Contents
On December 30, I posted my 2023 Year End FFJ Portfolio Review. In this FFJ Portfolio - December 2023 report, I provide a recap of my recent investment activity during the month and a snapshot of the holdings within the FFJ Portfolio on the last trading day in December (December 29).
Short term price gyrations are of little relevance to me; I am interested in how my investments perform over the very long term. Nevertheless, I perform these monthly snapshots so I can look back and gauge the success of my investment decisions. These monthly reports going back to December 2018 are accessible here.
In December 2018, the FFJ Portfolio totals were:
Core Accounts: ~$350,809 CDN and ~$418,907 USD
Side Accounts: ~$715,363 CDN and ~$496,589 USD
Total: ~$1,066,172 CDN and ~$915,496 USD
In addition to having made multiple purchases subsequent to December 2018 (and a limited number of sales), my holdings have (for the most part) appreciated in value. The increase in the value of the FFJ Portfolio from December 2018 to December 2023 is ~$381,735 CDN and ~$4,011,986 USD.
The Return Of Irrational Exuberance
In December, we experienced the return of irrational exuberance thus making it very difficult to identify attractively valued companies.
The following are examples of companies where nothing fundamentally changed in a matter of weeks yet their shares went from undervalued/fairly valued at the time of my last purchase to currently being overvalued.
NOTE: The 'current' prices provided below are as of December 29.
Thermo Fisher Scientific
In my November 14 Buy Thermo Fisher While It Faces Short Term Headwinds post, I disclosed the purchase of additional shares @ ~$445. At the end of December, however, shares are trading @ ~$530. How can a company this size increase in value by $85/share in just over 1 month?
Blackstone
I concluded my last Blackstone post dated October 22 with:
I last acquired BX shares on May 9 @ $81.649/share and disclosed this purchase in my May 12 post. My current BX exposure is 1471 shares which are held in a 'Core' account in the FFJ Portfolio; BX was my 20th largest holding when I completed my Mid-2023 Investment Holdings Review at which time the share price was ~$93.
If BX were to retrace close to my May 9 purchase price, I would very seriously consider acquiring additional shares. Much would depend, however, on what other companies are 'on sale'.
For now, I consider BX to currently be moderately undervalued but only intend to increase my exposure through automatic dividend reinvestment. If BX's share price remains close to the current ~$94.50, I should receive an additional 10 shares ((1471 * $0.80 * 85%)/$95); shares are held in a non-registered account and as a Canadian resident I incur a 15% dividend withholding tax.
Shares currently trade at ~$130. How can Blackstone have increased in value by ~$48/share in ~7 months?
Blackrock
When I wrote my October 15 BlackRock Is Moderately Undervalued post, shares were trading at $627.66. Shares trade at ~$810 just over two months later! The business has not fundamentally changed in such a short time frame to warrant a ~$182 share price increase. Essentially, shares have gone from undervalued to slightly overvalued.
Rollins
In my September 7 Rollins Exposure Increased, I disclosed the purchase of additional shares @ $34.86 because I considered shares to be attractively valued. Fast forward to the end of December and shares now trade just under $44.
Once again, nothing about the company has fundamentally changed to warrant such a share price increase. Investors have merely bid up the share price to the point where it is detached from the underlying fundamentals.
Agilent Technologies
I last disclosed the purchase of additional Agilent shares @ $113.82 in my September 12 Agilent Technologies Exposure Increased post. I wrote a subsequent Agilent post on November 22 at which time shares were trading at ~$124. I concluded that post with:
In several posts, I state my desire to acquire shares in high-quality companies that have fallen out of favor. While A is still undervalued, its valuation is slightly less attractive than when I last acquired shares on September 11. With a share price increase of ~22% since the end of October. This suggests that investors are warming up to A.
I think there may be an opportunity to acquire additional A shares at a more favorable valuation if we experience a broad market pullback. I do not, therefore, intend to acquire additional shares at this point.
Shares currently trade at ~$139. I was not prepared to acquire additional shares at ~$124 and am less inclined to acquire shares at the current share price.
In my August 30 HEICO Is Firing On All Cylinders post, I disclosed the purchase of additional shares at ~$127.75. In my December 19 Create Wealth With A Long Term HEICO Investment post, I concluded with:
Disclosure: I am long HEI-a. The young investors referenced in this post will initiate a position in HEI-a within the next 72 hours.
At the time of my recent post, shares were trading at ~$144. As I compose this post, shares trade just below $143.
I consider HEICO to be overvalued. These young investors have a VERY long investment time horizon and shares will likely be far more valuable a few decades in the future. Nevertheless, I am reluctant to acquire shares given current market conditions. I am cautiously optimistic we will get a broad market pullback within the next couple of months and hope HEICO gets caught in any downdraft.
Purchases
I only made 1 small purchase in December.
Exxon Mobil (XOM)
In my December 8 post, I disclosed the purchase of 100 XOM shares on December 6 at ~$99/share. My XOM exposure also increased during the month through the automatic reinvestment of dividend income. I now hold 735 shares in a 'Core' account and 446 shares in a 'Side' account within the FFJ Portfolio. Additional shares are held in a retirement account for which I do not disclose details.
Sales
Abbvie (ABBV)
After announcing 2 acquisitions totaling ~$18.2B in a matter of days I decided to exit my ABBV exposure. My reasons for doing so are presented in my December 7 post.
Dividend Income
I base my investment decisions on risk, valuation, and long-term total potential return. Dividend metrics are of lesser importance. Nevertheless, I do track dividend income.
I received dividend income from the following companies in the FFJ Portfolio and retirement accounts for which I do not disclose details.
- Becton Dickinson (BDX)
- Blackrock (BLK)
- Broadridge (BR)
- Chevron (CVX)
- Church & Dwight (CHD)
- CME Group (CME)
- Emerson Electric (EMR)
- Exxon Mobil (XOM)
- Fortive (FTV)
- Goldman Sachs (GS)
- Home Depot (HD)
- Intercontinental Exchange (ICE)
- Johnson & Johnson (JNJ)
- Lockheed Martin (LMT)
- McDonald's (MCD)
- Microsoft (MSFT)
- Moody's (MCO)
- Nasdaq (NDAQ)
- Otis Worldwide (OTIS)
- Paycom Software (PAYC)
- RTX Corp (RTX)
- Rollins (ROL)
- S&P Global (SPGI)
- Union Pacific (UNP)
- Visa (V)
- Alimentation Couche-Tard (ATD.to)
- Brookfield Asset Management (BAM-a.to)
- Brookfield Reinsurance Partners (BNRE.to)
- Brookfield Business Corporation (BBUC.to)
- Brookfield Business Partners (BBU-un.to)
- Brookfield Corporation (BN.to)
- Brookfield Infrastructure Partners (BIP-un.to)
- Brookfield Infrastructure Corporation (BIPC.to)
- Brookfield Renewable Partners (BEP-un.to)
- Brookfield Renewable Corporation (BEPC)
- Canadian National Railway (CNR.to)
- Enbridge (ENB.to)
- Intact Financial (IFC.to)
- SMART Centres Real Estate Investment Trust (SRU-UN.to)
The income from the holdings within the FFJ Portfolio is accessible here.
During December, the holdings within the FFJ Portfolio generated:
- 'Core' accounts: ~$2,267 CDN and ~$7,426 USD
- 'Side' accounts: ~$2,504 CDN and ~$3,518 USD
Dividend income received in all of 2023 amounted to:
- Core' accounts: ~$22,658 CDN and ~$41,574 USD
- 'Side' accounts: ~$26,534 CDN and ~$23,609 USD
- Total: ~$49,192 CDN and ~$65,183 USD
In all of 2022, the holdings within the FFJ Portfolio generated:
- 'Core' accounts: ~$21,103 CDN and ~$36,392 USD
- 'Side' accounts: ~$23,702 CDN and ~$20,742 USD
- Total: ~$44,805 CDN and ~$57,134 USD
Holdings
The following are the monthly values of the FFJ Portfolio over the past several months.
January 2022
Core Accounts: ~$773,000 CDN and ~$1,858,000 USD
Side Accounts: ~$666,000 CDN and ~$1,475,000 USD
Total: ~$1,439,000 CDN and ~$3,333,000 USD
February 2022
Core Accounts: ~$778,000 CDN and ~$2,014,000 USD
Side Accounts: ~$672,000 CDN and ~$1,465,000 USD
Total: ~$1,450,000 CDN and ~$3,479,000 USD
March 2022
Core Accounts: ~$810,000 CDN and ~$2,118,000 USD
Side Accounts: ~$696,000 CDN and ~$1,554,000 USD
Total: ~$1,506,000 CDN and ~$3,672,000 USD
April 2022
Core Accounts: ~$770,332 CDN and ~$2,026,487 USD
Side Accounts: ~$658,363 CDN and ~$1,514,137 USD
Total: ~$1,428,695 CDN and ~$3,540,624 USD
May 2022
Core Accounts: ~$784,833 CDN and ~$2,133,728 USD
Side Accounts: ~$661,080 CDN and ~$1,499,998 USD
Total: ~$1,445,913 CDN and ~$3,633,726 USD
June 2022
Core Accounts: ~$742,473 CDN and ~$2,006,645 USD
Side Accounts: ~$595,911 CDN and ~$1,401,823 USD
Total: ~$1,338,384 CDN and ~$3,408,468 USD
July 2022
Core Accounts: ~$794,405 CDN and ~$2,230,466 USD
Side Accounts: ~$644,255 CDN and ~$1,539,292 USD
Total: ~$1,438,660 CDN and ~$3,769,758 USD
August 2022
Core Accounts: ~$740,560 CDN and ~$2,064,323 USD
Side Accounts: ~$637,547 CDN and ~$1,478,073 USD
Total: ~$1,378,107 CDN and ~$3,542,396 USD
September 2022
Core Accounts: ~$707,781 CDN and ~$1,894,989 USD
Side Accounts: ~$612,394 CDN and ~$1,311,542 USD
Total: ~$1,320,175 CDN and ~$3,206,531 USD
October 2022
Core Accounts: ~$740,555 CDN and ~$2,160,153 USD
Side Accounts: ~$624,677 CDN and ~$1,441,483 USD
Total: ~$1,365,232 CDN and ~$3,601,636 USD
November 2022
Core Accounts: ~$785,647 CDN and ~$2,311,806 USD
Side Accounts: ~$653,367 CDN and ~$1,516,013 USD
Total: ~$1,439,014 CDN and ~$3,827,819 USD
December 2022
Core Accounts: ~$737,157 CDN and ~$2,271,705 USD
Side Accounts: ~$602,514 CDN and ~$1,438,680 USD
Total: ~$1,339,671 CDN and ~$3,710,385 USD
January 2023
Core Accounts: ~$775,787 CDN and ~$2,387,269 USD
Side Accounts: ~$642,451 CDN and ~$1,520,472 USD
Total: ~$1,418,238 CDN and ~$3,907,741 USD
February 2023
Core Accounts: ~$757,627 CDN and ~$2,283,481 USD
Side Accounts: ~$634,210 CDN and ~$1,474,168 USD
Total: ~$1,391,837 CDN and ~$3,757,649 USD
March 2023
Core Accounts: ~$747,355 CDN and ~$2,385,759 USD
Side Accounts: ~$628,335 CDN and ~$1,532,785 USD
Total: ~$1,375,690 CDN and ~$3,918,544 USD
April 2023
Core Accounts: ~$768,494 CDN and ~$2,506,613 USD
Side Accounts: ~$638,604 CDN and ~$1,527,968 USD
Total: ~$1,407,098 CDN and ~$4,034,581 USD
May 2023
Core Accounts: ~$726,443 CDN and ~$2,536,273 USD
Side Accounts: ~$613,517 CDN and ~$1,480,114 USD
Total: ~$1,339,960 CDN and ~$4,016,387 USD
June 2023
Core Accounts: ~$769,378 CDN and ~$2,773,868 USD
Side Accounts: ~$630,919 CDN and ~$1,611,031 USD
Total: ~$1,400,297 CDN and ~$4,384,899 USD
July 2023
Core Accounts: ~$769,720 CDN and ~$2,884,064 USD
Side Accounts: ~$641,331 CDN and ~$1,670,716 USD
Total: ~$1,411,051 CDN and ~$4,554,780 USD
August 2023
Core Accounts: ~$742,952 CDN and ~$3,037,143 USD
Side Accounts: ~$619,549 CDN and ~$1,658,762 USD
Total: ~$1,362,501 CDN and ~$4,695,905 USD
September 2023
Core Accounts: ~$722,627 CDN and ~$3,001,498 USD
Side Accounts: ~$596,498 CDN and ~$1,584,096 USD
Total: ~$1,319,125 CDN and ~$4,585,594 USD
October 2023
Core Accounts: ~$695,571 CDN and ~$2,868,375 USD
Side Accounts: ~$576,003 CDN and ~$1,529,009 USD
Total: ~$1,271,574 CDN and ~$4,397,384 USD
November 2023
Core Accounts: ~$741,434 CDN and ~$3,117,406 USD
Side Accounts: ~$624,749 CDN and ~$1,643,731 USD
Total: ~$1,366,183 CDN and ~$4,761,137 USD
December 2023
Core Accounts: ~$776,979 CDN and ~$3,226,033 USD
Side Accounts: ~$671,468 CDN and ~$1,701,449 USD
Total: ~$1,448,447 CDN and ~$4,927,482 USD
NOTE: The above values exclude investments in several tax-efficient accounts for which I do not disclose details.
Final Thoughts
As noted earlier, there appears to have been a resurgence of irrational exuberance after late October/early November. I am, therefore, patiently waiting for a broad market correction with the hope of being able to acquire more attractively valued shares. Until such time as this happens, I continue to receive additional shares through the automatic reinvestment of dividend income.
That's it for now.
I wish you much success on your journey to financial freedom.
Note: Please send any feedback, corrections, or questions to [email protected].
Disclaimer: I do not know your circumstances and am not providing individualized advice or recommendations. I encourage you to make all investment decisions through research and due diligence. You should also consult your financial advisor where appropriate.
I wrote this article myself and it expresses my own opinions. I am not receiving compensation for it and have no business relationship with any company whose stock is mentioned in this article.
