Temasek Holdings – Top 5 Buys [2Q2022]

Markets haven’t been kind to investors this year. Amidst such conditions, both retail investors and hedge funds alike have experienced losses in one way or another. If 1Q wasn’t bad enough for Temasek Holdings, 2Q failed to show any recovery as their portfolio fell by a further 22%. As such, with this recent 13F report, Temasek’s portfolio has reduced by almost 40% since their all-time high back in 2Q2021.

• 2Q2022 Reported Value : $18,331,006 (-38.6%)
• 2Q2021 Reported Value : $29,876,534
• 4Q2021 Reported Value : $27,704,871
• 1Q2022 Reported Value : $23,711,491

At a time where all seems lost, perhaps what could be “wisdom” to us are some of the highest conviction buys that Temasek executed during this bear market. After all, why buy in a bear market if you think it won’t bring you gains in the future?

With that, here are:

Top 5 buys Temasek Holdings made in 2Q22

1. NVIDIA Corp. (NASDAQ : NVDA)

Temasek doubled their position in NVDA since 1Q2022

Rank :51
Total Shares Held : 234,309
Change in Shares : +152,162
Market Value : $35,519,000
Previous % of Portfolio : 0.09
Current % of Portfolio : 0.19

Nvidia would most certainly be a familiar name to many given how prominent they are in the manufacturing of high-end graphics processing units (GPUs). A clear beneficiary of the pandemic, investors of Nvidia reaped huge gains during covid where GPUs were in high demand due to people playing more games during lockdowns as well as their utility in crypto-mining.

At present, with the crypto bear rally and the general reduction in your average “stay-at-home” gamer, demand for GPUs have fallen significantly and with that so has the share price of Nvdia. In my opinion, present levels do indicate decent risk-to-reward with the stock trading at about 50% off their high’s of $300+.

What the future holds for Nvidia is anyone’s guess but what’s interesting is that GPUs are likely to gain more utility in our daily lives overtime as they are now being used in as part of the OS in many high-end cars as well as in our Metaverse Headsets such as the Oculus!

2. Orchard Therapeutics (NASDAQ : ORTX)

Rank :85
Total Shares Held : 4,319,049
Change in Shares : +4,319,049
Market Value : $2,523,000
Previous % of Portfolio : 0
Current % of Portfolio : 0.01

Orchard Therapeutics plc develops gene therapies for serious and life-threatening rare diseases. The company’s gene therapy approach seeks to transform a patient’s hematopoietic stem cells into a gene-modified cellular drug product. It provides Strimvelis, a gammaretroviral-based product for the treatment of adenosine deaminase-severe combined immunodeficiency (ADA-SCID)

WhaleWisdom

Ranked 85th in their portfolio with a market value of a little over 2 million, Temasek’s entry into Orchard Therapeutics is not considered big by any means and in all honestly is indeed negligible. However, what I’ve found to be interesting with this trade is how Temasek is buying into a PENNY STOCK.

At the time of writing ORTX is trading at a mere $0.55 which then begs the question that don’t investors avoid penny stocks? In which case, I would consider this one of their more “notable” buys given how they are playing in very dangerous waters.

3. Gogoro Inc (NASDAQ : GGR)

Rank :42
Total Shares Held : 8,002,475
Change in Shares : +8,002,475
Market Value : $61,219,000
Previous % of Portfolio : 0
Current % of Portfolio : 0.33

Gogoro is a Taiwanese company that developed a battery-swapping refueling platform for urban electric two-wheel scooters, mopeds and motorcycles. It also develops its own line of electric scooters and offers its own vehicle innovations to vehicle maker partners like Hero, Yamaha, Aeonmotor, PGO, eReady and eMOVING.

Wikipedia

Despite the overall lack of interest and appetite in the market for growth stocks, it is clear that Temasek is still in the game as they bought into yet another money-losing, EV related high-growth stock. Listed via a SPAC merger, think of Gogoro as a more mobile version of NIO where they provide “smart swappable batteries, charging infrastructure and cloud software that monitors the condition and performance of vehicles and batteries”.

With present market conditions, I must say that a trade worth $61 million into a non-profitable company does indeed warrant additional attention. Upon more in-depth research, it would seem that Gogoro has a monopoly over the refueling industry for two-wheeled vehicles as they were able to achieve 92% market share in Taiwan in the first half of 2022. As skeptical as I am about money-losing stocks, having such a significant market share does seem promising for a small company with little over 1.24B in Market Cap.

4. TPG Inc (NASDAQ : TPG)

Temasek increased their stake in TPG by 22%.

Rank :32
Total Shares Held : 5,220,258
Change in Shares : +970,258
Market Value : $124,816,000
Previous % of Portfolio : 0.53
Current % of Portfolio : 0.68

TPG is a leading global alternative asset management firm founded in San Francisco in 1992 with $127 billion of assets under management and investment and operational teams in 12 offices globally. TPG invests across five multi-product platforms: Capital, Growth, Impact, Real Estate, and Market Solutions and our unique strategy is driven by collaboration, innovation, and inclusion.

About TPG

First and foremost, do note that this company is NOT the telco that we know here in Singapore. TPG inc is in fact an asset management firm in the alternative asset space managing about $127 billion in assets through a principled focus on innovation. What’s interesting about this firm is that while Temasek lost about 40% of its portfolio value as compared to this time last year, TPG actually reported an increase of 17% in their total AUM ($127 billion) as of June 30, 2022 as compared to June 30, 2021 ($108 billion)

TPG inc does come across to me as more of a value play considering that they are sitting on a PE Ratio of about 14.86. This in my opinion is of fair value as compared to other asset managers such as Blackrock (PE 18.4) and BAM (PE 12.27).

Furthermore, with a dividend yield of about 5%, this may very much be one of those stocks in Temasek’s portfolio that add stability over growth.

5. Nu Holdings Ltd (NYSE : NU)

Nu Holdings Ltd. operates as a digital financial services platform and technology company primarily in Brazil, Mexico, and Colombia. It offers Nu credit and debit cards; Ultraviolet credit and debit cards; and mobile payment solutions for NuAccount customers to make and receive transfers, pay bills, and make everyday purchases through their mobile phones. 

Yahoo Finance

NU Holdings seems to be a stock that more institutional investors are adding of late. I first learnt of this company when Buffett took a $1B bite into the company early this year. Since then, NU has indeed been in the spotlight quite abit as both bulls and bears couldn’t quite figure out why Buffett would make such a bet. Institutions seem to have taken a liking to this stock as even JPMorgan bought 38.9 Million shares of the company back in early July.

With their most recent earnings report, it would seem apparent that while NU remains fundamentally weak (not profitable at present), their growth story is indeed intact as they have historically grown both user acquisition and revenue quickly.

Investing during a bear market

I’d think that every dollar counts for more during a bear market as capital becomes more costly due to rising interest rates. Therefore, I do look at the trades of institutional investors a little closer as they do help to narrow down investing ideas greatly. Much speculation still surrounds the many trades made by Temasek this quarter hence discretion is always advised. Apart from the trades listed above, here are some other notable trades:

• Baba : No Change
• Amazon : Trimmed position -8%
• ABNB : Trimmed position -13%
• SE : Added +8%
• DUOL : position -55%