Q3 2024 Portfolio Update

As of Q3 of 2024 I’m up 8.2% YTD, however, the MSCI World Index(URTH) was up 19% in that same time. MSCI World Index(URTH) is what I consider my benchmark. I did not do a Q2 portfolio update due to alot of life stuff happening in that time so I’ll talk about Q2 items here as well. Since the last update in Q1 I added 9 new positions while getting rid of 3.

The best performers this year have been FDEV, BSVN and CSV up 91%, 40% and 38%. FDEV was the biggest loser last year and is now close to where my cost basis is. I review positions at least once a year and I usually look at a whole industry and the video game space is coming up in Q4. I held onto FDEV due to insiders continuing to purchase stock while their results came in bad. The poor results were mostly due to new games selling a lot less than projected. Fiscal 2024 Fin report looks awful on the surface so we’ll see if I’ll keep holding.

The main detractor this year has been ASAI which is down 51%. This is mostly due to Brazilian interest rates increasing rather than decreasing which is what I thought would happen. Also the company is has alot of floating rate debt which has not been good for the company. However I still think that rates are too high with the Selic rate at 10.75% while inflation is just a 4.3%. So I continue to hold but may do some tax loss harvesting even though I don’t think thats a good idea but with the selling of Village and Acea this year with gains I wouldn’t mind offsetting it and buying ASAI back at these lower Prices.

Below is my portfolio and the additions and subtractions since the last update.

Portfolio as of Q3 2024

New Additions Since Last Update

NZME Limited(ASX:NZME)
Link to Article(Link)

Caltagirone Editore(BIT:CED)
Link to Article(Link)

Deutsche Beteilgungs AG(ETR:DBAN)
Link to Article(Link)

Sendas Dis(ASAI)
Link to Article(Link)

One Group Hospitality(STKS)
Link to Article(Link)

ISEC Healthcare(SGX:40T)
This is the first of my purchases that did not have a article yet. I’ve been watching the company for awhile and decided to finally purchase the company due to a number of exits this year and a high cash balance. ISEC is a eye care healthcare provider operating in Southeast Asia. The company is quite cheap at 12 times EV/EBIT with an excellent balance sheet while having decent underlying growth of 3-6%. The company is focused on rolling up the eyecare market in Southeast Asia where the majority of their growth has come from. I’ll probably write a full article in Q4.

Q&M Dental(SGX:QC7)
Another Company I purchased without a write up though I have been watching this one for awhile. The company is operating in dentistry industry with the majority of revenue in Singapore but the company is growing in Malaysia. The company is trading at 11 Times EV/EBIT while growing center count organically with ROIC over 20% while also paying a nice dividend. One of the companies major investments Axiom Dental which is a dental company based in China is starting to recover and Q&M investment may grow significantly. This is another I plan to do a full write up in Q4.

RCI Hospitality(RICK)
Another Company I purchased without a write up though I have been watching this one for awhile. RICK’s bombshell restaurants have been struggling recently and the company took a large write off this year on some clubs purchased in the prior years. However the club segment is still very profitable and excluding the bombshell segments the company is trading at an adjusted 9-10 times EV/EBIT. The company can still acquire clubs at very attractive multiples and the company shows signs of refocusing on its core operations rather then doing side projects as in the latest earnings call the company pulled out of the bid for a casino in Colorado and seeks to sell the land and other items invested into that project. Even though Bombshells restaurant’s future is uncertain I’m more certain that the club segment should be fine and grow going forward the recent decline in same store sales in both the clubs and the restaurants can partly be attributed to the restaurant industry in general struggling which I wrote in my article on STKS. I may get a official write up on RICK in Q4 though I’m not in a rush on that one.

Capri(CPRI)
I use to own Capri back in 2023 as I was bullish on the prospects of Jimmy Choo and Versace while thinking that the decline in Michael Kors could be over. 2023 was not a good year for Capri and the stock price fell and I think I was down 30% on my purchase price at one point. That’s when Tapestry(TPR) came to save me and announced the acquisition of Capri 20% above my purchase price which I then decided to sell. Since then the acquisition was challenged by the government as it would lead to a monopoly in the “accessible luxury space” and the stock price fell back down to levels pre acquisition announcement. I brought back in before the end of the trial which was going on in September as I think this one has a real good chance of going through as the governments argument over a monopoly in accessible luxury seems flimsy at best. Also I received confirmation bias while listening to the Yet Another Value Podcast with Chris Demuth. This will resolve before I can do a write up.

Subtractions Since Last Update

Village Super Markets(VLGEA)
As I said in my last article on VLGEA I think that profit margins have peaked for the company and even though it is still cheap(based on the peak profit margins) the expected return going forward is only barely above a 10 year note so I decided to sell as I don’t need to worry about profit margins going forward with a 10 year note. Also looking at an analysis of all the grocery stores google ratings owned by the company I found the rating of all the stores to average under 4 stars and recent reviews pointing to a decline rather than a increasing trend.

ACEA SPA(BIT:ACE)
I’ve held ACEA for nearly 2 years now and it has been a decent performer. With my cost base around $12 a share and a 6% dividend my CAGR has been almost 25%. ACEA was trading at 9 times earnings when I brought it but is now trading at 11 times. This isn’t that expensive but on a EV/EBIT basis the company is closer to 20 times which is more reasonably valued. Acea’s debt maturity is only 4.2 Years and with a cost of debt of only 2.2% a significant risk to the company will be the increasing cost of its debt given the current interest rate environment. For example, Italian 10 year bonds trade at 3.5% and a company would probably trade at a 1-2% premium to this. If Acea’s interest expense doubled profits would fall 50%. Even though I’m actually on the interest rates going lower side of things I have enough money in other investments betting on that, that I don’t need Acea as another one in fact I probably need more investments that will benefit from higher for longer rates or won’t care about interest rates.

Warner Bros(WBD)
I purchased a small position in AT&T in 2020, prior to the spin-off, after monitoring the company for some time. While I found it intriguing, I decided to sell due to the debt load. I may consider buying shares in the future, but right now.