PB’s StocksCafe Review [2021]

tl;dr: check out our summarised review of StocksCafe here! Referral link included

If you’re reading this blog and other personal finance blogs, you probably have started to or are interested in investing for your future. Investing can be hard enough to get started, but I (PB) think the hardest part is sticking with your investment strategy for the long term. To do that, you probably need to have as much clarity over your portfolio as possible.

That’s where portfolio tracking comes in.

Tracking your portfolio constantly and over a long period of time is the most feasible way to see how it’s doing now, in the past, and compared to the past. Unless you have the mental capacity to both remember and calculate everything (time-weighted returns; XIRR; dividend yield; performance against a benchmark index; etc.) in your head, you’ll probably need a tool to help you do this. If you have a standard stocks-bonds portfolio, you’ll need to record your transactions: what you bought, how much it costed, how much commissions you paid, how much dividends you get. But after you do that, you’ll want to see how it’s doing: how much annual return is that stock giving, how much is your yield on cost etc. This can be done in Excel (I personally use Google Sheets adapted from InvestmentMoats), but anyone who’s tried to create / adapt their own tracker sheet knows how difficult it is to both create and maintain: you have to set your own calculations and create a new formula for every new metric you want to track, you have to constantly maintain API / web scraping access to data like stock prices, etc. Time is money, and unless you’re doing this to practice your Excel skills (or web development skills if you’re so inclined to create your own site), a reliable tool would be helpful.

That’s where StocksCafe comes in. But what is it exactly?

Created by Evan Koh, StocksCafe is an all-in-one portfolio tracking platform that is increasingly popular in Singapore. It is widely used and very positive rated, deservedly so. Its basic version is free to use (yet doesn’t suck), offers a wide variety of features for investors, and allows you to track your portfolio performance automatically. Best of all, its internal forum is pretty active and feature requests / bugs are very actively dealt with by Evan. I (and I think quite a few others) have personally asked him if he would accept help with feature requests as I do have some relevant experience, but for now he has decided to handle this alone.

In this post, I’ll try to cover a few of the things that I personally have used (not everything as I’m kind of a lazy investor oops). From there, you can see if it suits you, and try it out for free! Of course, I’m not the first, nor will I be the last, to review this pretty amazing platform 🙂

disclaimer: referral links included. All screenshots are taken from my personal StocksCafe premium account, dated 26/2/2021 🙂

Portfolio Tracking

Of course, StocksCafe is known as a portfolio tracker, and the Portfolio tab is where we’ll start.

The Portfolio tab is the overview of your portfolio, where you can compare it against benchmarks (#1), break down to individual portfolios (#2), and of course track it by currency (#3), and view details such as current P&L, dividends, and closed P&L. Also circled in #3 is the pretty nifty tidbit about your portfolio’s estimated Beta, Value-At-Risk (VaR) and Expected Shortfall (technical aspects and their explanations here). I particularly appreciate the ability to breakdown to individual portfolios (#2), as it allows me to benchmark different parts of my portfolio against different things. In my own Google Sheets tracking, this is exceedingly time-consuming to do. For example, I have a big chunk of my portfolio in ETFs as shown above, but I also have individual stock holdings which are inherently more risky and volatile, but I can track their performances separately, which is helpful for me to evaluate my individual stock picks. You can also see your portfolio’s current yield, cost yield and projected yield (more details later).

Portfolio Report

One of my most visited tabs after the overview is the report. It contains quite a bit of information in a concise and well-organised manner. Specifically, this tab shows your portfolio’s time-weighted returns net of dividends and fees, its monthly volatility, max drawdown, XIRR & capital flow, paid & projected dividends, and P&L. Of course, you can benchmark these against your favourite benchmarks, and view these for any specific portfolio breakdown that you have. These statistics can be helpful for evaluating your portfolio performance and decision-making: for example, if you’re consistently underperforming a market index without having a specific strategy in mind while having worse volatility, you might be better off just following that index. This is difficult to do in my own Google Sheets as well, as getting this data over time consistently can be quite difficult. Of course, you can view the returns in chart form as well:

Dividends

Being Singaporeans, dividends are our favourite word when it comes to investing, and to be honest, StocksCafe’s dividends visualisation and tracking is one of the best I’ve used (and I’ve tried quite a lot of tools for dividend tracking).

You can view both announced and paid dividends, and even see your projected dividends. Best of all, because not all data providers have 24/7 immediately accurate dividend information, you can even manually override the dividend values if they are wrong.

Did I mention it also handles dividend withholding tax? The bottom image is an example of the (automatic) dividend tax rate that can be seen when you go to an individual stock page. Of course, Singapore doesn’t have dividend withholding tax for Singaporeans (not sure about non-Singaporeans), so if you’re only invested in the SGX, this is not a worry! But for me and others like me who have invested in non-SGX stuff, having this done automatically is very helpful.

Community: Shared Screeners & Portfolios

StocksCafe also has a pretty comprehensive screener. Interested in finding stocks fitting your own requirements? Head on to the screener, and check out the publicly shared screeners, or create your own. There’s a bunch of conditions, including both fundamental and technical, and you search by Exchanges as well. You can even set conditions as mandatory or not. Of course, you can click on the results to view more information about a particular security.

*View selected security in greater detail*

Other detailed tabs include their financial / dividend information, which I won’t go into too much detail here. One thing I must mention as I like a lot is the dividend charting, as if I’m investing in a dividend stock, I want to see that it’s generally increasing its dividend per share, which is best viewed with a graph:

And in case you were wondering where to view the dividend tax rate, it’s in the same Summary page (scroll down). Of course, this example is a Singapore stock, so no dividend tax 🙂

*View selected security in greater detail* #2

In this same page, you even make your own notes, view your past transactions in this security, and even view what members of the community are doing regarding this security e.g. how many of them hold it, what price they bought it at etc. If you click on the “2.9% holds BVA (10/341)”, you will see what other people hold (only those who make their portfolio public):

You can then view what other investors have, and like / follow other investors.

Friend of StocksCafe

Overall, I really like the community aspect of StocksCafe. If you sign up as a Friend of StocksCafe (referral link), you also get a Friends forum which lets you raise bugs / feature requests, which Evan and other Friends can view and comment on. As a developer myself, I have realised that an iterative development process is very important, but can only be done with constant feedback loops between the developer and the user. In this aspect, StocksCafe definitely has done very well.

As an example of listening to StocksCafe’s users, Singaporean investors in the past few years have started to invest more into Ireland-domiciled world ETFs for the lower dividend withholding tax, and some of the more popular ETFs are listed on the London Stock Exchange (LSE). While the LSE is not commonly provided in data providers, Evan went to search for alternative providers just so he could get LSE data as many community members were requesting for it.

I used to be pretty stingy about paying for stuff, but I have come to realise that you get what you pay for. While Google Sheets is certainly free for me to maintain, it’s quite a lot of effort, and the features that Evan has provided in this wonderful tool certainly make his platform worth a try (prices below). If you’re happy with the basic features and would like to use the full suite and support a valuable member of the personal finance community in Singapore in the process, definitely sign up to be a Friend of StocksCafe (referral link)!

Seems like the list of supported exchanges is outdated though, he definitely supports the LSE.

Overall Thoughts

I’ve used StocksCafe since near the start of my investment journey, and while I consider myself much more hands-on than the average investor in terms of tracking (i.e. I have my own Google Sheets), I definitely appreciate the convenience, features and nice UI that StocksCafe provides. If you’re investing for the long term like PG and I are, tracking your portfolio is a definite must. If you’re really interested or insistent in doing it yourself, props to you, but if you’re not and are willing to try out what someone else has created, definitely give StocksCafe a try.

If you like it enough like many of us have, definitely subscribe if you would like access to the member features. If you want a free trial of the premium features, get it here! Else, their website has all the other information you need 🙂

PB’s thoughts on Unity (NYSE:U)

Happy Lunar New Year from PB&G to y’all! Hope everyone is doing well amidst the pandemic and its associated restrictions 🙂 Today, I (PB) have decided to share some views regarding Unity Software (NYSE:U). Disclaimer: I took much inspiration from this and this. All monetary values shown are presumably in US$.

P.S. this is our first time writing such a thought / analysis post, so would appreciate constructive feedback if you guys have any!

Disclaimer: not financial advice, do your own due dilligence!

What do they do?

Firstly, a brief introduction: Unity Software is a video game development company most well known for Unity, a cross-platform game engine used for creating and monetising games. Their software solutions allow game developers to “to create, run, and monetize interactive, real-time 2D and 3D content for mobile phones, tablets, PCs, consoles, and augmented and virtual reality devices” (source).

Why are they interesting?

From the developer angle, its biggest selling point is that if the games you create with them generate <US$100K annually, you can use their software for free (a.k.a. you need the paid license only if you generate more than that every year). This makes their platform very accessible to small developers or individuals hoping to get into game development.

The company has 3 primary sources of income, in decreasing % of their total revenue: (1) Create Solutions (54% of 2019 revenue); (2) Operate Solutions (31% of 2019 revenue); (3) Strategic Partnerships and Others (15% of 2019 revenue). Of course, its main attraction is its game engine, allowing developers to focus on creating 2D, 3D and AR (Augmented Reality) games, while leaving the bulk of the technology workload to the engine itself.

As top-level game engines are presumably difficult and time-consuming to create and maintain, Unity releasing their game engine as a SaaS is a great positive for me. I’m not a game developer, but I am a software developer and use plenty of open-source tools. If a paid tool has a lot of features or an ecosystem that I’m very used to, it tends to be prohibitively costly for me to change, unless there’s a huge problem with e.g. cost or features that I desperately need. Hence, Unity has an unsurprisingly large and recurring revenue base, as shown by their dollar-based net expansion rate below (144% and 138% in Q3 and Q4 of 2020 respectively). I don’t expect this percentage to grow dramatically, but a general uptrend and significantly >100% is great to see since it means they’re getting more out of their existing customers.

Source: https://thegeneralist.substack.com/p/the-s-1-club-unity-is-manifesting

Their biggest competitor in the game engine space is Epic Games’ Unreal Engine. Since I’m not a game developer, I don’t know the differences, but in 2019, over 50% of all mobile, PC and console games ran on Unity and they have 71% of the top 1000 mobile games, so I think they appear to be the dominant player overall.

In short, what I like to see so far is that (1) they’re attractive to small players, which helps them gain market share; (2) they’re growing revenues at a good pace; (3) they have lots of recurring revenues as a SaaS provider; (4) they are the dominant player in their space.

Why did their share price drop after Q4 earnings?

If you follow Unity, or you do some research after reading this post, you might have noticed that their share price fell drastically after their Q4 earnings on 4th Feb 2021. But why?

From their Q4 earnings report, they reported a 39% y-o-y increase in revenues to $220m. While this exceeded general analyst expectations of $204m, this was nonetheless a significant slowdown from 53% revenue growth in Q3. Furthermore, management guided for Q1 2021 revenues to be $210m – $220m, a 26-32% y-o-y increase. As far as I can tell, the market reacted harshly by dumping their price due to lower guidance (slower expected growth).

To me, I see the conservative guidance as a good example of the underpromise-and-overdeliver strategy. Additionally, the growth rates are still pretty good, and their trump card, AR, is only starting to get mainstream media and investor attention, thanks to games like Pokemon Go. If AR pays off, it could pay off hugely for them. I picked up a few shares (positions at the end of this post) after this drop.

What does PB think?

In general, PG and I like SaaS, and one of our gold standards for this is Adobe. I’ve been a Lightroom / Photoshop / Premiere Pro user for a few years, and I hated it as a customer when they moved to a subscription-based model, but as an investor, it’s excellent to have recurring revenues. Unity is a bit in the same spot here.

I see pros for Unity as follows:

Game developers don’t pay for using their platform if their annual revenue is <$100K, which attracts many small developers and is a generally good way of gaining users
They are a mobile gaming GIANT, with 71% of the top 1000 mobile games being created with Unity’s engine: think Temple Run, Angry Birds, Mobile Legends: Bang Bang, Among Us etc.
Their 2 largest income segments, Create Solutions and Operate Solutions, grew revenue 37% and 61% respectively over the last year. These numbers are large, which is good, but not too large that they might create unrealistic further expectations
TTM overall revenue growth ~40%, similar point to the above
Number of customers spending >$100K grew 32% y-o-y, while number of customers spending >$1M grew 86% y-o-y
Dollar-based net expansion rate at 138% and has been well above 120% for the last 8 quarters. This metric shows how much of their existing customers spend from one year to the next, a.k.a. meaning sales to Unity’s previous customer base grew 38% y-o-y
2.7 billion monthly users on Unity’s platform (that’s the same scale as FACEBOOK!), and apps built with them were downloaded 5 billion times per month in Q4 2020
Healthy balance sheet: cash (~US$1bil) is approximately 10x their debt ($100+mil)
Currently only 13% of their revenue is derived from non-gaming segments so lots of growth potential if they choose to tap it e.g. education

Of course, we do see some risks:

AR/VR today is still at a relatively infant stage, where it’s a lot of hype and true potential is not fully realised. If their AR/VR investments kick off, they could do very well, but if not, might be meh
The mobile game crowd (generally gaming crowd, but especially for mobile games IMO) is pretty fickle, and they have to continuously be successful to keep their growth going
I’ve heard claims that Unity doesn’t monetise their users very well (could be a case of gain market share first, profit later) – can anyone explain this to me?
They are not profitable, with negative EPS (but healthy balance sheet as cash >>> debt)

Overall, I think the pros outweigh the cons for me, and that’s why I’ve invested a bit of money into this. Gaming in general has been on the rise for a while (just look at the Dota 2 International prize pool over the last few years), of which mobile gaming has arguably the most potential as most people aren’t in front of a computer all the time, but they have their phones practically all of the time they’re awake. I see gaming as a secular trend, with the possible trump card of their AR, and non-gaming investments helping out as well.

What do you think? Do leave any comments or feedback if you have, and we would love to hear other thoughts on Unity and the gaming space in general!

Disclaimer: PB is vested at an average buy price of $127.95

Lessons PG learned from investing

PG here! Would like to share a few things I learnt from investing so far 🙂

1. Do not invest for the sake of investing

It is a common belief that investing is better than not investing. After all, they always say that “time in the market is better than timing the market”. I have to admit that at the start of my investment journey, I felt so eager (in fact overly eager) to invest all the idle cash that I had, thinking that once I deployed my funds into some investments, it would be a job done.

I believe that due to my hasty behavior, I may have made a few investment mistakes, whereby I did not do proper due diligence and just bought shares based on what others claimed were “good”. Thankfully, I did not lose from these mistakes, but it was really stressful when I noted the price moving down south. Without my own personal conviction to buy these shares, it really made me nervous, especially for a first timer.

I would say that instead of making hasty decisions, if I were really keen to invest at a particular point in time, it would have been less risky to buy into some ETFs or invest into robos. That being said, I would like to caution that investing into robos is not “safer” than investing in shares.

This is a very well written article on robos which I would encourage you to read if you are keen to invest in robos!

2. Do not take analyst reviews blindly

Don’t get me wrong, I believe that analyst reports are a good way to get quick information on a company’s performance and business operations. The danger here lies when you do not question the validity of their assumptions and just blindly trust their opinions and follow the actions recommended. PB used to tell me “PG, if analysts were always right, they wouldn’t need to work anymore as they would be filthy rich”.

I learnt this the hard way when I made decisions heavily influenced by these analyst reports. For instance, not too long ago, one of the banks made a buy call on one of the hospitality REITs. Truth be told, I was so fixated on their analysis (and mildly FOMO) that I did not really analyze the market conditions properly. As the price just kept rising, presumably from this company’s buy call, this led to a costly buy at the peak of the REIT’s price. Till date, I am down almost 10% and don’t foresee any upside in the near future.

3. Do not get too hung up on daily price movements

PB can testify to this, as there have been numerous occasions where I felt hung up whenever the stock I bought into started sliding downwards after (despite doing due diligence). Not going to lie, this will definitely take time and experience to get better at. However, PB always reminds me that as long as the company has decent fundamentals and has risk in line with my risk appetite, I should not be too worried about the daily price movements, especially if I am investing for the long term.

As such, it’s good to have an investment thesis in mind as to why you bought into a stock, and continue to revisit it from time to time to see if it still holds.

4. Do not take risks that will compromise your daily routine

I am sure most of you have heard of the recent GameStop saga. PB and I decided to take a small bet into this whole episode and we bought a tiny portion of shares in GME just to try our luck. (Remember, only spare what you are willing to lose!) While PB was cool as a cucumber, I was fretting about the daily price movements. I remember there was even a night that I dreamt of GME and woke up in the wee hours of the morning wanting to check the price of GME. Needless to say, PB decided that this was affecting my well being and rest, and I decided to just exit my position. Thankfully, I still managed to earn a tiny bit from this whole saga, but most importantly I learnt a lesson on how I should only invest at a risk level that I would be comfortable (to rest well) with.

5. You need to start somewhere

As much as one can keep reading about investing, there is still no better way to learn than to start small and try it first hand. In my opinion, investing is as much about doing proper analysis as it is understanding investor psychology. While I used to read investing books from time to time, I must say I really learnt so much just trying it out by myself. It also helps if you have a like-minded partner/friends/family members who are keen to bounce ideas off one another. Truth be told, I feel like it really helps that PB is also very into these investment related topics, whereby I never felt “alone” in this journey. Our chats are filled with many articles we constantly share with each other and I don’t mind it one bit (compared to before I knew PB)

If you feel like the costs are too high just to even try investing in individual stocks, you could try Interactive Brokers with only $0.35 commission per trade (check out our review here!). It also allows you to buy fractional shares and buy into a variety of stocks. A note of caution here, diversifying into stocks doesn’t mean diversifying risk, especially if you buy stocks that are highly correlated in movement with one another.

Hello World!

Happy 2021, and welcome to the PB&G blog! We’ve been on our personal finance journey for a little while now, and recently thought of documenting our voyage. Hopefully you’ll be here to watch us grow! 🙂

Since it’s early in the new year, the first things we’ll share are our plans for this blog and our current portfolio!

Plans For PB&G

Our plan is to use this blog to document our personal finance journey. We’re hopefully looking to write document our investment analysis and decisions, share some guides on personal finance-related stuff (e.g. how to use IB etc. etc.) and track our net worth and portfolios! Stay tuned to watch us hopefully learn and grow 🙂

Portfolios

PB’s current cash portfolio comprises SGD and USD ETFs and stocks; and some SSBs. Near the end of 2020, I sold a chunk of my ETFs to build up a small warchest. The chart below shows my portfolio tracked monthly. I’m currently trying to move more towards having most of my portfolio in my US ETF (specifically the world ETFs of previously IWDA and now VWRA), maybe about 75%, then have the remaining 25% “fun money” to play with for individual stocks, and also have a bit of warchest as well (currently ~USD 10K)! Follow my StocksCafe portfolio here 🙂

Check out the detailed portfolio:

PB’s Overall Portfolio (as of 18/01/2021)

Overall, I think I did ok-ish for 2020, not spectacularly and way worse than QQQ or the ARKs, but decent enough. I did have a couple of big-ish (40+% XIRR) winners in Fastly, AEM, Micro-Mechanics, Microsoft and Tesla. One thing I want to do for 2021 is to speculate less and also trim down my portfolio to fewer holdings so it’s easier to manage!

PG’s current portfolio comprises mainly stocks in the SGX market + StashAway (~15k).

In 2020, PG bought a few of the local banks shares when they dropped quite a bit. However, as PG did not want to have too much concentration risk in FIs, she started looking for stocks in other industries, such as real estate and machinery. Owing to the recovery climate , PG looked into those REITs that would provide dividend income, alongside some capital gains.

Overall, I think I could have been more active during the downturn as I didn’t expect it to end so quickly. Going forth, my plan would be to inject more growth stocks into my portfolio, as well as increase my global exposure. Of course, this won’t happen overnight. In the meantime, I will be DCA-ing into StashAway as I grow my knowledge and slowly build up my independent investment habits.