FFJ Portfolio – May 2023

This FFJ Portfolio - May 2023 report is an overview of my recent investment activity.

The month of May was interesting. The risk of failure in the US debt ceiling negotiations contributed to weakness in the share price of many companies. This is borne out by the monthly variance in the total value of the holdings in the FFJ Portfolio (see below).

US lawmakers in the House of Representatives passed a bipartisan bill on May 31 to raise the debt ceiling. However, Senate approval is still required. Should the Senate not approve the bipartisan bill in short order, there is a very strong probability the US government will be unable to meet all its financial obligations.

However, even IF the Senate approves the bipartisan bill in a timely fashion, there is a litany of problems (ie. sluggish growth, rising interest rates, high inflation) that remain.

There is evidence of weak economic growth in the United States and China, the world’s #1 and #2 economies. This is borne out by weak forecasts by several bellwether companies (eg. Home Depot, Lowe's, Macy's, and Costco to name a few).

In addition, China faces significant problems. Skyrocketing unemployment (the official unemployment figures appear to be grossly understated), foreign companies relocating their operations from China to countries such as Vietnam, Thailand, and India, and plummeting real estate values are signs that all is not well.

In addition, Germany's effort to exit its economic downturn faces headwinds because China is its most important trading partner; Germany slipped into recession in Q1 2022 when the energy price shock in 2022 took its toll on consumer spending. Should Europe's biggest economy continue to experience a slowdown, this would spell trouble for the rest of the European region, which only narrowly avoided a recession at the start of 2023. France, for example,  has enjoyed a strong economic recovery since the pandemic but recently it reported that consumer spending fell for the third consecutive month in April.

We also have to contend with inflationary pressures. Higher interest rates to tame inflation run the risk of tipping an economy into a recession.

In addition, the Ukraine war and the climate crisis, both pose risks to global supply chains and food prices.

Needless to say, investing is challenging given all these headwinds. Nevertheless, my plan remains to invest in undervalued/fairly valued high-quality companies.

Purchases In The FFJ Portfolio

During the month, I made the following purchases in the FFJ Portfolio.

Agilent Technologies (A)

On May 10, I initiated a 200-share position @ ~$127/share in one of the 'Core' accounts within the FFJ Portfolio and disclosed this purchase in this post. My total A exposure is currently 200 shares.

Blackstone (BX) and Blackrock (BLK)

On May 9 I acquired additional shares in a couple of my existing holdings and disclosed these purchases in this May 12 post.

• BLK - acquired 30 shares @ $635.349 bringing my total exposure to 130 shares
• BX - acquired 100 shares @ $81.649/share bringing my total exposure to 1,462 shares

Thermo Fisher Scientific (TMO)

In this May 19 post, I disclose the purchase of 52 shares @ ~$515/share within one of the 'Core' accounts within the FFJ Portfolio.

TMO subsequently held its 2023 Investor Day on May 24. After listening to management's outlook, I acquired an additional 25 shares @ ~$507/share within another 'Core' account within the FFJ Portfolio. I disclose this purchase in this post.

My total TMO exposure is 77 shares.

HEICO Corporation (HEI-a)

I acquired 200 non-voting shares (HEI.a) @ ~$132/share on May 23 through one of the 'Core' accounts in the FFJ Portfolio and disclosed this purchase in my May 23 post.

I subsequently acquired another 100 shares at ~$127/share on May 26 through the same account and disclosed this purchase in my May 26 post.

My total HEI-a exposure now consists of 400 shares held in one of the 'Side' accounts and 300 shares in one of the 'Core' accounts in the FFJ Portfolio.

Purchases In A Retirement Account

Automatic Data Processing (ADP)

The majority of my ADP exposure is in a retirement account. On May 30, I disclosed in this post the purchase of additional ADP shares @ ~$207/share.

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.

The income from the holdings within the FFJ Portfolio is accessible here.

During May, the holdings within the FFJ Portfolio generated:

• 'Core' accounts: ~$1,858 CDN and ~$2,046 USD
• 'Side' accounts: ~$2,353 CDN and ~$1,085 USD

YTD dividend income is:

• Core' accounts: ~$8,939 CDN and ~$13,945 USD
• 'Side' accounts: ~$10,610 CDN and ~$9,147 USD

I received dividend income from the following companies in the FFJ Portfolio and retirement accounts for which I do not disclose details.

• Apple (AAPL)
• Bank New York Mellon (BK)
• Blackstone (BX)
• Carrier Global (CARR)
• Mastercard (MA)
• Paychex (PAYX)
• Walmart (WMT)
• West Pharmaceutical (WST)
• Emera (EMA.to)
• SMART Centres Real Estate Investment Trust (SRU-UN.to)
• The Bank of Montreal (BMO.to)
• The Royal Bank of Canada (RY.to)
• The Toronto-Dominion Bank (TD.to)

Holdings

The monthly FFJ Portfolio holdings dating back to December 2018 are accessible here.

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

NOTE: The above values exclude investments in several tax-efficient accounts for which I do not disclose details.

I have no idea how a company's share price will behave in the short term. Therefore, I try to invest in high-quality companies from a long-term perspective.

Periodically, investors will ask me for my opinion about a particular company. I am not a financial advisor, and therefore, I caution them that I am merely sharing my thoughts based on my circumstances.

Some of the companies presented are likely because a company's share price has fallen dramatically. Share price behaviour, however, is not the basis upon which to make an investment decision. Investing based on share price behaviour is akin to gambling.

In many cases, I can easily eliminate some of these suggested companies. Given the global risks identified earlier in this post, I see no reason to invest in a company whose credit risk is or is close to, non-investment grade territory. Although my decision to exclude higher-risk companies as potential investments might prove to be wrong, I know I would be inclined to monitor higher-risk investments far too often. I do not need to complicate my life! Therefore, I choose to invest in companies I am confident would remain in business even if the stock market were to shut down for some time.

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.