The Perfect Stocks Portfolio: A Global Approach to Value Investing in 2025

In an era of global interconnectivity, The Perfect Stocks Portfolio has embraced a truly international approach to value investing, incorporating companies from diverse markets including the United States, China, Switzerland, Denmark, Greece, Singapore, Hong Kong, and Japan. This strategic global diversification follows the time-tested principles of Benjamin Graham, the founder of modern security analysis and father of value investing.

Investment Philosophy and Strategy

The portfolio’s foundation rests on Graham’s fundamental criteria for selecting stocks: profitable companies that pay dividends and maintain strong balance sheets. This global approach is particularly relevant today, as the United States currently represents 60-70% of global market cap—a level not seen since the 1970s, before a significant market correction.

While maintaining a focus on liquidity and ensuring all stocks can be traded in the United States, the portfolio seeks high-quality, dividend-paying, undervalued companies worldwide. This approach takes advantage of valuation distortions across different markets while recognizing the interconnected nature of global business.

Current Market Environment

The U.S. market maintains a strong uptrend, continuing its 20-month momentum with only brief interruptions. Despite rapid interest rate increases, the American consumer has demonstrated remarkable resilience, maintaining spending levels that keep pace with inflation. This strength is exemplified by recent impressive earnings from companies like Costco, which reported better-than-expected revenue and earnings growth.

The job market remains healthy, though showing signs of moderation. Wage pressure has been kept in check by productivity increases and legal immigration. However, inflation remains sticky around 3%, with recent Producer Price Index (PPI) data surprising to the upside.

Regional Market Updates

China has implemented a $1.4 trillion stimulus program—its most aggressive monetary policy since 2008-2009. While market expectations vary between 4-5% growth, the administration’s commitment to economic reinvigoration suggests potential for additional stimulus measures.

Japan's economy shows moderate recovery with consumer spending and capital investment growth. The Bank of Japan’s upcoming policy decisions are closely watched, with mixed expectations regarding potential rate hikes. The country recently approved a $250 billion stimulus package to support household spending and economic activity.

Europe markets face ongoing challenges, though the European Central Bank has implemented a 25-basis-point rate cut. While inflation control has improved, growth remains a concern. The United Kingdom continues to navigate political and economic challenges.

Portfolio Performance Highlights

Recent portfolio performance has been mixed, with notable movements including:

• Hello Group MOMO (Chinese internet company): Leading performer with 16% growth
  
• Johnson Outdoors JOUT Positive returns despite weak earnings
  
• Union Industrial Holdings: Strong monthly performance
  
• Shipping companies and semiconductor stocks: Temporary underperformance

Portfolio News

ROHM Semiconductor ROHCY and Nanjing SemiDrive Technology Ltd. have jointly developed a smart cockpit reference design, integrating SemiDrive’s X9M and X9E automotive System-on-Chips (S with ROHM’s Power Management ICs (PMICs), Serializer/Deserializer (SerDes) ICs, and LED driver ICs. This collaboration aims to enhance the functionality and efficiency of vehicle cockpits, supporting up to three display projections and four Advanced Driver Assistance System (ADAS) cameras. Several automakers have adopted the reference design to advance smart cockpit applications.

The collaboration between ROHM Semiconductor and SemiDrive represents an important advancement in smart cockpit technology. To understand its significance, let’s first break down what a smart cockpit is and why this reference design matters.

A smart cockpit in modern vehicles is essentially the command center where all driver information, entertainment, and control systems come together. Think of it as the digital dashboard and control interface that helps drivers interact with their vehicle’s various systems.

The key innovation here lies in the integration of several sophisticated components:

The foundation is built on SemiDrive’s X9M and X9E automotive System-on-Chips. These are like the brains of the operation – imagine them as powerful computers condensed onto single chips, specifically designed for automotive use. They handle the complex processing needed for multiple displays and cameras.

A.P. Moller-Maersk AMKBY, a leading Danish shipping and logistics company, anticipates a 5% to 7% growth in global container volumes for 2025, driven by robust U.S. demand amid potential port strikes and tariffs on foreign goods.

 This outlook contrasts with recent trends; in 2023, Maersk reported a 6% decline in loaded volumes during the second quarter compared to the same period in 2022, reflecting a broader industry downturn.

 The company has also implemented significant cost-cutting measures, including plans to reduce its workforce by approximately 10,000 positions in response to challenging market conditions.

Johnson Outdoors Inc. JOUT, a global innovator in outdoor recreation equipment and technology, reported a challenging fiscal year ending September 27, 2024. The company faced an 11% decline in revenue, totaling $592.8 million, attributed to market challenges and competitive pressures across all segments. This downturn led to an operating loss of $43.5 million, a significant drop from the previous year’s operating profit of $11.7 million.

The fiscal fourth quarter saw net sales of $105.9 million, up $9.5 million from the same period last year. However, the quarter ended with an operating loss of $42.8 million, exacerbated by increased promotional pricing, a shift toward lower-margin products, and inventory reserves on slow-moving and obsolete stock.

Despite these challenges, Johnson Outdoors maintained a strong financial position, reporting $162.0 million in cash and investments as of September 27, 2024, with no debt. The company remains focused on consumer-driven innovation, enhancing go-to-market strategies, and improving operational efficiencies to achieve long-term profitable growth.

Africa Oil Corp. AOIHF recently concluded a share buyback program and initiated a new one. Between December 2 and December 6, 2024, the company repurchased 815,000 shares, with 320,000 shares acquired on the TSX and 495,000 on Nasdaq Stockholm. The transactions were executed by Scotia Capital Inc. and Pareto Securities, respectively. All repurchased shares will be cancelled.

Under the share buyback program launched on December 4, 2023, which expired on December 5, 2024, Africa Oil repurchased a total of 23,987,632 common shares, falling short of the authorized maximum of 38,654,702 shares.

On December 6, 2024, the company initiated a new share buyback program, repurchasing 174,000 shares on its first day. This program allows for a maximum of 18,362,364 shares to be repurchased over 12 months, concluding on December 5, 2025. Both programs comply with the EU Market Abuse Regulation, Safe Harbour Regulation, and the relevant Canadian and Swedish securities laws.

Industry Diversification

The portfolio maintains broad sector exposure including:

• Semiconductors and integrated circuits
  
• Shipping and transportation
  
• Outdoor recreation (camping, fishing, boating)
  
• Social networks and e-commerce
  
• Manufacturing (automotive, electronics, medical equipment)
  
• Oil and gas exploration and production
  
• Consumer Goods
  
• Electronic components

Investment Outlook

While the portfolio may appear conservative, its strategy of focusing on undervalued, dividend-paying companies with strong balance sheets has historically outperformed the broader market. This approach, grounded in Graham’s time-tested principles, continues to offer a steady, conservative path to long-term market outperformance through global diversification and value investing principles.