Plans for 2026

In the last few months, I have been doing some selling. I sold Dicker Data and my entire position in the Australian Resources index. In retrospect I maybe should have sold the Resources index in 2 lots, as it has continued to move higher. What I decided is that as commodities are cyclical, it was good to get out while the getting was good. The flip side of this, is that now I have all of this cash in my ASX account. In my NZX account, I have also built up a cash position, as I took profits on PFI and Turners, and sold off Contact Energy. I have got some money going into the ETFs at the end of this month, which considering that January is usually a bad month for the markets, might not immediately seem like a good decision.

Looking to my USD account (Hatch), I am becoming tired of owning Realty Income. I do not need the monthly dividends anymore, and the share price growth has been naught. I would be much better off to own something that reinvests its earnings and grows its market cap. Stocks I have on my watchlist include Rocket Lab, Visa and Blackrock. I chose Nvidia over Rocket Lab 2 months ago, and am regretting the decision, as Rocket Lab is up around 70% since. Nvidia will do fine though, so I will not be selling it. In the next year, analysts predict that Realty Income's share price will rise around 14%, and when combining this with the dividend, you have a targeted net annual return of 18% est. So, I don't think I will be selling this either. Another option for me is to add money into my Hatch account. I converted most of the money to Hatch at 72c NZD/USD, and our exchange rate is now sitting at 58c. So our exchange rate is not as favourable as it once was. But if I were to transfer some money to Hatch, I would look to buy JP Morgan or Visa. Both of which are very strong financial companies with excellent balance sheets and sustainable revenue growth. Visa has a PE of 30.8, with a free cash flow yield of 3.1%. JP Morgan has a PE of 16, and declining free cash flow.

The problem on the NZX is that we do not have a lot of good companies/ stocks. Turners is probably my favourite of the stocks I own. Spark is a dog, and I am waiting for a better price to sell out of it. At the moment I am just using my NZX cash to buy into more ETFs. I am really unsure if I will be buying any more individual stocks on the NZX. Certainly, if I were buy something, like Serko or South Port, I would like to sell Ebos or Spark. South Port is an opportune company to talk about. It operates the port out of Bluff, and would be primed to benefit from any new mining activity in Otago or Southland. They already have a very sustainable business, facilitating the imports and exports of dairy products, fertilizers and meat. The two best performing regions in the country right now are Otago and Southland, and South Port will benefit as their economies grow.

Looking over to the ASX, a few companies that I have been looking at are SGH, Brambles and Ophir High Conviction Fund. SGH are Seven Group Holdings, majority owned by the Stokes Family. Going upon EBITDA figures; Westrac comprises 41.5%, Boral 30.4%, Coates 18.8%, Energy companies 8.5% and Seven West Media 2.7%. So you would think that they are a very diversified business. But Westrac, Boral and Coates are all in similiar business activities. Westrac is the Caterpiller dealer for Western Australia and NSW. Boral is the largest integrated construction materials company in Australia, supplying concrete, cement and ashpalt. Coates is the largest eqiupment hire company in Australia, mainly servicing the mining industry. This means that 90% of their business is reliant on a strong mining industry, but while not being directly exposed to commodity prices. Beach Energy is a relatively high-risk oil and gas producer. The Media assets at 2.7%, are basically unimportant to SGH's bottom line. But newsprint media has been a sector in decline for many years. SGH have a PE of 36, with a market cap of 18.92B, and a free cash flow yield of 0.7%. To have a PE that high, you would assume that SGH have some significant growth drivers ahead, which I don't think they have.

Brambles has been a strongly performing company for many years. They are a global operator of pallet and container share and reuse pools. They have a dominant market share in Australia, the US and Western Europe. Their customers are mainly from the consumer staples industry. Sustainability and reuse are a big part of how they do business. They have a PE of 23, a market cap of $30.85B and a free cash flow yield of 3.5%. Important to note is that in the early 2000s and in 2008/2009, BXB saw significant share price drawdowns. And in 2009 they substantially reduced their dividend, which is not a good sign if we were to enter a recession at some point. The other stock I have been looking at on the ASX is Ophir High Conviction Fund, which all of the analysts seem to like. They invest in a concentrated portfolio of 15-30 small to mid-cap ASX stocks. Importantly, the fund managers are personally invested in the fund, so you know your interests are aligned. They have had a 14.9% annual return since inception in 2018. It is noticeable that their distributions do go up and down. It is not particularly easy to find out a lot of information about the fund.

I am entering 2026 feeling a bit of regret about having done so much selling last year. But it is important for me to realize that I already captured much of the gains in resources, and with cyclicals it is always sensible to sell when earnings are high, yields are low, and PE ratios are low. And to buy when the opposite is true. PFI and Realty Income did not participate in the big gains in 2025. But they may see some recovery in 2026, there is really no way to know. Indeed, the property sector was the only negative sector in 2025. In Jim Cramer's recent book, How to Make Money in Any Market. he said in a well-run Core: Satellite portfolio, you do not need to own individual stocks across different sectors. You get all of your diversification from your ETFs (which comprise over 60% of my portfolio). You should only own stocks' that have the ability to beat the market. Companies that have enduring competitive advantages, constant innovation and high free cash flow yields. So, in 2026 that is what I plan on doing. Owning less stocks, larger positions in ETFs and to do more research.