Raspberry Pi

 I've just put a small amount of money into Raspberry Pi.  They'll make up about 2.2% of my portfolio.

Things I like about them:

• They've steered the ship well for the last 12 years, iterating their core Single Board Computer (SBC) product, making money, growing sales.
• They've developed beyond the education & enthusiast market into OEM sales and now microprocessors.
• They can achieve decent margin, because:
• They have a strong brand, particularly due to the connection with the Raspberry Pi Foundation.
• Their products have a reputation for quality and longevity.
• There's a great ecosystem around the product thanks to a lot of hobbyists contributing to open source projects.
• The engineers tinkering with these things in their spare time introduce them to their professional lives - so the hobbyist market drives OEM adoption.  I expect the same will be true (though with a much longer lead-time) of the education market, where engineers who played with these at school/Uni eventually turn into the decision-makers of the future.  They've been around since 2012, so this should be starting to happen now/soon.

Things I'm not so keen on:

• They're expensive, on a P/E ratio of around 30.
• A decent chunk of that profit is actually capitalized development expenses - yuck.
• They're heavily dependent on a few other companies: Broadcom who design most of the chips they use, TSMC who manufacture them, and Sony who manufacture the Raspberry Pi itself (in a single facility in South Wales).

4 European investment companies on a massive NAV discount

These four companies each own a mix of listed and unlisted investments, mostly in Europe, and are all trading on a discount of around 40% to their Net Asset Value:

• Groupe Bruxelles Lambert (GBL)
• Kinnevik AB
• Wendel Group
• Exor N.V.

You can quibble about the valuation of their unlisted investments, but most are trading on less than the value of just their listed securities.  The exception is Kinnevik, and that is sitting on 12bn SEK in cash, vs market cap of 24bn SEK and investments of 27bn SEK.  For the share price to be too high those unlisted investments would have to be worth less than a third of the number quoted.

Trading at a discount to NAV is normal for these companies.  You'd have to go back ~20 years to find a time when GBL traded at roughly NAV.  However, their NAV and share price have been drifting gradually further and further apart, and in my opinion the discount is now compelling.  Any combination of dividends and share buybacks should deliver exceptional shareholder value over the next couple of decades from this starting point.

I form no judgement about the actual investments the companies hold, and I don't intend to pick and choose between them.  On 5th August I invested in GBL (at 65.35 Euros per share) and Kinnevik (at 79.41 SEK per share).  On 6th August I invested in Wendel (84.15 Euros per share) and Exor (88.65 Euros per share).

More SLP

Doubled my holding of Sylvania Platinum at around 58p - it's even cheaper than it was a few months ago.  They're still profitable even with the current depressed platinum group metals price, still sitting on around $100m of cash (at a market cap of < $200m).  If the PGM price goes nowhere they should plod along OK.  If it recovers to levels seen a couple of years ago they'll be raking in the cash.

Japanese small-caps

 Looking for a bit of diversification I've bought a few ISJP: iShares Japanese Small-Cap ETF.  Why?

• They're reasonably priced, based on P/B and P/E.
• The yen currently seems very weak vs the dollar, so there's the potential for that to unwind.
• I don't currently have any exposure to Japan.
• There are lots of noises about financial reform in Japan at the moment - demanding companies with very low P/B value publish plans on how to resolve it, for instance.  Could spark an improvement in earnings coupled with an improved P/E ratio, for double impact.

2023 Review

It's been a relatively active year for me, buying more Aviva preference shares and making new investments in Sylvania Platinum and Vesuvius.

Performance has been OK considering the lack of tech shares:

• 9% in GBP (vs 7% for the FTSE 100 including dividends)
• 15% in USD (vs 25% for the S&P 500, I think that doesn't include dividends)
• 19% in NOK (vs 9% for OSEBX, probably not including dividends)

Star performer was TAG Immobilien, up over 100% (after falling 50% in 2022 - so I'm still barely in profit overall).  Berkshire Hathaway, iShares Emerging Markets Dividends ETF and Aviva preference shares (my 3 largest holdings) all returned around 10%.  Ferrexpo (my smallest holding) was a disaster, down 43%.