Welcome to the Oak Investor Coaching Substack!
For newcomers to the Oak Community, I’m Gordon, a Management Consultant from Glasgow, UK.
I started Oak Investor Coaching in 2021 to introduce new investors to the benefits of the markets. There is always volatility, but over the long term, there’s no better place for your money.
In this post, I’ll be outlining the holdings in my portfolio.
I’ll go through each company, why I like them, and the Bear/Bull case for each.
I use SimplyWallSt for my portfolio summary, as well as my own tools for stock analysis.
To sign up via my referral link, please click the link below:
https://simplywall.st/?via=Oak
2022: A Year Like No Other
2022 has been quite a year for investors: with war in Europe, soaring inflation following the infinite money printing required to keep us all afloat during the events of the last few years, and so many others.
I currently operate across a number of brokerages based on my current needs.
I use Freetrade for my Stocks and Shares (S&S) ISA, Lightyear for my General Investing Account (GIA), and Fidelity for my workplace share scheme. This gives me the benefit of low transaction fees in my GIA account, and tax efficiency in my larger S&S ISA.
I also use IG and Trading212 for any more high risk leveraged investing or options, primarily as hedges during periods of uncertainty.
I tend to invest approximately 25% of my income per month, with higher or lower amounts based on opportunities I see.
Note that none of the following constitutes a buy or sell signal, and should be taken as information only. I am not a financial advisor.
Portfolio Holdings
Tesla (TSLA)
Thesis- I want to own the world’s premier EV company, with a wide moat in software, renewable energy and AI.
Bear Case- Change in sentiment, high P/E is punished by investors as competitors close gap, returned to mean stock price.
Bull Case- Breakthroughs in self driving, AI, robotics and solar energy. Return to ATH and beyond.
Jacobs (J)
Thesis- My current employer, contributions made through workplace salary sacrifice programme.
Bear Case- Global slowdown in consulting,
Bull Case- Continued streamlining and earnings growth.
Alibaba (BABA)
Thesis- Highly undervalued commercial and technology company, with a history of growth and global reach.
Bear Case- Further tensions between China and USA, delisting potential alongside continued lower profit margins.
Bull Case- Return to ATH as economic conditions improve in China, and tensions reduce.
Meta Platforms (META)
Thesis- Heavily undervalued company with great user numbers and products, punished due to focus on the Metaverse alongside declining advertising revenues.
Bear Case- Further sentiment decline as TikTok and other platforms grow, leading to slower growth.
Bull Case- Return to ATH as earnings continue to grow, minimising Metaverse projects and focussing on short term turnaround.
EOG Resources (EOG)
Thesis- I want to hold exposure to the oil and gas sector as commodity prices continue to increase during winter uncertainty. This company has competitive fundamentals in the sector, and pays a generous dividend.
Bear Case- A sudden drop in the oil price due to geopolitical circumstances, leading to a mass sell off in the stock. This would be hedged by my positions in renewable energy, and the tech sector.
Bull Case- A continued rise in oil and gas demand as supply shortages increase, leading to a rise in the stock price.
Tencent (TME)
Thesis- Similar to Alibaba, Tencent has tremendous reach within the Chinese market, and continues to sell off into attractive valuations. Consistent share buybacks and growing earnings are likely to lead to long term growth in the stock price.
Bear Case- Further declines in the Chinese market, or tensions geopolitically, leading to short term challenges in the stock price, ultimately returning.
Bull Case- Return to ATH as economic conditions and Chinese lockdowns improve.
Nintendo (7974 OTC)
Thesis- Household name with a leading presence in entertainment and gaming, with low P/E relative to the sector, growing earnings, generous dividends and solid fundamentals.
Bear Case- Recession hitting revenue and subscription numbers in the near term, leading to continued decline in earnings.
Bull Case- Mild recession having little impact on demand, returning to ATH alongside dividend stability.
TIPS
Thesis- With inflation as high as it is, I want protection to a fixed income security which is protected against the continually high inflation seen in global markets.
Bear Case- Sudden drop in inflation leading to spike in equity prices, leading to a sell off in the bond market.
Bull Case- Continued inflation protection and reliable hedged fixed income.
Apple (AAPL)
Thesis- The world’s biggest company in terms of market importance, and continually a leader in innovation and customer demand. I want to hold household names during recessionary periods.
Bear Case- Lockdowns in China impacting manufacturing, high debt and P/E leading to a decline as recessions hit globally, and investors seek protection in other asset classes, likely cash.
Bull Case- Markets recover and investors continue to support the technology sector, with Apple leading the way.
Microsoft (MSFT)
Thesis- I want to own one of the most successful software and hardware household names, which historically performs well during a recession.
Bear Case- Similar to Apple, declines in demand amid a global recession.
Bull Case- General support in the technology sector throughout a recession, returning to ATH.
Nike (NKE)
Thesis- I want to own an undervalued company in the retail space with global reach, resilient supply chains, and household name status.
Bear Case- Supply chains or lockdowns in Asia lead to a slump in sales, increased inventory and reductions in earnings.
Bull Case- Continued growth, returning to ATH.
Coca Cola (KO)
Thesis- I want to hold an undervalued household name during a period of recession, where demand is likely to remain high, and the dividend is above average.
Bear Case- Supply chains remain constrained, unable to reach growth estimates.
Bull Case- Return to ATH due to continued demand despite recession.
Twitter (TWTR)
Thesis- I don’t value this company, but I want to take advantage of a likely takeover at $54.20.
Bear Case- Failure to make a deal, leading to Twitter falling to the $20s.
Bull Case- Deal complete at $54.20.
JP Morgan Chase & Co. (JPM)
Thesis- I want exposure to one of the world’s most successful financial services companies, with solid earnings, a good dividend and competitive P/E ratio.
Bear Case- Continued uncertainty in the financial sector during a recession, with high inflation leading to declines in all asset classes.
Bull Case- Minor recession leading to return to equity markets and continued investment profits.
Alphabet (GOOGL-A)
Thesis- I want to own an undervalued name in the advertising space, with a robust business model and a diverse range of products.
Bear Case- Anti-competition losses, reduced advertising revenues, and loss of traffic to other platforms.
Bull Case- Positive returns, return to ATH based on increased advertising revenues.
So that’s it! All the basic outline of my portfolio. I’ve balanced and analysed this in line with my risk profile, time horizon and specialities. I want to further rebalance into dividend paying names, and gradually move out of my more risky assets into undervalued small cap companies, but this will require further research.
I’d love to hear about what you’ve got in your portfolio, and whether you agree with the bear or bull case for each.
Stay tuned for the next edition of the Oak Investor Coaching Substack!
-Gordon