When I reviewed the portfolio, I noticed the underperformance was mainly contributed by stocks or REITS that I considered "safe" and "cheaper" based on conventional valuation metrics such as higher dividend yield and lower price earning ratio. Those stocks that I perceived more "expensive" were the ones that held up better. If there was one thing I learned, I should have weighed more on the quality and the moat of a company rather than the valuation before investing to avoid "value trap".
On 1st June 2020, First REIT dropped by almost 30% from $0.885 to $0.635, before recovering some losses to close at $0.695, on news that Lippo Karawaci planned to initiate a restructuring process with First REIT with regards to the rental support it provided for its hospital. Due to the Covid-19 pandemic situation, the Lippo group felt that the rental support it provided was no longer sustainable. I felt the fundamental reason that made me bought First REIT in the first place has changed and that made me uncomfortable. The risk has increased significantly with First REIT future revenue and income streams depend on the solvency of Lippo Group.
For the reason above, I exited all my First REIT position on 9 Jun 2020 at $0.715. Total loss was 18.48% after taking into account dividends received. I added Tassal Group and Carlsberg in June.
Link to Yaruzi's low cost portfolio as of June 2020.
