - meaning this was never the problem of Orion. The problem lay instead with a complete lack of communication with its investors, weak leadership, and a backseat position. I got rid of this company before the year ended and I do not plan on coming back.
The reason my Growth Portfolio was down so massively again this month, is of course because of Tesla (TSLA). The December shutdown rumored for the Shanghai factory was instead confirmed for January, which made the stock dive once more. At the same time, various price reductions have spawned fears of Tesla’s demand as we move into a likely recession. I still believe demand for the company’s products is essentially limitless. I do not care what shape they sell their battery products in: If less cars, then more stationary battery storage. As long as that story keeps intact, I see no reason to fear.
A few other worthwhile things took place in December: Broadcom (AVGO) shared its earnings for the quarter and did incredibly well, beating estimates and guiding well for the future. Broadcom raised its dividend by 12%, which is just wonderful to see. This investment is slowly growing closer to my heart and I am really excited to see what its proposed acquisition of VMWare (VMW) will mean for them if it passes regulation. This company is just so well run.
Research & Goals
In related news, The FTC decided to sue Microsoft (MSFT) over their Activision Blizzard deal. This was surprising to me, and many others, but I really do still think the deal will pass. An arbitrage play/short-term trade of the Activision Blizzard (ATVI) stock might be something I look into in the coming year. The argumentation against the deal passing is weak. Microsoft has offered every competing platform a 10+ year contract on Call of Duty and only Sony has resisted. This is not only something I have researched this month but ever since the deal was announced. I understand it is impactful, but regulation is here to protect consumers and I do not see how consumers are hurt by this scenario.
Watch List
Growth Portfolio
| Name (Ticker) | Conviction (Rank) |
| Embracer (EMBRAC B) | 1 --- |
| Sea (SE) | 2 --- |
| Meta (META) | 3 --- |
| Shopify (SHOP) | 4 --- |
| Palantir (PLTR) | 5 --- |
| MercadoLibre (MELI) | Contender |
Dividend Portfolio
| Name (Ticker) | Conviction (Rank) |
| Costco (COST) | 1 --- |
| Elkem (ELK.OL) | 2 ↑ |
| Otis (OTIS) | 3 ↓ |
| Coca-Cola (KO) | 4 ↑ |
| LVMH (MOH) | 5 New |
| PepsiCo (PEP) | Contender |
While my Growth Portfolio Watch List has again stayed the same, I could potentially have added Activision Blizzard to the list at the top. I will not do that, even though it is the stock I am most likely to buy next, as it would not be joining for the long term in any case. The two stocks of the industrials sector which I am watching in my Dividend Portfolio Watch List have swapped places this month, mostly due to changes in valuation. But the most interesting change is that LVMH (MOH) has now joined the list. LVMH is the owner of the Louis Vuitton brand and its CEO Bernard Arnault is one of the richest men in the world. This is a company that could be a great fit in my portfolio, as it brings exposure to the consumer sector and European markets.
Thanks for reading - This post will soon be joined by my full 2022 year in review sometime later this month.
Goals
In my 2021 year in review, I stated that I aim for a 35% return in 2022. I ended up down 46,41%.
Over the long term, my goal is to slowly shift towards more stable positions and dividends on my journey toward financial freedom.
Disclaimer: I am not a financial advisor, the opinions expressed in this article are entirely my own – always invest at your own risk.
