This month’s investment journal delves into the practical execution of The Grand Plan which I outlined in the previous month’s update. While things unfolded mostly as anticipated, the doozy of moves I have made this month does include some surprises. December markets turned out quite an exciting conclusion to the year and so I count myself lucky to have been able to pull this portfolio rebalancing off in time.

Overview

Moves

Rebalances

• On December 1st I sold my stake in Realty Income (O) at an average price of $53.04 marking a loss of 10.40%. I reacquired a smaller temporary position in the company on December 18th at an average price of $57.3.

• On December 1st I sold my stake in 3M (MMM) at an average price of $98.46 marking a loss of 57.93%. I reacquired an equivalent size position in the company on December 13th at an average price of $100.79.

• On December 1st I sold my stake in Broadcom (AVGO) at an average price of $919.84 marking a return of 67.32%. I reacquired a slightly larger position in the company on December 6th and 8th at an average price of $922.88.

• On December 1st I sold my stake in AbbVie (ABBV) at an average price of $143.73 marking a return of 61.84%. I reacquired a smaller position in the company on December 6th at an average price of $145.17.

• On December 1st I sold my stake in Starbucks (SBUX) at an average price of $97.95 marking a return of 17.98%. I reacquired a slightly smaller position in the company on December 6th at an average price of $95.65.

• On December 1st I sold my stake in Bank of Nova Scotia (BNS) at an average price of 60.69 CAD marking a loss of 11.82%. I reacquired a smaller position in the company on December 7th at an average price of 59.72 CAD.

• On December 6th and 13th, I reacquired an equivalent size position in Unity (U) which I sold last month, at an average price of $33.62.

New positions

• On December 4th I started a new position in Visa (V) at an average price of $256.00.

• On December 4th I started a new position in Novo Nordisk (NOVO-B) at an average price of 678.10 DKK.

• On December 6th I started a new position in Costco (COST) at an average price of $605.43.

• On December 13th I started a new position in Waste Management (WM) at an average price of $605.43.

• On December 18th I started a temporary position in American Tower (AMT) at an average price of $213.68.

• On December 18th I started a temporary position in VICI Properties (VICI) at an average price of $31.51.

Sales

• On December 14th I sold around 13.5% of my position in Tesla (TSLA) at an average price of $250.91 marking a return of 1293.94%.

• On December 18th I sold my stake in Adobe (ADBE) at an average price of $596.57 marking a return of 65.79%.

Performance

Dividend overview

I received a total of $162.33 in dividends before taxes for December 2023, an increase of 23.04% compared to the same month last year at $131.93.

Commentary & Review

Plan vs. execution

Stable Giants

While I stuck to the plan laid out in last month’s update quite closely, reality did turn out a bit differently. Rather than initiating a new position in Otis (OTIS), the elevator/escalator giant, as I had initially decided, I opted instead for a different stable services provider - namely Waste Management. The Chinese real estate market has undergone a notable shift for the worse - as one of the major themes of this year. It is not what it used to be. This implies that Otis will increasingly have to rely on Saudi real estate investment projects in the coming years and the prospect of that is not something I am particularly excited about. Given that the current valuation of the company does not reflect this newly assumed risk, I have decided to postpone my entry into the company. While there may come another opportune time to initiate a position in Otis, it will remain as a Top Pick on my Watch List for now. Fortunately, with Waste Management, I do not foresee any short-term risks on the horizon. In fact, I anticipate the opposite - expanding markets like China, India, and Taiwan are opportunities for significant success for trash/recycling services.

Living out my REIT dreams

In my plan, I also announced that I would exit Realty Income and the REITs category for good, as I will be looking to buy my first home in 2024, granting significant exposure to the real estate sector that way. Instead, I went and reacquired a position in Realty Income, along with two other REITs: American Tower and VICI Properties. So what gives? REITs are currently beaten down across the board, due to the interest rate hikes we have experienced in 2023. For this reason I believe the category as a whole currently represents very little downside. So as a temporary measure, until we find the right home to buy, I am placing some of my former Tesla funds in these three wonderful REITs as an alternative to cash. This does naturally pose a higher risk than none yet also offers a much higher yield than what I am able to achieve with a savings account. The average yield of these three REITS is 4.57% right now and at the same time, it allows me to live out my REIT dreams, with a fully stocked sector category, before saying goodbye forever…

Uncertain surrounding Adobe’s future

On December 18th Adobe and Figma announced that their $20 billion merger would be annulled. The deal failed to pass regulatory approval and as per its terms, Adobe is required to pay Figma a $1 billion reverse termination fee. Adobe stock jumped a few percent on the news which I expected, regardless of how inverted I think this reaction is to reality. As a reader, you may remember that back when the deal was orginally announced, Adobe stock dropped like a rock, as investors believed the price they were paying for Figma was too high, valued at only half of what Adobe offered in its prior funding round. Following the termination announcement I immediately went back to browse through my old comments on the subject and they essentially boil down to this:

1. Figma is a next-generation creative software company and a huge threat to Adobe long-term. Personally a big fan too.

2. With Adobe stock down on the news, that means failure to complete the deal is a short-term positive.

3. Should Adobe be successful in acquiring Figma, it will be great for the stock in the long term.

4. Adobe is a quality company overall, regardless of the deal.

With no. 4 being what it is, I had actually expected to hold onto my shares following the news. But something just did not feel right. I realized that my excitement about the company was tied to its future potential with Figma. With that and the massive increase in valuation the stock has experienced over the past year, I decided to sell. I really do think that Adobe’s monopolistic reign is under threat by Figma (being a digital designer and actively using both suites myself) and that their investors could be in for a rude awakening. I may be overreacting of course, but with no. 2 turning to reality I feel much better stepping out now and taking gains. Should an opportunity to invest in Figma pop-up one day, however, consider me intrigued. For now, they remain a private company. Adobe being unable to absorb a credible threat is likely also a huge win for consumers in the long term and may spawn exciting new developments in the creative software space.

Welcome to the Club

Much did, however, go as expected. Two stocks that I have eyed for quite a while - Visa and Costco now finally join my portfolio, along with the return of Novo Nordisk, which was once a large part of my portfolio and which I sold far too early. These are all three lesser positions only making up 1% of my portfolio as of now, but I expect all of them to grow significantly over time, both through further direct purchases and stock appreciation. In fact, my Costco position has already gained 6% as the company announced a special dividend of $15 per share, only a few days after my purchase. I also wrote an in-depth post on why I am so excited about adding Visa and Mastercard (MA) which you might want to check out if you have not already. None of these companies are cheap from a valuation perspective, but I believe them to be uniquely well-positioned for the future.

I now hold 17 positions in total, spread across different sectors. A whole lot of them are lesser positions making up 1% or less of my portfolio, even after decreasing my Tesla position now quite a bit. This is a bit of a shame and with me setting aside cash for the down payment on my future home, it is likely to take a while before I really have the opportunity to change this fact. But with the rebalancing, I finally feel really great about the positions that I own and my ability to diversify amongst them. As for how my portfolio performed for the full year 2023, you will have to check out the front page where I have updated my YTD, 3-, 5-, and 10-year performance against the S&P500. Much more on this, of course, in my upcoming 2023 Year in Review post…

Watch List

Updates to the Watch List this month: A few changes - mostly just removing the positions I have now acquired. I have likewise demolished the Real Estate category, as will no longer be looking for stocks to buy in this sector. Finally, I have added Grab (GRAB) the South East Asia equivalent to DoorDash/Uber, as I am considering increasing my exposure to this growing geographical area.

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.