Portfolio Changes 12 Sep 2018

The Sell

One of the rules we employ to manage our US portfolio is to reduce positions that have grown much faster than other positions. That point is reached if a position’s share in relation to the total portfolio has become too big.

Our position in Atlassian (TEAM) has reached this point for the second time this year. In May we already sold some shares, and now – on 12 September – we sold some more but will hold on to most of our position. While the share price was USD 62.90 in May, we now received USD 89.65 per share. Because this is also a significant relative increase in such a short term, in our view the risks associated with this position has increased, too.

Here is a list of our trades in TEAM for the Optarix US Portfolio:

Trade	Date	Transaction	Price
1	29 Dec 2015	Bought	30.79
2	02 Jun 2016	Bought	24.91
3	01 Aug 2016	Sold	29.99
4	05 Jun 2017	Sold	36.93
5	05 May 2018	Sold	62.60
6	12 Sep 2018	Sold	89.65

Trade 1 was for starting the original position. Trade 2 added more shares at a reduced price. We did trade 3 when the price allowed selling to break even for the overall position. As you can see, each time the price was even higher. Between Dec 2015 (shortly after IPO) and Sep 2018 the share price almost tripled. Therefore we took more money off the table with trades 4 to 6 and move the proceeds into other existing or new positions. Bottom line we see a gain of 275% at the moment. We continue to participate in future increases with the remaining position in TEAM.

Note that TEAM are investing all cash back into the business and as a result don’t show a profit, let alone pay a dividend. Therefore the only way to generate cash from this position is to sell shares when the price is right. This high-tech company is therefore fundamentally different than a dividend aristocrat. The latter create cash in the form of a dividend that increases once a year.

The Buy

With the available cash from selling some TEAM shares and from dividends, we started a new position in Exxon Mobil (XOM). From the dividend aristocrats in the S&P 500 that we don’t already own, this was the one with the lowest price/earnings ratio (P/E ratio). Exxon has been pay a dividend since 1911. It has increased its dividend for about 35 years. The dividend yield is currently at 3.96% which is quite nice.

We are aware that some investment funds and asset managers are selling assets in the oil industry. To some degree this is a personal decision in our view, in some cases driven by ethical or moral reasons. We respect that. However, we also believe that XOM is a great addition to the Optarix US Portfolio. The dividend yield is great and if XOM continues to raise the dividends each year (as it did in the last 35 years) it represents a good source of cash that we’ll be happy to use in the future to broaden our investments even further.

Summary

This is yet another of how we use the opportunity to reduce a position that has seen substantial gains and start a new position with the proceeds of the sale and the accumulated dividends of the portfolio positions. Both, reducing one position and adding a new position, reduce the point risk each position represents. We review our positions regularly and rebalance our portfolio as needed.

In total the Optarix US Portfolio now has 35 positions plus a small portion of cash. Going forward we intend to eventually have a position in each of the S&P 500 dividend aristocrats combined with a selection of positions in hightech companies.

Happy investing!

Disclaimer: We own shares in TEAM and XOM. We have no plans to change these positions or to start new positions of any company that may be mentioned in this post. This post does not represent a recommendation to buy or sell any securities (mentioned or not). You are responsible for your own decisions. Do your own due diligence and speak to your financial adviser before deciding.