This month’s investment journal covers my new CRISPR/Genomics investment as well as the earnings of my biggest two holdings. Overall the month was a bit lackluster for me, but with great things on the horizon.

Overview

Moves

• On January 9th I started a new position in Xtrackers Genomic Healthcare Innovation (XGEN) at an average price of $27.54.

• On January 15th, I increased my position in Xtrackers Genomic Healthcare Innovation (XGEN) at an average price of $27.08, lowering my average to $27.27.

• On January 17th, I increased my temporary position in Realty Income (O) at a price of $56.69, lowering my average to $57.09.

Performance

Dividend overview

I received a total of $175.20 in dividends before taxes for January 2024, an increase of 37.00% compared to the same month last year at $127.88.

Commentary & Review

CRISPR is back, baby!

As some readers may be aware, I have long been optimistic about the opportunity of CRISPR and genomics-related developments. Back in March 2021 I wrote a deep dive on the technology as I acquired a stake in CRISPR Therapeutics (CRSP). This story however, is also tied to my biggest investment mistake - selling out of Novo Nordisk (NOVO B), just before its claim to fame with Ozempic and WeGovy, missing out on a near 400% return. The story is a tale of bad timing in every regard, as CRISPR Therapeutics oppositely took a nose dive in the following months leading me to eventually phase it out of my portfolio. It all was a bit messy really, I never disclosed it here because I moved it to a part of my portfolio that I used to keep private and which no longer exists.

Regardless, ever since (For transparency I sold out in the first part of 2023, netting a loss of 30.5% and this was still calculated into my overall returns for the year) I have been feeling left out. This is an opportunity I still believe in, one that I never meant to truly exit and one that I am not willing pass on. Nothing really changed in my perspective, everything was just so sour in 2022 that I ending up reallocating my funds into shorter term opportunities. But my pension fund (which is part of my overall portfolio, now fully public) represents the perfect spot to place an investment into something as long-term as this.

And as mentioned in the CRISPR deep dive, I would have preferred to place my money in a broader CRISPR/Genomics related ETF if it was not for a disadvantageous tax laws on foreign ETFs. I knew from the get-go that CRISPR Therapeutics, while a leader in the space, would present a too concentrated bet on the sector with much higher risks. But I stuck with that solutions in spite of it, due to my excitement over the technology. I also noted however, that I did so “for now”. For since moving my pension fund to my own brokerage sometime in 2022, this problem was solved: Danish Pension funds are taxed at an entirely lower bracket, regardless of what investment resides inside. So when I had some cash left over from my sudden exit of Adobe (ADBE) last month as it failed to acquire Figma, I found myself with an opportunity to get back into CRISPR and in the right way. I took a close look at ARK Genomic Evolution (ARKG) which I was eyeing back then, but found that it has been diluted by other ARK bets like Teladoc (TDOC), which I do not find relevant for the opportunity, even if it relates to healthcare in general.

Fortunately, all the stars aligned and just as I was about to pull trigger anyway, my brokerage informed me that for a limited time they would zero fee purchase orders on all Xtrackers ETFs - one of which is XGEN - a passive investment fund with an objective to weigh its positions based on technological innovation in the genomics space. This is not a well known fund, assets under management are rather modest, but it is JUST right for me. So I picked up a few shares in January and later picked up a few more before the zero-fee offer expired.

Earnings for my Big Two

January was the month for earnings for my biggest holdings, namely Tesla (TSLA) and Microsoft (MSFT).

Tesla - A bumpy ride

Tesla disappointed investors with little to no guidance and a statement of being “in between two growth cycles”. I was expecting a lackluster quarter as delivery numbers only ever slightly managed to meet expectations and price per vehicle continued to drop throughout the year, with even more cuts announced here in 2024. I will be the first to admit that when Tesla issued guidance of 1.8 million vehicles sold in 2023, I thought they were sandbagging. Musk even went on record at the first earnings call of the year saying that if things went really well, they could hit 2 million. When 24 hours prior to earnings release, rumors broke of Tesla’s Next Generation Vehicle having a set timeline for production, I knew that we were in for a rough time. This was undoubtedly intentionally timed in an attempt to hedge what was coming… It did not work. The stock dove 12% and broke the $200 barrier.

With that said, it was not all bad. For the first time in a long time, the earnings call itself was a great experience. Musk was calm and collected, the new CFO stayed informed and vigilant and other executives offered great replies to intriguing questions. The last few quarters in a row, I have criticized Tesla and Musk in particular, for messy earnings calls and incoherent ramblings. Happy this was not the case this time. Other businesses are doing well, progress on Optimus is astounding, although it is now clear that a high-interest rate environment is an Achilles heel of their operations, as both vehicle and Energy sales suffer tremendously under it. I had never considered its impact on the non-car business before now, but this explains why Tesla is so diligent about maintaining low debt and why Musk have been so upset over the Fed hiking rates. But Tesla has set itself up for long-term success: All the price drops have hurt (western) competition far more than them and are now at the ready to release a budget option into a market exploding with demand. China remains its only viable threat, but here politics will finally serve Tesla well, creating favorable conditions for them in the western world.

Something kind of crazy also happened near the end of this month, related to Musk’s 2018 compensation package, which made him into the richest man in the world. A judge in Delaware court deemed the package null and void, due to an investor’s inquiries regarding Musk’s “unfair” control over the board at the time. While true that the Tesla board at the time consisted in part of family members and friends (like his brother, Kimbal Musk), it is also true that this compensation plan would only serve him well, if it benefitted investors. The compensation package is in fact, quite legendary, as all its goals were met, including Tesla hitting a $650 billion market capitalization, which was by most considered entirely absurd at the time. Tesla will have to appeal the decision, which may work (It is the first time in history that the Delaware court has ever nullified a compensation plan for a public company) or they will simply have to restructure the plan in order to make Musk whole. There is no reason to doubt that investors, like back then, will vote in overwhelming support of his fair compensation. What Musk managed to pull off during the Model 3 ramp up until now, is nothing short of a miracle and an incredible feat of management and problem solving. It is a strange situation and one that is likely to trigger the incorporation of Tesla in Texas, rather than in Delaware.

Microsoft - Topping even the highest expectations

Microsoft, on the other hand, managed to pull off the near-impossible this time around. Expectations going into earnings were sky-high, with analysts hoping for a reacceleration in cloud growth boosted by AI. And somehow, Microsoft beat it. They delivered massive growth across several businesses, with the most important ones doing even better. Xbox grew massively too, although this is a result of the now closed Activision-Blizzard merger. Earlier in the month Microsoft announced layoffs here, to make up for overlapping roles, with around 1900 employers saying goodbye. This is unfortunate, although completely understandable in this case. In general, this year is already looking to be really tough for the game industry with Over 6000 Video Game Industry Layoffs already. Unity (U) waved goodbye to another 1800 people, while Riot Games let go of just over 500. I personally know some good and extremely talented people who have been laid off this time around and it really just sucks.

But as clockwork, Microsoft stock dipped a little following earnings, as it always tends to do, regardless of how well they perform. No matter - there is no company like it. In fact, they managed to once again take the crown from Apple (AAPL) this month to become the most valuable company in the world. This pleases me greatly, although I hope they are able to stick to this #1 spot over the long time, as they have been unable to when this has happened in the past. Once some of my other positions crawl slowly into the top 10 largest companies by market cap, I will be a very happy man…

I tweeted out the following once Tesla left this exclusive club following earnings. They have since rejoined. Can you guess which two companies I am referring to?

Something to look forward to

January was not the best start to the year for me, with my portfolio underperforming the market quite heavily. This was tied to Tesla’s performance of course, which continue to impact my overall performance quite heavily. But 2024 has already flipped things around a bit, turning Microsoft back into my largest position over Tesla, for the first time in many years. This means I might be able to expect slightly more stability going forward… Lets see.

Novo Nordisk likewise delivered a slam dunk of an earnings report, while 3M (MMM) did not… And I write this on the 2nd of February, Alphabet (GOOGL), Meta (META)and Amazon (AMZN) have already reported earnings too. Alphabet disappointed investors like Tesla - dropping to back to nearly the same level I got out at, while Meta and Amazon did incredibly well. In fact, Meta surprised everyone by issuing a permanent dividend, which is to be paid out quarterly from now on. This is incredible news for Meta investors (in my opinion) and one that really made me wish I had made good on my plans to buy shares in the company, back when no one else believed in them. I also wrote a deep dive on the Metaverse back in October of 2021.

Watch List

Updates to the Watch List this month: I have removed the ARK Genomic Revolution ETF from the Healthcare sector as I have picked up XGEN instead.

My Watch List sorts stock by sector and notes are included for each one, describing my interest and reservations. The status indicates the likelihood of a position being added to my portfolio. ‘Watching’ means I just keep an eye on them, whereas ‘Top Pick’ means they are very likely to find their way into my portfolio at one point - ‘Under consideration' means somewhere in between, with notes offering some elaborating thoughts. Please note my Watch List is based on my own research and goals and is in no way a recommendation of what to buy.

Disclaimer: I am not a financial advisor, the opinions expressed in this article are entirely my own – always invest at your own risk.