Damian Kasztelan has made more money from his investments over the past two years, than he has from his job.
Damian, who works in the data science industry, has seen an impressive return of 165% on his investment portfolio over the past four years. This equates to annualised returns of around 24.26% — significantly more than the annualised returns of 0.22% he would have earned from the FTSE 100 over the same period.
The 31-year-old first started investing seven years ago, after graduating from his studies in civil engineering. He says: “I moved to France to work as a design engineer on a high-speed railway project for TGV trains. It was a good contract that allowed me to save around £1,000 a month so, besides seeing the sights in Paris and Lyon, I wanted to look at options of how to use this money.”
Rather than opening a savings account, Damian started to learn about investing. “I enjoyed reading about it, discovering reasons for stock price movements and looking at the macroeconomic aspects of investing,” he says.
"I Learned From my Mistakes"
Like many new investors, he made mistakes in the beginning, selling shares after they’d gained 5%, for example. “I did not have much patience and was often replacing companies in my portfolio too frequently,” he explains.
Since then, Damian has focused on trying to identify industries that will benefit from changes happening around the world, be it the move to a digital economy, the switch to greener technologies, and the growth of virtual reality in areas such as teaching and travelling. Damian tries to look for companies set to benefit from these trends, as well as having high profit margins and some competitive advantage over their rivals.
Now living back in the UK with his girlfriend, Damian makes use of an Isa, Lifetime Isa and Self-Invested Personal Pension (Sipp) to invest, and has other investment accounts in US dollars and Polish zloty. Although his money is spread across a number accounts, however, he tries to consider it as one portfolio.
So, which are the shares that have delivered these stellar returns? Some of his top performing holdings have come from the technology sector. He invested in Apple (APPL) in July 2017 after buying his first Apple device, a MacBook Pro. Shares were price at $145.34 at the time and have since risen to $503 a share. Damian says: “I have bought more shares in Apple since then, and have seen gains or around 170% on this holding.”
Morningstar analysts say this tech giant has built a competitive advantage thanks to its ability to package hardware, software, services and third-party applications into “sleek, intuitive and appealing devices”. Morningstar analyst Lee Davidson adds: “This expertise enables the firm to capture a premium on its hardware, unlike most of its peers.”
Davidson says that despite its admirable reputation, loyal customer base, and unique products, the consumer hardware space can be unforgiving to firms which are unable to consistently satiate the customer’s appetite for more features. Given the short product cycles of Apple’s products and army of firms targeting its dominance, the stock is assigned a narrow, rather than wide economic moat.
More recently, Damian has made strong gains on an investment in Tesla (TSLA). He bought the shares in the midst of this year’s market turmoil in March and has seen made a gain of 270%. The stock, like Apple, also has a one-star rating from Morningstar analysts, indicating that it is trading above its fair value estimate. The share price has powered ahead during 2020, rising from $478 at the start of the year to more than $2,000. After such strong rallies in their share prices, both Tesla and Apple have announced a stock split.
Morningstar’s Davidson says: “Tesla has a chance to be the dominant electric vehicle firm and is a leading autonomous vehicle player as well as a vertically integrated sustainable energy company with energy generation and storage products, but we do not see it having mass-market volume this decade.” This is largely due to pricing of these electric cars. Morningstar points out that the uncertainty for the firm is very high and it does not have any economic moat.
"My Best Ever Investment"
One of Damian’s best investments has been in video game company CD Projekt RED, which is owned by CD Projekt (7CD). This is now the biggest Polish company in terms of market capitalisation and is also one of the biggest video games companies in Europe.
Damian, who lives in Swindon, originally invested in the company back in 2013, when most of his holdings were in Polish stocks. He sold the shares in 2017 after making a 385% return.
While such a return is nothing to be sniffed at, Damien says that selling the stock was a bad investment decision in the end as it has since continued to skyrocket in value. “It doubled twice within two years after I sold it,” he admits. “I have since re-purchased the stock. The experience has made me rethink my approach slightly and while I still buy high-growth companies, I don’t look to sell them until something fundamentally changes in the business.”
Damien used March’s stock market crash to increase his exposure to some of his favourite companies and his portfolio remains tech-heavy. “Many of the companies I hold are benefiting from the transition to the digital economy and this trend has accelerated because of lockdown,” he says.
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