As highlighted last week, we recently pared our exposure to US stocks in favour of more attractively valued Chinese consumer tech stocks. We are also sitting on a comparatively high level of cash, of almost 24% of total portfolio value, while holding on to the SPDR Gold MiniShares Trust (even if we are not adding our exposure despite bullish analyst calls for the precious metal).
We will write on the rationale of our outlook for the rest of the year and our prevailing strategy in the very near future. But for this week, we will focus on the five remaining US stocks in the portfolio, which is a blend of sectors, risks, value and growth.
Berkshire Hathaway
We have held Berkshire Hathaway since the very beginning of this portfolio. Berkshire owns diverse core operating businesses, including insurance, railroad, utilities and energy, manufacturing, services and retailing. Thus, buying the stock gives us exposure to a broad swath of US economic growth and, equally important, it is a conglomerate with an excellent track record of corporate governance. Its share price has far outperformed the Standard & Poor’s 500 index in the six decades under Warren Buffett’s leadership, with the company growing from strength to strength on his innate investment and timing instincts, investment philosophy, values as well as disciplined capital allocation. In fact, we hope to emulate the long-term success of Berkshire for the Absolute Returns Portfolio.
See also: Brilliant but broke: Why not all good business ideas pay off
Therefore, it is no surprise that Buffett’s plan to step down as CEO at end-2025 and handing over the reins to his hand-picked successor, Greg Abel, has given investors pause. Berkshire’s share price fell off its alltime record high immediately after the announcement. Buffett, who will stay on as chairman of the board of directors, is undeniably one of the greatest investors of our time — and leaves behind shoes not easily filled. On the other hand, Berkshire’s fundamentals remain strong.
Its operating businesses are well managed, independently run under Buffett’s mostly hands-off management style. The wide range of businesses translate into higher overall earnings and cash-flow resilience even during recessions. For instance, insurance and utilities are non-cyclical. In the last few years, Buffett has been paring down his hugely successful stock portfolio — including selling down its single-largest holding, Apple — and raising cash to a record US$363 billion, mostly invested in short-term treasury bills currently. Investments in equity securities are valued at less than US$264 billion, or about 22.6% of the company’s total assets of US$1.16 trillion.
The massive cash pile leaves Abel with plenty of options, including more aggressive acquisitions of operating businesses that play to his strength. His strategy will be critical to Berkshire’s continued outperformance, as he is not seen to be the stock-picker that Buffett is. Notably, the fact that Buffett is still sitting on record cash, even as stock markets recovered from the recent tariff-induced sell-off, is good reason for investors to exercise greater caution. In this respect, Berkshire is a defensive anchor in our portfolio.
See also: Technology alone won’t save you — it takes vision and execution
United States Steel Corp
Our investment in US Steel has done remarkably well in the short two-plus months since we bought the stock. Its share price jumped sharply higher after President Donald Trump endorsed Nippon Steel’s proposed US$14.9 billion acquisition of the company — reversing former President Joe Biden’s decision to block the deal because of national security concerns. Nippon Steel’s promised US$14 billion investment to expand capacity and modernise US Steel’s ageing mills bodes well for its future competitiveness. The “partnership” is now pending finalisation.
Fundamentally, our investment thesis for investing in steel stocks remains valid. We believe domestic steel manufacturers will be one of the main beneficiaries of reindustrialisation in the US over the longer term, though some capex decisions are likely being delayed by prevailing tariff uncertainties. In the short term, Trump’s tariffs on steel and aluminium are supportive of US steel prices and producer profitability. For context, Trump implemented 25% tariffs on all steel and aluminium imports effective from March 12 — with no exemption for any country. This month, tariffs were raised further to 50% for all (effective from June 4), with only the UK granted temporary exemption from the additional tariffs. For the UK, the original 25% levy remains in place.
Tariffs have driven domestic steel prices higher, boosting cash flows for steel companies — US hot rolled coil prices, the benchmark for steel prices, jumped from a little over US$700 a ton at the start of this year to more than US$940 a ton before paring back slightly to about US$860 a ton currently. US Steel expects its adjusted Ebitda (earnings before interest, taxes, depreciation and amortisation) to improve to between US$375 million and US$425 million in the second quarter, from a lowly US$172 million in 1Q2025.
Crowdstrike Holdings
The cybersecurity firm is the sole remaining US tech stock in the portfolio. Enterprises are racing to embrace advanced artificial intelligence (AI) technologies in their operations to boost productivity and gain critical competitive advantages. This is the reason for the intensity of the US-China tech war, for global economic and military dominance. The US is home to many companies that fit the bill, including several AI-powered software platform and solution providers that we had previously bought in the Absolute Returns Portfolio. The problem, as we wrote last week, is valuations. We saw this happen to CrowdStrike’s share price volatility last week.
The company’s revenue rose 20% year on year to US$1.1 billion in the latest quarter (1QFYJan2026) while earnings per share (EPS) of 73 cents adjusted beat analyst estimates of 66.5 cents. It also upped EPS (earnings per share) guidance for the current quarter to between 82 cents and 84 cents adjusted, versus consensus of 81 cents to 82 cents. Cash flow remains positive — operating cash flow is at a record high of US$384.1 million and free cash flow is at US$279.4 million. It still failed to clear, however, the high bar of lofty market expectations implied by prevailing valuations — its stock price had rallied to all-time highs just prior to the results release, but fell back post-results.
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CrowdStrike is still suffering from the financial fallout caused by the global Windows outage as a result of one of its botched security updates in July last year. The company has been offering some products for free, discounts and extended usage as part of its customer retention efforts, which continue to drag on revenue projections for the rest of its financial year. It has also seen some delays in the onboarding of potential customers, lawsuits (including one by Delta Air Lines) as well as increased scrutiny from regulators.
We remain positive on CrowdStrike’s longer-term outlook. The need for cybersecurity has never been greater — and is rising, with the progressive digitalisation of every aspect of our lives, coupled with the increasing frequency, sophistication and severity of cyberattacks and their repercussions. CrowdStrike integrates AI and machine learning into its platform to identify and stop the most advanced, emerging attacks, creating new Indicators of Attack (IoAs) at machine speed and scale.
Goldman Sachs-JP Morgan Chase
Both Goldman and JP Morgan reported strong 1QFY2025 earnings results that topped analyst expectations. Goldman’s net revenue was up 6% y-o-y while net earnings and diluted EPS rose an outsized 15% and 22% respectively over the same period. While uncertainties triggered by Trump’s tariffs resulted in a 22% y-o-y drop in advisory revenues (leading to an 8% y-o-y decline in investment banking fees) as corporates hit the pause button, the slowdown was offset by robust equities trading revenue that grew 27% y-o-y.
JP Morgan’s earnings also benefited from increased revenue from equities trading, up 48% y-o-y, with a particularly strong performance in derivatives, thanks to volatile market conditions in 1Q2025. This boosted net income from the commercial and investment bank segment, up 5% y-o-y. On the other hand, net income for the consumer and community banking segment fell 8% y-o-y, owing primarily to lower net interest income on lower deposit balances. Overall net revenue was up 8% y-o-y, while net income and diluted EPS rose 9% and 14% respectively.
Of note, both banks sounded a note of caution on the broader economic outlook amid prevailing heightened uncertainties. The current environment was best summed up by Jamie Dimon (CEO of JP Morgan): “The economy is facing considerable turbulence (including geopolitics), with the potential positives of tax reform and deregulation and the potential negatives of tariffs and trade wars, ongoing sticky inflation, high fiscal deficits and still rather-high asset prices and volatility.”
We foresee imminent announcements on deregulatory changes that will benefit large US banks. This includes easing capital requirements, such as lower supplementary leverage ratio on US Treasuries holdings — that would make trading Treasuries more attractive and potentially drive down yields — and an extended delay in the implementation of Basel III Endgame.
Massive leadership changes in key regulatory agencies such as the Consumer Financial Protection Bureau are also expected to result in less stringent and cumbersome rules and oversights, and enforcement actions, reducing compliance costs for the banks. Lower capital requirements and costs will spur lending activity and profits, and the global competitiveness of US banks — hence our upbeat outlook on Goldman and JP Morgan. The former offers greater potential upside due its higher cyclicality while the latter’s diversified earnings are more stable and resilient.
On the flip side, excessive deregulation and the removal of safeguards could raise systemic risks and potential financial instability. But that is probably too far down the road for the consideration of equity portfolio investors.
The Malaysian portfolio posted a loss of 0.3% for the week ended June 11. Kim Loong traded unchanged at RM2.25 while United Plantations was 1.8% lower at RM21.74. Insas – Warrants C continued to lose ground, down 14.3% to three sen, sending our total loss on the investment to 92.8%. Total portfolio returns now stand at 184% since inception. This portfolio is outperforming the benchmark FBM KLCI, which is down 16.7% over the same period, by a long, long way.
The Absolute Returns Portfolio, on the other hand, was up 0.7% last week. The gains boosted total returns since inception to 25.6%. The top three gainers for the week were Goldman Sachs (+4.2%), CrowdStrike (+3.6%) and Alibaba Group Holding (+3.3%); while the top three losing stocks were SPDR Gold (-0.8%), Berkshire Hathaway (-0.6%) and US Steel Corp (-0.3%).
Tong’s AI Portfolio also traded higher for the week, gaining 0.2%, lifting total portfolio returns since inception to 0.3%. The top gainers were Cadence Design (+4.3%), Alibaba (+3.3%) and RoboSense (+3.0%). SAP (-3.3%), Twilio (-1.4%) and Datadog (-0.9%) were the three biggest losing stocks last week.
Disclaimer: This is a personal portfolio for information purposes only and does not constitute a recommendation or solicitation or expression of views to influence readers to buy/sell stocks, including the particular stocks mentioned herein. It does not take into account an individual investor's particular financial situation, investment objectives, investment horizon, risk profile and/ or risk preference. Our shareholders, directors and employees may have positions in or may be materially interested in any of the stocks. We may also have or have had dealings with or may provide or have provided content services to the companies mentioned in the reports.
