Speculative Stock Portfolio

[aus_trader]

Due to price falling back consecutively, sold MLX from portfolio.

Closed:

 

[over9k]

You benchmarking yourself against anything @aus_trader ?

 

[aus_trader]

You benchmarking yourself against anything @aus_trader ?

Probably not benchmarking, but I do monitor the stocks in the portfolio and how they are performing.

 

[over9k]

It'd be a good idea to benchmark yourself against some kind of index ETF. You're just spinning your wheels if you're not beating the market.

(Not trying to be abrasive or anything, data shows us that most traders don't beat the market)

 

[aus_trader]

We've been through quite a few energy themes with the picks in this portfolio such as Oil, Uranium and renewables. Times could be changing and we need to adopt the strategies to target new themes developing in recent times.

My research has taken me to the latest trend in renewable energy. It's not just wind, solar or some geothermal form. It's hydrogen production from renewables such as solar and wind. There are a few candidates I've read up on that's in this space listed on the asx.

This industry is in it's infancy, so I didn't have to look for a low priced underdog due to prime stocks hitting billion dollar market caps. I've decided to go for the stock that is in the prime land holding position out of all of them. We are talking Carnarvon region of Western Australia which is blessed with the best conditions for this type of project anywhere in the country.



So in terms of location globally, what we have in this part of WA is world class for a zero carbon hydrogen project.



Memorandum of Understanding (MOU) already in place with 50-50 Joint Venture (JV) with Total Eren.



Current progress of this asx small cap stock: Province Resources Ltd (PRL)...


Open Portfolio:

Note: 1/2 of FFX position has been sold for a profit.

 

[qldfrog]

Would go well with my ammonia thread.

 

[aus_trader]

CSR was sold on Friday. The two dividends received during holding period was really nice adding to the share price gain.

Closed positions:

 

[aus_trader]

Our latest pick PRL could be in the right area of investing at this point in time and not just a pie in the sky hopeful.

There is significant money flowing into this type of projects and I happen to come across a couple of articles that was just published:

World's biggest green energy hub proposed for south coast of WA

The 15,000 square kilometre renewable energy hub planned for the south coast of Western Australia could produce up to 50 gigawatts of power.

www.abc.net.au

Green Energy: ‘World’s biggest’ $100 billion green hydrogen project proposed for WA

 

[aus_trader]

Some things have changed forever in recent times and these include more people working from home, increase in online shopping and taking personal hygiene such as hand sanitisation/washing to a whole new level. It's these type of new themes that I am really interested in to bring to this portfolio because I think the pandemic recovery stocks have probably had their share price rises already, some of which we benefited and profited from in this portfolio.

Working from home theme has really cemented itself as something that's going to stay long term even if the whole world was to rid itself of the virus. I have seen many businesses adopt this model and I work with a lot of people from all type of industries and it was remarkable to see the transformation that has happened over the last year. Other than building, mining, healthcare and service industries where people had to get to their work site to perform their duties a lot of the office related jobs have been transformed to work from home models.

I think employees and bosses have seen the win-win scenario that it has created. Workers are able to save time and fuel travelling to work which could be in a city center far from home. They can also be close to family and be with them as soon as you clock off from work. Bosses are able to save money by downsizing office space which tend to be quite expensive wherever it's located especially if it's in a city tower. So instead of having 5 floors of a city tower to run the company, now it could do it by occupying just 1 floor level. So overall time and money saved, productivity up (KPI's at highest levels) and improved health and wellbeing due to lower stress levels stuck in peak hour congestion or crowded in public transport, which works a treat if the virus is around.

So I thought this is the perfect time to invest in XYZ commercial office building fund that should see it's share price go through the roof !

I've been researching in all parts of the asx from spec end to the blue chips but it's not easy to find the right candidates to invest in that is uniquely positioned for the new world. Some I've come across might do OK well into the future, but 'might do OK' doesn't cut it for this portfolio.

Then I got thinking... How have companies transformed themselves so quickly from doing everything in-house ? How are the companies that are crushing it now than ever before able to attract the talent and skills to get things done so quickly ? When diverse skillsets are required in such a fast changing business landscape how are they getting the candidates so fast when the skilled migration is nearly dead ?

Successful firms are thriving in this environment are not doing it the old fashioned way. While the competition is struggling to survive, the pioneers of the new world are outsourcing from all over the planet. That's the key differentiator, they are bringing the skills of freelancers from all over the world to adapt their business to the fast changing environment.

So the latest addition to this portfolio is 'Freelancer Ltd' (FLN). I've looked at this company before and on each occasion the stars had not aligned. It was too far off getting to profitability or it's US competitors were steam rolling all over the Aussie firm ?

FLN is at an inflection point where the stars have lined up and it's taking on some of the biggest jobs it's ever taken, we are talking big US giants like NASA. No jokes, this Aussie firm has been helping NASA with complex projects and providing big cost savings to NASA as well:



The list of FLN top customers is mind boggling, we are talking the biggest companies in the world like Amazon, Microsoft, Facebook, Airbus etc.



Put it this way, since I looked at Freelancer as a Aussie firm starting to expand in the US last time, it has now truly gone global:



Their depth of service offering is amazing. It can be from a $30 logo design for the smallest startup to a $25 million joint contract to NASA (See letter from National Aeronautics and Space Admin aka NASA to Freelancer Sydney office informing they won the multi-million dollar tender for work):





On top of all of this, FLN also has the world's largest escrow business. Escrow.com was acquired by Freelancer in 2015 and it's become a must have for some of the biggest business and asset dealings for some of the biggest companies in the world. One of the biggest problems that arise when it comes to dealing with expensive and unique automobiles, collectibles and other transactions is security of payment and verification of goods delivery. This is where Escrow.com comes in:



It's used for big transactions, in fact you can't buy a vehicle through eBay motors in the US without transacting through Escrow.com.





Escrow.com client base is just as impressive:



If those two businesses wasn't enough, FLN also has a freight business for moving heavy expensive items such as for a lot of our miners in Australia:

 

[aus_trader]

FLN is likely to be accumulated by Ethical funds out there as it is already changing the lives of people in poor nations and aims to bring the living standard of people with very low incomes:






Open Portfolio:

 

[Beaches]

I think employees and bosses have seen the win-win scenario that it has created. Workers are able to save time and fuel travelling to work which could be in a city center far from home. They can also be close to family and be with them as soon as you clock off from work. Bosses are able to save money by downsizing office space which tend to be quite expensive wherever it's located especially if it's in a city tower. So instead of having 5 floors of a city tower to run the company, now it could do it by occupying just 1 floor level. So overall time and money saved, productivity up (KPI's at highest levels) and improved health and wellbeing due to lower stress levels stuck in peak hour congestion or crowded in public transport, which works a treat if the virus is around.

The reduction of office space in the inner city is not the trend currently emerging. While there is considerable differences between companies and certainly a difference between private companies and government tenants .. the general trend is for similar sized office space.

Currently the most common model appears to be for a hybrid of X days working from home and Y days working from the office (2 home / 3 office or 1 home / 4 office are common themes). The designs being developed are allowing for lower peak people numbers but with greater space between workstations.

The above is only for Sydney inner city office space, based on the design briefs currently being put to Architectural firms and being submitted for DA approval. Although 3rd party reports out of Melbourne are telling a similar story.

I don't think the final model has been settled for either employees or companies and it will take a while yet.

 

[qldfrog]

The reduction of office space in the inner city is not the trend currently emerging. While there is considerable differences between companies and certainly a difference between private companies and government tenants .. the general trend is for similar sized office space.

Currently the most common model appears to be for a hybrid of X days working from home and Y days working from the office (2 home / 3 office or 1 home / 4 office are common themes). The designs being developed are allowing for lower peak people numbers but with greater space between workstations.

The above is only for Sydney inner city office space, based on the design briefs currently being put to Architectural firms and being submitted for DA approval. Although 3rd party reports out of Melbourne are telling a similar story.

I don't think the final model has been settled for either employees or companies and it will take a while yet.

WFH is not really new, i was WFH while consulting 15y ago ..
There was a forced push but the average big corporation do not like it, less control for middle manager, liability and kpi are only valid for easy to measure jobs while BS jobs which are a majority nowadays in PS and big corporations are hard to measure KPI.
My view is outsourcable jobs have had a boost ,but this will be also moved even more OS, and we will see a flow back to the city or just job cuts

 

[aus_trader]

The reduction of office space in the inner city is not the trend currently emerging. While there is considerable differences between companies and certainly a difference between private companies and government tenants .. the general trend is for similar sized office space.

Currently the most common model appears to be for a hybrid of X days working from home and Y days working from the office (2 home / 3 office or 1 home / 4 office are common themes). The designs being developed are allowing for lower peak people numbers but with greater space between workstations.

The above is only for Sydney inner city office space, based on the design briefs currently being put to Architectural firms and being submitted for DA approval. Although 3rd party reports out of Melbourne are telling a similar story.

I don't think the final model has been settled for either employees or companies and it will take a while yet.

Yes I've also seen part work from home / part come into the office scenarios for some office workers but the same level of full time occupancy and cubicle density will be unlikely to continue. I believe the tide has turned for good outsourcing is going full scale which is great for companies like FLN.

So just to clarify when I say outsourcing is going full scale I am not talking about putting a call center in India or Malaysia and run the rest of the operations from the CBD head office. I am talking a lot of the work itself such as design, customer support, advertising, web design/maintenance (Used to be done by the IT department), back office functions such as record keeping, backing up etc being outsourced. I think @qldfrog sees the same transformation that is taking place.

 

[qldfrog]

Yes I've also seen part work from home / part come into the office scenarios for some office workers but the same level of full time occupancy and cubicle density will be unlikely to continue. I believe the tide has turned for good outsourcing is going full scale which is great for companies like FLN.

So just to clarify when I say outsourcing is going full scale I am not talking about putting a call center in India or Malaysia and run the rest of the operations from the CBD head office. I am talking a lot of the work itself such as design, customer support, advertising, web design/maintenance (Used to be done by the IT department), back office functions such as record keeping, backing up etc being outsourced. I think @qldfrog sees the same transformation that is taking place.

Sadly for the west, no difference between someone designing in bali mumbai or Sydney, so loss for Oz mid term

 

[aus_trader]

Sadly for the west, no difference between someone designing in bali mumbai or Sydney, so loss for Oz mid term

Very true @qldfrog, it's sad that we will not have all the jobs to ourselves at any cost to companies in order to hire us !

However there is no turning back. I have seen this type of scenario play out in front of my own eyes in the manufacturing sector in Australia where I thought I had a 40-year career for life in Automotive manufacturing. We know what happened to that sector.

So this time it's the transformation of administrative/office jobs. Any job that could be done remotely will have to compete with the Global workforce as companies like FLN start offering the skilled talents of freelancers from around the globe to compete for the same job.

It's a slow process as successful companies adapt and change and as rigid headstrong firms get priced out and disappear over time, but I think it's good to be aware of these global shifts taking place. I had tunnel vision back in the manufacturing days and even as the slow shift was happening all around me, that caused all Automotive manufacturing in Australia to move to overseas I decided to bury my head under the sand until being laid off one day. Could have re-trained or moved to another sector if I kept my eyes open

 

[qldfrog]

Very true @qldfrog, it's sad that we will not have all the jobs to ourselves at any cost to companies in order to hire us !

However there is no turning back. I have seen this type of scenario play out in front of my own eyes in the manufacturing sector in Australia where I thought I had a 40-year career for life in Automotive manufacturing. We know what happened to that sector.

So this time it's the transformation of administrative/office jobs. Any job that could be done remotely will have to compete with the Global workforce as companies like FLN start offering the skilled talents of freelancers from around the globe to compete for the same job.

It's a slow process as successful companies adapt and change and as rigid headstrong firms get priced out and disappear over time, but I think it's good to be aware of these global shifts taking place. I had tunnel vision back in the manufacturing days and even as the slow shift was happening all around me, that caused all Automotive manufacturing in Australia to move to overseas I decided to bury my head under the sand until being laid off one day. Could have re-trained or moved to another sector if I kept my eyes open

Sure, but this has profund effects as we have basically priced ourselves out of every value added job, and with automatisation, there is not much leftno manufacturing, no office admin, retail, barista and taxi truck machinery drivers for a short time

 

[aus_trader]

Sure, but this has profund effects as we have basically priced ourselves out of every value added job, and with automatisation, there is not much leftno manufacturing, no office admin, retail, barista and taxi truck machinery drivers for a short time

There will be completely different jobs that will arise due to the shift taking place however.

Things like automation engineering, robotics, design, CAD, photoshop, video editing, making movies/documentaries and a whole lot of other creative jobs cannot be replaced by automation or computers IMO.

 

[qldfrog]

There will be completely different jobs that will arise due to the shift taking place however.

Things like automation engineering, robotics, design, CAD, photoshop, video editing, making movies/documentaries and a whole lot of other creative jobs cannot be replaced by automation or computers IMO.

But they can all be done os for cheaper

 

[aus_trader]

But they can all be done os for cheaper

That's the scary part mate...

We may have to be content with a lower pay.

 

[aus_trader]

Rather than looking out into the stock universe to find those rare candidates that could be further analysed, I decided to take a good look at the portfolio itself. Something that jumped out at me was the low proportion of dividend paying stocks currently held. In previous years, especially the last two years there was a lot of dividend stocks that were included as selections for this portfolio.

So is there something that I am doing differently ? Is there some fascination with the new kids on the block, those growth stocks with sky high valuations ? Have dividend stocks become old fashioned and boring ?

All are valid questions and the answers to the those questions are NO, NO and NO.

Dividend stocks are always a delight for me and even in this environment there is a couple of dividend paying stocks in the current portfolio. You see, it's not that I have actively neglected dividend paying stocks from my research, but dividend stocks themselves have become less attractive that I have looked for other themes that may produce better capital appreciation than taking the risk of holding the good old dividend paying blue chips where their margins are coming under pressure.

So I hope that answers the question about less dividend paying stocks currently in this portfolio but as and when stars align for the right dividend paying candidates to be included into this portfolio I will happily share my research such as with today's dividend stock bought for this portfolio, more about that later...

From what I see, there are seismic shifts happening and I am doing independent research that probably no one else is doing, not even the big research houses with huge teams of resources/analysts. I hope I can say that without being arrogant, because they are peddling the same old dinosaurs onto their clients and recommending to load up on the same old banks and yesterday's market darlings in most cases. In fact as most of you know I am as humble as pie and readily accept when I get my research wrong

A recent example where I have not done the deep diving into stock research was when I bought CSR Limited (CSR) for this portfolio. I said CSR was selling sugar products at the supermarket as well as construction materials. When @Dona Ferentes and fellow members pointed out that there was no sugar business in CSR, I had to eat humble pie and accept that I made a mistake and promptly thanked you guys for pointing it out. Thankfully CSR was put into this portfolio at a opportune time when the building/housing boom 2.0 was going gangbusters. Hopefully some of you got to see the fastest residential real estate rise in our lifetime if you lived in the inner suburbs of a capital city, doubling or close to doubling from the start of the COVID (when the property market was in a slump) to now, depending on which suburb. So the good thing is even if I/you weren't fortunate enough to experience the direct wealth effect of owning property in the right pockets of the cities, we got to see a good share price appreciation along with chunky dividends from CSR thanks to it's building materials business riding on the back of this property boom.

Now to a little bit about declining dividend yields or unsustainable dividend payers which could be dividend traps waiting for unsuspecting investors and traders to sleep walk into. On the face of it, everything looks super rosy, in fact the share market is booming at all time highs:


So from the outside it's a shiny new car. Fast as well, so could be a Lambo or Ferrari ?️

Although nothing too concerning to stop me from buying stocks, there is a slightly different story happening in the engine room where I spend most of the time. That's to do with the dividends. Basically except for a few stocks that are bucking the trend and increasing their dividends, most companies are having declining dividends. I am not talking about the inverse relationship of increasing share prices that is causing a decrease in dividend yields. I am saying the dividends themselves are being cut, which makes it difficult for me to find those great yielding opportunities with increasing dividends like I used to.

Now to today's dividend paying small cap that was purchased. It doesn't need any introductions, it's been well covered in this portfolio multiple times in the past. It's grown via acquisitions of smaller Law firms since we looked at it last time and it has the same story of bringing justice to wrongdoings with it's slogan "Right Wrong":


The name of the company has changed to Shine Justice Ltd (SHJ) to reflect what they do I suppose. The business itself is staying quite resilient to the current environment and the numbers show healthy growth with lower overheads:



As a result this is one of the companies that is able to increase it's dividends even in the current environment. Also it's from a healthy balance sheet, so in a sustainable way:



Being in the small end of the market, there is probably less coverage of this stock in the media and there is somewhat wide bid-ask spread, so I had to put my purchase order near the bottom of that range and wait for a long time to get filled. Just my 2c to be mindful of that and be patient if buying shares of this company. Every 2c saved could add up over time ?

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