Update: we shared Temasek Holdings’ top 5 buys in 2Q22 here!
With a net portfolio value of almost S$400 billion, Temasek Holdings has grown significantly since its inception in 1974. In the diagram below, we can see that ALL of the major financial crisis/recessions in history barely left a mark on Temasek’s portfolio as they stayed focused on their mission to “generate sustainable returns beyond our present generation”.
With such results, it might just be a good idea to get some investing ideas by peeking into Temasek’s portfolio.
Alas, after looking into their portfolio, I found that most of the information published on their website is really basic and mostly lack specifics. This comes to me as no surprise since they are not bound by any regulation to declare their portfolio. From time to time, we do see news about the companies they chose to invest in. But ultimately, they are not required to disclose the specifics of their portfolio to the public.
What we can rely on as an accurate source of information is their 13F reports. For those unfamiliar with the report, Fintel describes it as follows:
All hedge funds or institutions that manage over $100M are required by the SEC to file quarterly reports on their holdings. These reports are called 13F reports. However, the filings are required the following quarter from the reporting period, which means that by the time the filing is made (and we see them), the information could be five months old.
Fintel.io
Their 13F report is pretty much the most reliable information that we can get our hands on as ordinary members of the public. Fortunately for us, Temasek filed their 13F report for 2021 on Valentines Day (14/02/22), which is very timely.
Let’s take a look at the top 5 companies (by Market Value/ % change) that Temasek bought at the end of 2021.
1 – Pinduoduo Inc (NASDAQ: PDD)
Rank :43
Total Shares Held : 2,116,527
Change in Shares : + 2,089,851
Market Value : $123,394,000
Previous % of Portfolio : 0.01
Current % of Portfolio : 0.45
For those unfamiliar with Pinduoduo, it primarily operates in the e-commerce and agriculture sectors. It rallied significantly in 2020 and like most e-commerce stocks, it came crashing down in the second half of 2021.
The Company’s platform provides value-for-money merchandise and interactive shopping options. The platform is built to resemble a virtual bazaar of a broad spectrum of products.
CNBC : PDD Profile
2 – VMware (NYSE : VMW)
Rank :15
Total Shares Held : 4,573,346
Change in Shares : + 3,898,723
Market Value : $529,959,000
Previous % of Portfolio : 0.35
Current % of Portfolio : 1.91
VMware primarily operates in the Cloud computing industry. Competitors in the same sector includes Oracle and Microsoft.
VMware is an industry leader in virtualizing IT infrastructure and became a stand-alone entity after spinning off from Dell Technologies in November 2021. The software provider operates in the three segments: licenses; subscriptions and software as a service; and services. VMware’s solutions are used across IT infrastructure, application development, and cybersecurity teams, and the company takes a neutral approach to being the cohesion between cloud environments.
NASDAQ
3 – SEA Limited (NYSE : SE)
Rank : 21
Total Shares Held : 1,723,906
Change in Shares : + 889,901
Market Value : $385,655,000
Previous % of Portfolio : 0.93
Current % of Portfolio : 1.39
Sea Limited, together with its subsidiaries, engages in the digital entertainment, e-commerce, and digital financial service businesses in Southeast Asia, Latin America, rest of Asia, and internationally.
Yahoo Finance
Here we have another crowd favourite whose share price has failed to find support in this bear run. For those unfamiliar with SEA Limited, it has been in the news quite a bit recently as the inflation scare has taken a greater toll on them more than other companies.
The common theme here is that inflation hits growth stocks more than value stocks. This is because inflation eats into the currently non-existent profit margins of many growth stocks (SEA Ltd being no exception), causing them to widen their losses.
They had just released their 4Q21 earnings, Alex summarised SEA Limited’s latest results here.
4 – Mastercard Inc (NYSE : MA)
Rank : 8
Total Shares Held : 2,933,844
Change in Shares : + 73,874
Market Value : $1,054,189,000
Previous % of Portfolio : 3.48
Current % of Portfolio : 3.80
Mastercard is a globally recognised brand and has the 8th largest position in Temasek. Though the percentage change in the portfolio is minor, I find this move to be one with conviction given the dollar value committed to this purchase.
Mastercard has indeed held up well through this period of volatility, with the stock holding strong at its all-time high of $401.50. It is common for stocks to lose momentum when approaching resistance, but the charts show no sign of slowing down for this company.
5 – Opendoor Technologies Inc (NASDAQ: OPEN)
Rank : 90
Total Shares Held : 88,289
Change in Shares : + 71,515
Market Value : $1,290,000
Previous % of Portfolio : 0.00
Current % of Portfolio : 0.00
Opendoor Technologies Inc is an online company for transacting in residential real estate. Headquartered in San Francisco, it makes instant cash offers on homes through an online process, makes repairs on the properties it purchases and relists them for sale.
Wikipedia
While the Opendoor can be considered a relatively “low-conviction” investment for Temasek, it is interesting to note that they increased their position in this company by 426%. While the percentage increase seems big, it is still a small portion of their portfolio given its market value of $1,290,000.
This move by Temasek does interest me more than their other purchases as Opendoor was previously considered a “meme” stock along with GME, AMC etc. (Bloomberg). Furthermore, the stock fell by more than 20% on Friday given their larger than expected loss. Interestingly enough, their higher losses were primarily driven by stock-based compensation (SBC). I previously touched on SBC in my article here on Palantir. Interestingly, both companies share the same practice.
Despite the inflation argument, it is clear that Temasek Holdings has stood by SEA Ltd as a supporter and even more so with conviction after doubling their stake in this company.
What do these stocks have in common?
In the Temasek Review 2021 highlights, Temasek highlighted 4 investment themes that they have decided to focus on in the coming years.
The five stocks we have discussed do fit into at least one of the categories above in one way or the other. But what I find to be more consistent with the share purchases that Temasek made is that they seem to align more with the concept of “Future of Consumption”.
As retail investors, our resources are limited and no matter how much Fundamental Analysis or Technical Analysis knowledge we have, we will never be able to beat the resources that institutions have at their disposal. Personally, I do look into the trades which institutions such as Temasek make to help guide my investing decisions. With this recent filing, I may just take a second look at PDD moving forward.
P.S. This is not financial or investing advice, you should do your own research before investing. If you’re not sure where to start, you can read Dr Wealth’s free value investing guide (no email needed).