March 20, 2025

Portfolio Changes: None

China Shows Some Momentum

I’m in Japan this week as Warren Buffett indicated that his Berkshire is raising its stakes in Mitsubishi, Marubeni, Mitsui, Itochu and Sumitomo. Berkshire’s average holding across the five stocks increased by just over one percentage point to about 9.3%. This comes as financial pundits continue to determine the meaning of why Berkshire has accumulated a massive cash position.

Perhaps Buffett is betting that America’s share of global equity indices may be close to peaking at almost 70%.

This contrasts with its share of global population of 4% and share of global GDP of 23%.

Its share of global trade is less than 15% and has declined over the last decade.

Meanwhile, power rival China is showing some signs getting its economic and market mojo back.

China’s passenger car exports increased nearly 20% to 4.9 million in 2024, from less than 1 million in 2020.

BYD (BYDDY) this week unveiled a lineup of electric vehicles it says can charge almost as fast as it takes to refuel a regular car – nearly 300 miles of driving range for a charge of just 5 minutes.

Its global footprint is also growing. Ford has sold its auto factory in Brazil to China’s BYD and China’s share of Thailand’s EV market is now 71%, up from 22% in 2022.

China’s recent progress extends to electric vehicles and beyond.

After more than a decade of research, Chinese scientists have developed a new steel production process that’s not only 3,600 times faster than traditional methods but also eliminates the need for coal.

AutoJosh reports that Ford’s CEO claims China is a decade ahead of the U.S. in battery manufacturing and the ex-Google CEO reportedly warns that China is a decade ahead on AI.

Another strategic sector where China has a commanding lead is in shipbuilding. From a base of 5% in 2000, China’s share of the $150 billion global shipbuilding industry has expanded to over 50%, largely aided by government subsidies, lower costs, and economies of scale.

Once dominant U.S. shipbuilders have seen their share dwindle below 1%. According to the U.S. Office of Naval Intelligence, China’s capacity in shipbuilding exceeds the United States’ by a factor of more than 200. I have heard that China can build naval ships three times faster and three times cheaper than the United States.

Another issue that Washington must focus on.

Explorer Weekly Stock Commentary

Below is a brief update on each Explorer stock. Any changes in ratings will be highlighted. This section is all you need to read each week.

Explorer Disrupter Recommendations – need to watch more closely and have a 20% trailing stop-loss in place.

Agnico Eagle Mines (AEM) shares were up 4.4% this week and gold is attracting even more attention as a place to allocate cash to avoid tariff issues altogether. Agnico also offers a global footprint with mines in Canada, Australia, Finland, and Mexico, with exploration and development activities in Canada, Australia, Europe, Latin America, and the U.S. Buy a Half

Banco Santander (SAN) shares rose 10% this week as it partnered with Verizon (VZ) to introduce the Verizon + Openbank Savings account for Verizon customers who want to take advantage of a 10x higher-yielding savings account while giving them the potential to save up to $180 on their Verizon bill annually. The partnership aligns with its mission to become a leading bank in the U.S. Buy a Half

BYD (BYDDY) shares soared 14.6% this week as the company unveiled a lineup of electric vehicles it says can charge almost as fast as it takes to refuel a regular car – nearly 300 miles of driving range for a charge of just 5 minutes. Its global footprint is also growing. Ford has sold its auto factory in Brazil to China’s BYD where it has a market share for EVs of about 70%. Buy a Half

Centrus Energy (LEU) shares steadied this week, rising 2% after performing poorly for several weeks as uranium prices have pulled back. Over the last year, the stock is up 94%. Centrus is a key processor and producer of enriched uranium. Buy a Half

Cloudflare (NET) shares were up 2% this week as the company unveiled Cloudflare for AI, a suite of tools to provide comprehensive visibility, security and control for AI applications. The stock is up 9% in 2025 as the S&P 500 index is down 3%. Buy a Half

Dutch Bros (BROS) shares turned things around this week, rising 6% to up their gains to 26% so far in 2025. It is an expensive stock, but a great growth story and the company just reported a solid quarter. Hold a Half

Luckin Coffee (LKNCY) shares were up 6% this past week and 36% so far in 2025 as China stocks outperform and seem to be gaining traction. Buy a Half

Sea Limited (SE) shares were steady this week after Sea’s e-commerce group, Shopee, became profitable in Asia and Brazil. SeaMoney maintained steady profitability and increased revenue by 55%, and Garena has over 600 million users playing its games quarterly, making it one of the largest mobile gaming companies globally. Hold a Half

Subaru (FUJHY) shares were up 5.3% in their first week as an Explorer recommendation. Based in Tokyo, Subaru holds a 10% market share in Japan, making it the third-largest automaker in the country while in America the Subaru brand has a cult-like following. Subaru’s stock sells for only five times trailing earnings and about 70% of book value and sports a 3.9% dividend yield. Buy a Half

Explorer Dominator Blue-Chip Recommendations – More Buy and Hold

DBS Bank (DBSDY) shares gained 2% this week as Southeast Asia’s biggest bank raised $2 billion through a bond offering. It is headquartered in Singapore, with its main listing on the Singapore Stock Exchange, and is the largest constituent of the Singapore Straits Times Index. Buy a Half

International Business Machines (IBM) were again steady this week as the company expects revenue growth to accelerate to at least 5% this year. IBM has now booked more than $5 billion worth of AI-related business, fueled by its expansive consulting arm, and its software segment posted 11% revenue growth in the fourth quarter of 2024. Buy a Half

Visa (V) shares were up 2% this week and can do well even in a weaker economy because it doesn’t issue any cards or take on any debt. Instead, it only partners with banks and other financial institutions to issue co-branded cards and collecting fees on every transaction. Visa is a great company with an impressive operating margin of 66%. Buy a Half

Watch List – Stocks we like but do not follow day-to-day

ConocoPhillips (COP), Franco-Nevada (FNV), MOOG (MOG-A)

Explorer ETF/Fund Positions

Aberdeen Asia-Pacific Income Fund (FAX) is a close ended fixed income mutual fund launched and managed by Aberdeen Standard Investments (Asia) Limited in Singapore. Buy a Half

Grayscale Bitcoin Trust (GBTC) offers investors a way to track very closely to the day-to-day or “spot” movement of bitcoin prices. For aggressive investors comfortable with volatility. Buy a Small Allocation

JPMorgan Equity Premium Income ETF (JEPI) offers double-digit yield coming from both option premiums and dividends using a value-focused strategy. Buy a Full

Morgan Stanley China A Share Fund (CAF) offers exposure to a basket of top Chinese-listed stocks. Buy a Half

Oberweis Micro-Cap Fund (OBMCX) fund stands out for several reasons. The fund’s sound investment process and strong management team earns it a rare Morningstar Medalist Rating of Gold. Over the past five years it has posted an impressive average annual return of 21.1%. Buy a Half

Sprott Platinum and Palladium ETF (SPPP) offers direct exposure to both platinum and palladium which are selling at a sizable discount to gold offering potential upside appreciation. Buy a Half

WisdomTree Emerging Markets High Dividend Fund (DEM) offers a high dividend yield and some of the highest quality emerging market stocks. Buy a Half

Explorer Stocks Summary

Brief company summaries that will not change week to week.

Agnico Eagle Mines (AEM) follows a conservative strategy and with a history spanning more than 60 years, and now operates a sizable portfolio of 11 assets located in four countries. Management forecasted gold production of approximately 3.45 million ounces in 2024. The company estimates it has about 54 million gold ounces of proven and probable reserves. Furthermore, Agnico Eagle has paid a dividend for 41 consecutive years with a dividend compounded growth rate of 23% per year since 2005 and paid a dividend of $1.60 per share in 2024.

American Superconductor (AMSC) aims to modernize the electrical grid by helping it connect and distribute power. Its products allow and coordinate the power grid including transmission lines, substations and generators. For example, its mega-watt scale power control gear leads to safer and more resilient and efficient power grids. The company is already the leading supplier of high-performance superconductor cables and its top markets are strategically important growth markets such as: Maritime, Maglev technology, and AI data centers – a huge growth opportunity.

Banco Santander (SAN) was founded in Spain in 1857. The bank’s U.S. headquarters is in Boston, but its strength lies in Latin America and Europe where it has more than 8,000 branches with 171 million customers as well as 58 million digital accounts. About 55% of deposits and loans are in Europe with the balance in Latin America. In its most recent quarter, Santander’s revenue was up 8% while net profits increased 16%.

BYD (BYDDY), in both 2021 and 2022, more than tripled sales from the previous year. That’s hyper growth and including hybrids, BYD has already surged past Tesla in terms of sales. Most of BYD’s sales are still in China but it has a big international expansion underway, including in the U.S., Europe, and Asian markets. BYD is the world’s largest EV battery maker and with CATL and others, is working on sodium-ion batteries. Much less energy dense than lithium batteries, sodium batteries should be much cheaper. BYD will also launch a next-generation Blade battery in 2025, with longer range and faster charging. That, along with various other models, could help rev up BEV sales growth next year. BYD expects solid-state batteries for high-end models by 2027, but not fully reaching lower-end models until 2030-2032.

Centrus Energy (LEU), based in Bethesda, Maryland, supplies nuclear fuel and services for the nuclear power industry in the United States, Japan, and Europe. Centrus Energy is building an enrichment facility in Ohio and would be very likely to benefit especially if federal funding moves forward to support this and other nuclear projects. I believe Centrus stock will benefit from increasing demand for its services, and that downside risk is low while upside potential is significant.

Cloudflare (NET) is both an aggressive and dominator recommendation offering products and services in four cutting-edge fields, though cloud computing is its bread and butter. Its global reach is breathtaking as 20% of all web traffic runs through Cloudflare’s network and over 95% of internet users from 180 countries worldwide access the company’s services each day. And it reaches these users within 50 milliseconds. The firm’s client list includes more than 30% of Fortune 1000 companies and the ability to efficiently move and connect data – from where it is located to where it is needed (edge computing) – is a massive business opportunity in which Cloudflare already excels.

Watch List: ConocoPhillips (COP) is a global energy industry giant and one of the largest independent exploration and production (E&P) companies in the world, as measured by production levels and proved reserves. The company, founded in 1917 and based in Houston, has operations in 13 countries, although almost half the company’s production is derived from U.S. sources.

DBS Bank (DBSDY) is one of the largest banks in Southeast Asia with a presence in 19 markets. It is headquartered in Singapore, with its main listing on the Singapore Stock Exchange, and is the largest constituent of the Singapore Straits Times Index. The Government of Singapore established DBS in July 1968 and its largest and controlling shareholder is Temasek Holdings, which is one of two large sovereign wealth funds controlled by the Government of Singapore. DBS has assets of roughly $750 billion and a growing presence in the three key Asian areas of growth, which it defines as Greater China, Southeast Asia, and South Asia, meaning India. It is the largest and strongest bank in Southeast Asia and the leading consumer bank in both Hong Kong and Singapore.

Dutch Bros (BROS) is an operator and franchisor of drive-through coffee stores, with 950 stores as of the end of the third quarter, including 38 that it opened in the quarter. It’s expanding at a steady pace, expecting up to 165 new stores in 2024, and it envisions up to 4,000 stores over the next 10 to 15 years.

Watch List: Franco-Nevada (FNV) is a company with more than half of its revenue coming from gold, but it also offers exposure to platinum, silver, and oil and gas. Franco-Nevada’s focus on royalties and streaming reduces risk and enables it to sidestep the huge capital costs that impact traditional miners. It enjoys cash flow and profits as its mining partners finance and complete exploration and expansion projects. That cash flow enables it to invest in new deals, pay a dividend, and operate debt free. Franco-Nevada has increased its dividend each year since its IPO in 2008.

International Business Machines (IBM) is a blue-chip artificial intelligence (AI) and India play with a nice dividend yield. Known as “Big Blue,” IBM now primarily helps businesses and governments manage their information technology in the cloud era. The stock sells at a discount to the S&P 500 multiple and the information technology sector’s forward earnings multiple. IBM has paid a dividend every quarter since 1916 and has had 29 consecutive years of dividend increases.

Luckin Coffee (LKNCY) is a leading purveyor of coffee and specialty drinks in China. The price of a cup of Starbucks coffee is more than double that of Luckin coffee. In addition, Luckin is adept at adapting to local tastes and launching new products that broaden the market. For instance, it brings to market about 60 new products each year, offering a new drink every week. Its new coconut latte sells nearly $140 million worth annually. All this shows in the numbers as Luckin’s latest quarter revealed strong sales and store count growth.

Watch List: Moog, Inc. (MOG-A) supplies advanced primary flight controls on the most modern military aircraft. That includes the Lockheed Martin F-35 Lightning II and the Future Long Range Assault Aircraft program. The company’s major platforms include the 787, A350, Joint Strike Fighter (F-35 Lightning II). The company also supplies primary flight controls for the Boeing 787 and Airbus A350 widebody aircraft, as well as business and regional jets from Embraer (ERJ) and Gulfstream, owned by General Dynamics (GD).

Sea Limited (SE) has three core businesses: 1) digital gaming/entertainment, 2) e-commerce, and 3) digital payments and financial services, known as Garena, Shopee, and SeaMoney, respectively. Garena is a leading global online games developer and publisher. Shopee is the largest e-commerce platform in Southeast Asia and Taiwan. SeaMoney is a leading digital payments and financial services provider in Southeast Asia.

Subaru (FUJHY), based in Tokyo, Subaru holds a 10% market share in Japan, making it the third-largest automaker in the country. In America, the Subaru brand has a cult-like following and Subaru’s stock sells for only five times trailing earnings and about 70% of book value. It also sports a 3.9% dividend yield, has a market value of $13.4 billion and has a strong balance sheet with a net cash position of $7 billion.

Visa (V) doesn’t extend credit but provides the plumbing for financial payments and communications throughout the world. Visa’s financial infrastructure also underpins much of the world’s commerce. The duopoly between Visa and Mastercard is often referred to as one of the best businesses in the world, with insurmountable moats, low operating costs, and plenty of opportunities for unlocking additional value. Visa currently trades at a discount to its archrival MasterCard.

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