Tuesday, June 23, 2015

How my 18 stock IoT index did after 2 years (hint: not too shabby!) and some lessons learned

Back in June 2013 when I started this blog I picked 18 stocks which I thought mirrored the public companies that would benefit the most from the coming IoT boom.  In retrospect I think there has been an IoT boom but the differences in how some of my 18 picks performed is startling.  A couple of companies had stock splits (Google and Apple) and Freescale is being acquired by NXP this summer.

But talking of Freescale it was my clear winner over the last 2 years, in fact its a two bagger with a gain of 200.21%.  On the other end of the equation Sprint was down 33.6% and overall the portfolio gained 34.5%, not too shabby! Here's the portfolio in all its glory (my original post from June 2013 with the rationale for each stock and my 7 elements of the IoT is here: http://dblaza.blogspot.com/2013/06/how-to-invest-in-internet-of-things-my.html).

Stock Name-Symbol Price on 6/22/15 Price on 6/20/13 % gain
Apple-AAPL $510.44 $416.45 22.57%
Amazon-AMZN $436.29 $273.44 59.56%
ARM-ARMH $53.73 $36.67 46.52%
Atmel-ATML $10.44 $7.45 40.13%
Avnet-AVT $43.45 $33.40 30.09%
Cisco-CSCO $28.94 $24.44 18.41%
Freescale-FSL $42.27 $14.08 200.21%
Google-GOOG $1,076.38 $884.74 21.66%
Honeywell-HON $105.37 $77.71 35.59%
IBM $167.73 $197.39 -15.03%
Linear Technology-LLTC $47.15 $35.92 31.26%
Microchip-MCHP $50.41 $36.48 38.19%
Maxim-MXIM $35.65 $27.36 30.30%
Rackspace-RAX $38.18 $35.13 8.68%
Sprint-S $4.69 $7.07 -33.66%
STMicroelectronics-STM $8.30 $9.26 -10.37%
Taiwan Semiconductor-TSM $23.84 $17.41 36.93%
Texas Instruments-TXN $55.50 $34.62 60.31%
Total % gain 34.50%

Now does this make me an investing genius?  Well we all know the answer to that question and you haven't hurt my feelings!  Let's compare my results to some common indices to get a reality check.  

If you had simply bought the Dow Jones Index (DJIA) during this time period then you would have a return of 22.77%, so I beat the Dow.  The S&P 500 returned 32.15% so I beat the S&P. But what about the "tech heavy" NASDAQ?  If you had simply bought the NASDAQ index you would have seen a 53.18% return, way better than my 34.5% and buying the SOX semiconductor index would have given you a 58% return, again significantly better than my index.

So whats the lesson here?  To me it's clear that the IoT is an amalgam of so many industries and sectors its hard to find pure play companies and no single player is going to dominate, not Google or Amazon or IBM.  I identified 7 aspects of the IoT and its not just hardware, software and infrastructure that we need to look at but standards, security, governance and ecosystems so its much more complex than people think.

So looking forward I think the meta lesson is that the real winners in the IoT are going to be those companies that can assemble the best ecosystem to serve the IoT and today I think that's wide open.  If you think you have spotted a winner please comment.