The story began in mid-February, when I noticed a substantial increase in available funds within my CPF Investment Scheme (CPFIS), ready for stock purchases. I wasn’t expecting it but now that I think about it, this was likely due to the maturity of my T-bills invested with CPF.
The exact reason didn’t matter; having available funds was a pleasant surprise, especially without an active income.
Looking through the four stocks invested with CPFIS – OCBC Ltd (SGX: O39), Micro-Mechanics (Holdings) (SGX: 5DD), The Hour Glass Limited (SGX: AGS), and AEM Holdings (SGX: AWX), the first decision I made was to add more Micro-Mechanics and The Hour Glass.
Why these two and not the others?
I am pleased with the recovery made by Micro-Mechanics in recent quarters and am optimistic of a strong performance this year. As for Hour Glass, I wanted to add back the position I divested last year as I still believe that it can sustain its dividends going forward.
Given that OCBC is already my largest holding, I do not want to increase my exposure further. On the other end, I wanted to keep my exposure to AEM smaller as I am still monitoring if the company can turnaround its business.
To better illustrate my trading activity this quarter, here’s a visual overview of my buys and sells.
Getting More Income Beyond Banks and REITs
One consideration that I had when making my trades this quarter is to maintain my exposure to banks and REITs. Hence, despite the robust performance from the three Singapore banks, I instead added HRnetGroup Ltd (SGX:CHZ) and Frasers Centrepoint Trust (SGX: J69U), or FCT.
To further this diversification, I also increased my position in UMS Integration (Ltd) (SGX: 558). This involved a tactical manoeuvre: selling my existing UMS shares in my cash account and repurchasing a larger quantity through my CPFIS.
This might sound silly to you, but this approach freed up cash for other investment opportunities, particularly those ineligible for CPFIS.
While FCT is a REIT, my overall REITs allocation remains slightly lower due to the reduction of three Mapletree REITs holdings.
I’ve covered the reasoning behind these stock picks in my previous posts. Just click the in-text links or check the related posts list at the end for the details.
Opportunities in Growth Stocks
The increased volatility in US markets also presented me a chance to deploy additional capital into growth companies I believe in.
I raised further capital by divesting nCino Inc (NASDAQ: NCNO) and Novocure Ltd (NASDAQ: NVCR), accepting losses of 40% and 57% respectively.
The resulting funds were then strategically reinvested, increasing my holdings in iFAST Corporation (SGX: AIY), a Singapore-based fintech company, as well as Alphabet Inc (NASDAQ: GOOG) and The Trade Desk (NASDAQ: TTD).
I am optimistic of their long-term growth trajectory and believe the market is currently offering them at attractive prices.
Simultaneously, I sought to diversify beyond the technology sector. This led me to adding more Tractor Supply Company (NASDAQ: TSCO), a resilient performer in a challenging retail environment, and to initiate new positions in Ulta Beauty Inc (NASDAQ: ULTA) and e.l.f. Beauty (NASDAQ: ELF)
Ulta Beauty was a previous holding, which I divested in November 2021, shortly after a CEO change. Interestingly, part of those sales proceeds were used to purchase nCino. Now, the cycle completes as I reinvest the nCino proceeds into Ulta Beauty, coincidentally just after another CEO transition.
e.l.f. Beauty, a newer discovery, came to my attention during my Ulta Beauty research. Both operate in the beauty sector, albeit with distinct models, a topic I’ll explore further in a future post.
The recent shared experience of both stocks is a significant price drop after less than positive outlooks. Ulta Beauty is down around 20% year-to-date, while e.l.f. Beauty exprienced a sharp 48% decline.
Based on my preliminary research, I suspect the market has overreacted, though further downside is possible. However, with Ulta Beauty trading at a 15x forward PE and e.l.f. Beauty at 20x, I consider these reasonable valuations for a small position, allowing me to learn more.
This concludes my trades for the quarter. I am likely to remain on the sidelines for the coming quarter, unless I am “gifted” by another unexpected influx of funds.
Related Posts
Is It Still A Good Time to Buy Singapore Banks?
UMS Integration: Poised for a Stronger FY 2025 Performance
A Brighter Outlook for HRnetGroup
Will Frasers Centrepoint Trust Raise Its DPU for FY2025?
Micro-Mechanics 2Q 2025: Profits Skyrocket, Doubling Year-on-Year
iFAST 4Q 2024: Record Quarter and iFAST Global Bank Turned Profitable!
Alphabet (Google) Stock Price Dropped: Should You Buy?
Ouch! Trade Desk Suffers Brutal 33% Stock Plunge
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