The performance of ASX shares last month defied the market adage of selling in May. But there’s one fund manager whose smile is bigger than most.

This is listed investment manager Monash Absolute Investment Company Ltd (ASX: MA1) as it reported a 12.8% gain in the value of its portfolio in May, which is nearly double the gain on the S&P/ASX 200 Index (Index:^AXJO).

There are a few factors that pumped up the fund’s alpha (performance above the wider market), but its managers credit three ASX tech stocks for doing more of the heavy lifting.

Firing the afterburner

One was the Afterpay Ltd (ASX: APT) share price, which surged 52% last month on the back of two announcements.

The buy now, pay later darling attracted a large investment from China tech titan Tencent Holdings Ltd, which quelled doubts about Afterpay’s outlook and valuation.

Afterpay then surprised the market by announcing it hit five million active customers in the US – a 30% to 40% increase over its weekly run rate from January to February.

However, in a sign that the Afterpay share price may be close to fair value, the fund sold some of its holdings although it said Afterpay remains one of its largest holdings.

Good buy

The second stock that made a big contribution to Monash’s big month was the Kogan.com Ltd (ASX: KGN) share price.

The online retailer’s stock jumped 41% in May as it was one of the few that benefited from the COVID-19 lockdown that drove people to shop on the web.

“We had sold out of Kogan in late February on COVID-19 concerns about its supply chain. The stock subsequently fell and rebounded,” said the fund manager.

“Once it was clear to us there [sic] supply chain issues were limited we bought back into the stock.

“A week after we rebuilt our position it had a positive business update and the stock price continued run.  It ran all the way through May too and we started to take profits.”

The fund manager completely sold out of the stock after making around 50% profit.

Paying off

Another stock that Monash did well out of was EML Payments Ltd (ASX: EML) share price, which jumped 30% that month.

The fund sold some of its holdings before the payment solutions group withdrew earnings guidance due to the coronavirus turmoil even though it said business trends remained favourable.

“With EML however, we managed to rebuild our position close to that low point, in mid-March,” said the fund manager.

“A strong rally started soon after when EML announced a renegotiated outcome for its PFS acquisition, resulting in a strong capital position. A further business update later in May was well received by the market.”

Monash sold a modest amount of shares in EML to control its portfolio weighting.

More reading

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• Could Goldman Sachs’ 2020 predictions for the US share market spell the end of the ASX 200s remarkable rise?
• 3 investing secrets for success with ASX shares
• Is the a2 Milk share price too high to buy?
• ASX 200 investor in your 40s? 3 shares to buy now

Brendon Lau has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Emerchants Limited. The Motley Fool Australia owns shares of and has recommended Kogan.com ltd. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Emerchants Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Investing is one of those disciplines you may never truly master. Even the great Warren Buffett has (and does) make mistakes. All we can hope is to learn from our mistakes and get a little better each day.

As part of my own journey, I like to study what works for the world’s best investors like Buffett and what doesn’t. So here are three investing ‘secrets to success’ I’ve observed experts using which I try and implement into my investing style.

Secret 1: Be your own person

One of the downsides to the rise of the internet is how many different opinions are accessible and can influence your own. For every good idea you have, you can be sure there are ten articles that will completely shoot you down.

Not letting these get in the way of a good high-conviction idea you have is a secret to success. Remember, Afterpay Ltd (ASX: APT) was under $9 a share just two months ago and many said it was done as a company. Today, it’s over $47 a share.

2) Don’t trade your profits away

For some reason, popular culture often paints successful investors as traders – jumping in and out of shares a hundred times a day. This couldn’t be further from the truth in my view. In contrast, the most successful investors I’ve observed (like Warren Buffett and Charlie Munger) seem very happy to not do a whole lot most of the time.

Instead, they wait for once-in-a-decade opportunities to buy the companies they like at the right price. Buffett himself was said to want to own Coca-Cola shares ever since he was a child. But he waited until 1987 (when he was 57 years old) to buy his first tranche. Now that’s patience.

3) Most investors are better off buying the index

Here at the Motley Fool, we think anyone with the right attitude and decent experience can outperform the market over time and get awesome returns. But the sad truth is, most retail investors (and many professional fund managers) simply don’t. As such, these investors would have been better off just buying an index fund like the Vanguard Australian Shares Index ETF (ASX: VAS).

I’m not saying that everyone should just give up and ‘buy the index’. But it’s a sobering statistic that any investor who wants to become successful should always keep in mind.

More reading

• 5 things to watch on the ASX 200 on Tuesday
• Why the Zip Co share price rocketed 57% higher in May
• 3 top Warren Buffett quotes to start your week right
• I don’t normally buy ETFs, but I would buy these 2
• This ASX fintech share is up 489% since March

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of AFTERPAY T FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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