5 Portfolio Updates by Temasek Holdings for 1Q2022

Update: we shared Temasek Holdings’ top 5 buys in 2Q22 here!

We are able to catch a glimpse of the trades that Temasek makes every quarter by looking through their 13F statements. For those new to the term 13F, its essentially a report that all fund managers must submit to the SEC within 45 days of the end of the calendar quarter. Without this report, we would have no idea what stocks Temasek holds in the US market.

Personally, I do enjoy looking through these reports as there is always more to a trade than meets the eye when it comes to how such large funds operate. As a prelude to this article, do check out Temasek Holdings’ Top 5 investments as of end 2021.

Temasek Holding’s Quarterly Performance: 4Q2021 vs 1Q2022

• 4Q2021 Reported Value : $27,704,871
• 1Q2022 Reported Value : $23,711,491

Temasek’s portfolio lost about 15% of its value during the recent market sell-off. What do you think about this? (Let me know in the comments)

For me, I think that’s nothing short of fantastic. I’m not sure about the rest of the readers out there but if your portfolio only went down by 15% this quarter then you truly deserve a pat on your back as many of us (myself included) saw our portfolios go down by way more than that. Their performance is comparable to the S&P500 which also experience an approximately 15% decline this recent quarter.

With that out of the way, lets take a closer look at 5 trades made by Temasek that certainly caught my attention.

5 portfolio updates Temasek made for 1Q2022

1. Lumen Technologies (NYSE : LUMN) : Sold 25% of Position

Rank :9
Total Shares Held : 72,659,407
Change in Shares : – 24,600,000
Market Value : $818,872,000
Previous % of Portfolio : 4.41
Current % of Portfolio : 3.45

Lumen Technologies, Inc., a facilities-based technology and communications company, provides various integrated products and services under the Lumen, Quantum Fiber, and CenturyLink brands to business and residential customers in the United States and internationally.

Yahoo Finance

Lumen Technologies belongs to the classic dividend stock category. With a dividend yield of almost 8.5%, you’ll find this stock on the watchlist of most dividend investors. To top things off, they likely do appeal to value investors as well as they trade at a reasonable PE of 6.23. The nature of their business also seems to be defensive in nature as they operate mostly in the telco industry very much like Singtel/Starhub.

It is difficult for me to identify why exactly Temasek trimmed off a quarter of their holdings in this company as on the surface, nothing looks unusual. Considering that Temasek made their first entry into this company 5 years ago, the only reason that I can think off is perhaps the price action of Lumen hit a designated stop-loss level set by Temasek (possibly at $10). I speculate that this could have been a form of risk control by Temasek.

2. Draftkings (NASDAQ : DKNG) & Affirm (NASDAQ : AFRM): Sold All

Although these two companies operate in completely different industries, I grouped them together because they fall in the same category of Growth stocks which are not profitable hence are considered to be more speculative in nature.

Sports betting company, Draftkings and Buy-Now-Pay-Later, Affirm are probably not new companies to most of us investors. What’s interesting about Temasek is that this quarter, Temasek sold off all shares in both companies. The trades are reflected as follows,

• Draftkings – 265,902 Shares, Sold ALL
• Affirm – 5,834 Shares, Sold ALL

As always, such a move can be open to interpretation however to me, it is clear that Temasek would rather recuperate whatever capital they have left rather than to run further with their losses.

3. Alibaba (NYSE : BABA) : No Change

Rank :6
Total Shares Held : 9,083,997
Change in Shares : NA
Market Value : $988,339,000
Previous % of Portfolio : 4.17
Current % of Portfolio : 3.89

What were you expecting? I’m an Alibaba shareholder myself so after all the bad news, this is (at the very least) good news. We know that eCommerce is on a downtrend. We know that Covid accelerated the growth of eCommerce and at present, we are seeing growth normalise back to pre-pandemic levels. So this begs the question, is Alibaba a speculative investment? It would appear that Temasek is undecided for now and with the stock trading at a range of $80-$100, I’d say that the market feels the same as well.

4. SEA Limited (NYSE : SE) : +47%

Rank :23
Total Shares Held : 2,543,006
Change in Shares : + 819,100
Market Value : $304,627,000
Previous % of Portfolio : 1.28
Current % of Portfolio : 1.39

SEA Limited has has quite a bit of media coverage lately for 2 reasons.

1. They beat Expectations.
2. Its share price is still on the downtrend. – Founder is one of the biggest losers this quarter.

With that, we do have a mix of good and bad news for the company. We can continue to argue over the bull/bear case for this company but what is clear is that Sea Limited is now trading at 80% off its highs which could easily make this company a potential multi-bagger in time to come.

5. Toast (NYSE : TOST) : +205%

Rank :63
Total Shares Held : 1,159,989
Change in Shares : + 780,100
Market Value : $25,207,000
Previous % of Portfolio : 1.28
Current % of Portfolio : 1.39

Toast, Inc. operates a cloud-based and digital technology platform for the restaurant industry in the United States and Ireland. The company offers Toast Point of Sale (POS), a hardware product; Toast Order & Pay, which allows guests to order and pay from their mobile devices; Toast Flex that is used for on-counter order and pay, as well as used as a server station, guest kiosk, kitchen display system, or order fulfillment station; Toast Go, a handheld POS device that enhances the table turn times through tableside ordering and payment acceptance; and Toast Tap, a card reader.

Yahoo Finance

Of all the companies that I could focus on, I decided to zoom in on Toast as I found this to be a pretty unusual trade in nature. For those unfamiliar with Toast, they listed via a direct listing in September last year and as with most growth stocks, the price of Toast fell from a high of $69 to $14 at present.

What puzzles me the most is that Temasek has chosen to close their position in quite a few high-growth companies such as Draftkings and Affirm. Yet with this move into Toast, its almost like they haven’t quite given up just yet.

Financials wise, it does look like things are shaping up for Toast as net losses slimmed to $23 million (previously $99 million). Revenue doubled from a year before and along with that Gross Payment Volume and total locations. Coupled with how POS providers tend to have more “sticky” customers in general (higher retention rates), this may very much be an indication of better days ahead.

Understanding Temasek’s investment theme

In the Temasek Review 2021 highlights, Temasek highlighted 4 investment themes that they have decided to focus on in the coming years.

It is evident that Temasek hasn’t deviated much from this as their holdings in Sea Limited and Alibaba indicate their commitment to the future of consumption. On its own, Toast also represents digitization in an industry that is still relatively “behind” as compared to others.

Apart from the 5 trades mentioned above, here are some other notable trades that Temasek executed last quarter.

• PDD + 15%
• TSM + New Position 275,929 Shares
• NVDA + New Position 82,147 Shares
• AMZN + 16%