Monthly summary of my positions, end of June

Here’s the summary of my positions as of June 26. As in the past I’m doing my monthly summary on the last weekend of the month, as I have more time on the weekend than I do during the week when the market is open. (We’re just two market days early). You can consider this a six-month update.

At the end of May I was up 31.3% on the year, and the S&P 500 was up 2.4%. It’s now the end of June and I’m up 35.0% and the S&P is up by 2.1%, so I was up 3.7% more in June while the S&P lost 0.3%. I’m ahead of the S&P by 32.9% this year, after six months. Please note that I don’t ordinarily measure against the S&P, or any other index, but since I started this board I post my results against it since the MF uses it as their yardstick.

We now wait for the earnings season to tell us more about how our companies have been doing.

My big three, SWKS, BOFI, and SKX, are still the same and make up roughly 52% of my portfolio. I did cap SWKS at below 20% as I indicated that I would last month.

I noted last month that I had added a bit to my BOFI in May at $92. I bought a lot more in June between $92 and $94 (even though it was already an oversized position), and then bought some even a little above that. It’s now at $106.50, which is gratifying.

Here are the big three:
SWKS at 18.65% - trailing PE is 24.5 - ttm earnings growth is 77%
BOFI at 17.57% - trailing PE is 21.8 - ttm earnings growth is 39%
SKX at 15.56% - trailing PE is 31.7 - ttm earnings growth is 132%

Their 1YPEG’s are 0.32, 0.56 and 0.24 respectively.

My big three make up about 52% of my total portfolio. Although these are high-conviction stocks, that’s a real lot in three stocks. They are in entirely different fields: microchips, banking, and retail clothing. This wasn’t by design, but it spreads the risk. Their average trailing PE is 26.0, which I’m quite okay with. Their average rate of growth of trailing earnings is 82.7%, which is even better. You’ll notice that these big three positions all have very low 1YPEG’s. It’s not really meaningful to average 1YPEG’s as it is with PE’s or rate of growth, but if you are curious, they average at 0.37. This is not an inherently risky portfolio.

Next, I drop down to a group of four middle size positions (AMBA, CRTO, INBK, and EPAM) which are much smaller positions than my big three at between 7.9% and 5.1%, but which I also have strong conviction about. I especially have strong hopes for INBK but can’t take a bigger position in it because it’s such a small company with lack of liquidity. I already have a much larger position than is probably prudent for me. I slightly decreased my position in CRTO briefly because, not being a techie, I didn’t understand all the significance of the Apple announcement. I gradually bought some of it back. I am comfortable with my current position (about 7.8%) and have no current plans to reduce it further. AMBA we’ve already discussed a lot on the board. I added a little at $100 this week when it fell from $126 and now will watch and see how it does. EPAM’s price just keeps slowly melting up.

AMBA - PE is 41.6 - earnings growth is 114% - 1YPEG is 0.37
CRTO - PE is 42.8 - earnings growth is 220% - 1YPEG is 0.19
INBK - PE is 19.0 - earnings growth is 49% - 1YPEG is 0.39
EPAM - PE is 30.5 - earnings growth is 33% - 1YPEG is 0.93

I’ve been prospecting for new stocks the last couple of months and have bought some small positions but these are definitely not high conviction stocks. I’m not really sure of any of them. They are try-out stocks. To do this I have reduced my positions in CELG and WAB, which are growing slowly in relation to their PE’s, and also in XPO, which is growing revenues enormously, but not yet making money. Note that I have no gripe with any of these, and certainly have strong convictions in WAB and CELG, (and a wait and see attitude about XPO), but when looking for additional funds this is where I raised money. These three are now all 2.0% or less.

My try-out positions are, in order of size (ranging from 4.0% to 0.7%):

INFN
SEDG
SWIR
PAYC
SNCR
FB
LOGM

Please note that all of these seven try-out positions together total as much as just ONE of my big three, so please DON’T get all excited about them and go take a big position in one of them because I’m in it! The top seven stocks, about which I have strong convictions, make up 80.3% of my portfolio. These seven try-outs, plus the three positions I’ve reduced to get cash, all ten of them together, make up just 19.7% of my portfolio.

What I do is truly “modified buy-and-hold”. Of my biggest positions I’ve had SWKS and SKX over a year, BOFI for two and a half years, and CRTO for over six months. I’ve had CELG and WAB for two and a half years each, INBK for about ten months and EPAM for five or six. In no way is this “short-term trading”. When I buy a stock, it’s with the idea of holding it for as long as circumstances seem appropriate, NEVER with a price goal or the idea of trying to make a few points. If I try out a stock in a small position, and later decide it doesn’t fit and I sell it, I really don’t care whether I gain a dollar or lose one. I just sell out to put the money somewhere better.

Since I began in 1989, my entire portfolio has grown enormously. If you are new to the board and want to find out how I did it, and how you can do it yourself, I’d suggest you read posts #4 through #8 at the beginning of the board, and especially the Knowledgebase that Neil keeps for us (currently post #9286 but it may be updated early in July), which is a compilation of words of wisdom.

Hope this has been helpful.

Saul

69 Likes

You soundly beat my YTD return of 11.4% using my MF passive long term buy and hold strategy. I currently have 56 stocks planning to cut that number in half.

This is not an inherently risky portfolio.

I don’t know. Having over 50% of my portfolio in 3 stocks would make me exceptionally nervous. I would think though after putting as much time into understanding the companies and their potential would significantly reduce the concern.

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We really should take into account that we were very lucky this six months and that it won’t always be like this. We hit a series of great stocks that had great runs (SWKS, SKX, BOFI, AMBA, EPAM, etc). Believe me, it doesn’t always happen this way. Sometimes you can’t find the great stocks, sometimes you have them but they go nowhere, sometimes the market crashes and takes them with it. But let’ enjoy it while it’s fun.
Saul

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Hey Saul
I was noticing you haven’t mentioned SYNA in this post.

That stock in particular looks very cheap to me at current levels when I look at the adjusted EPS and revenue. And it’s recently come in from its highs. I was thinking of grabbing some more.

I also like SYNA because it feels like it could also be a part of the cyber security trend with its finger print readers.

Thanks
Keith

Well, Saul, you have done it again.

48 recommendations and counting at your monthly posting. It is obvious that most readers consider this to be their favorite post month after month. The reason is simple:

Those of us who also have large holdings in your top 3 have done extraordinarily well YTD. Not only that, but you generously give the 3 most important reasons for holding these stocks:

1.Trailing PE
2.TTM Earnings Growth
3.1YPEG

Folks, we won’t always have Saul around. However, Saul has generously given us the financial tools to continue investing for a lifetime. These are indeed golden times for this young board.

And for that we are all grateful!!!

Jim

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Hey Saul, I was noticing you haven’t mentioned SYNA in this post. That stock in particular looks very cheap to me at current levels when I look at the adjusted EPS and revenue. And it’s recently come in from its highs. I was thinking of grabbing some more. I also like SYNA because it feels like it could also be a part of the cyber security trend with its finger print readers. Thanks
Keith

Hui Keith, I have no longer been following it so I don’t know why it has dropped from $101 to $86 in a couple of weeks. However, I exited it some time ago because I felt I had enough in chips with SWKS and AMBA, and also I was worried that they were having to sue companies about patent infringement, which meant to me that they were having threatening competition. would you like to bring us up to date with what’s happening with them.
Thanks,
Saul

would you like to bring us up to date with what’s happening with them.

Apple, who comprises~15% of revenues to SYNA has said that they want to take the touch driver and the display integration in house to design a combined TDDI, exactly which SYNA is the clear leader. A bit of history-SYNA aquired Renesas SP last year which has allowed them to create the TDDI and Apple was/is a customer, which now goes to SYNA. SYNA paid high 400 millions for Renesas while Apple declined to aquire them a bit earlier for high 300 millions. Apple doesn’t seem to like SYNA. SYNA is the clear leader still and by no means is Apple’s attempt immediate or clearly imminent, but Sual’s thoughts on the compitition/patent protection appropos. It’s 1ypeg is around 40.

Alex

Alex,

Apple, who comprises~15% of revenues to SYNA has said that they want to take the touch driver and the display integration in house to design a combined TDDI… Apple doesn’t seem to like SYNA.

I thought this was speculation. Can you please point us to where you got this?

Chris

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http://m.seekingalpha.com/news/2592875

http://www.digitimes.com/news/a20150618PD208.html

http://m.seekingalpha.com/article/2902646

Alex

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Apple, who comprises~15% of revenues to SYNA has said that they want to take the touch driver and the display integration in house to design a combined TDDI… Apple doesn’t seem to like SYNA.

I thought this was speculation. Can you please point us to where you got this?

That is a little unfair Chris. We all know how secretive apple is and that nobody is going to get anything from Apple until its a done deal.

Here is an article on the subject.

http://www.macrumors.com/2015/06/22/apple-tddi-chips-no-home…

Apple is seeking to develop an in-house single-chip solution for integrating both the touchscreen and display drivers for mobile devices onto one chip, according to a new report today from Taiwanese site DigiTimes. The touch and display driver integration (TDDI) chips would also include “integrated fingerprint sensors”, potentially allowing Apple to do away with the iconic home button.
Apple is internally developing touch and display driver integration (TDDI) single-chip solutions for its iPhones, according to sources in Taiwan’s IC design industry.

The TDDI single-chip solutions will also come with integrated fingerprint sensors, said the sources. The integrated design would fit into future iPhone designs – models with ultra-thin and ultra-narrow displays, and with a whole plane design eliminating the Home button.

and here is something Oppenheimer just put out.

Oppenheimer upgraded Synaptics (NASDAQ: SYNA) from Perform to Outperform with a price target of $105.00, saying to buy on recent weakness.

Analyst Andrew Uerkwitz commented, “Synaptics has declined 14% over the last seven trading days (vs. NASDAQ +0.3%) on what we believe is unjustified fear over a Digitimes article. It claimed that Apple is developing an in-house TDDI solution. We see this as highly speculative. And even if true, Apple’s TDDI is unlikely to come to fruition until 2018. While we fully respect Apple’s ability to integrate and build leading-edge solutions, we believe it is far too difficult to build a TDDI solution for the resolution and touch capabilities needed for an Apple device. Thus, we see the recent sell-off as unjustified and a near-term buying opportunity. Upgrade to Outperform with a $105 PT.”

http://www.streetinsider.com/dr/news.php?id=10684004

I know the streetinsider isn’t the best link but it came across seekingalpha also.

My thoughts are with Oppenheimer. It isn’t going to be easy for Apple to do tddi and it will take them time to develop it. If oppenheimer is correct that it will take them until 2018 how do we know TDDI will even be the touch technology of choice? By then Syna will have come up with something new.

Andy

2 Likes

I don’t follow SYNA closely , but if 15% of their revenue comes from Apple that means 85% is coming from somewhere else. And that “somewhere else” market is growing as mobile phones get ever more common. Most of the global mobile phones are rather primitive and do not have finger print recognition.

Personally I don’t use it often, just type in my 4 number code. But it certainly is a sales point for people upgrading because to a large extent mobile phones are a commodity.

I owned SYNA at one point, and sold it at a profit. Maybe it’s time to look at it again.

Saul,

I see at the very bottom of your new very small tryout positions that LOGM has earned a place, albeit, the smallest of the seven at 0.7%, at the bottom of the list in last place!

A few weeks ago on the Weekly Analysis Board that Neil started when LOGM was the stock that we were researching and discussing, you commented that it looked interesting, but ended your post by saying,

I’m afraid that they are a little overpriced.

http://discussion.fool.com/logmein-looked-interesting-and-i-have…

What made you change your mind, or did you decide instead that they were interesting enough to take a tiny nibble as the very smallest level?

Always learning.

Thanks,
okapimoon

2 Likes

I see at the very bottom of your new very small tryout positions that LOGM has earned a place, albeit, the smallest of the seven at 0.7%, at the bottom of the list in last place! A few weeks ago on the Weekly Analysis Board that Neil started when LOGM was the stock that we were researching and discussing, you commented that it looked interesting, but ended your post by saying, I’m afraid that they are a little overpriced.

What made you change your mind, or did you decide instead that they were interesting enough to take a tiny nibble as the very smallest level?

Hi Okapimoon, You are correct on all accounts.
I did think it looked interesting.
I did think it was a little overpriced.
I did think they were they were interesting enough to take a tiny nibble at the very smallest level just to keep them on my radar. Maybe foolish on my part (small f), but if it doesn’t work out I’ll just exit it.

Saul

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Actually, okapimoon, in looking through my notes, it was your write-up after mine, that made me stay interested. Thanks (I think).
Saul

1 Like

Actually, okapimoon, in looking through my notes, it was your write-up after mine, that made me stay interested. Thanks (I think).

Saul, I feel honored that you found some of my research and thoughts on LOGM had merit worth considering (and even a small nibble). Definitely hope it proves profitable!

okapimoon

Saul:

In the spirit of friendly competition, my YTD returns as of June 26 for the four accounts I manage were:


Me    25.8%
Fiona 31.6%
Anna  19.9%

SEP brokerage 15%

The first three are as reported by IB, the SEP I calculated myself (and I’m going from memory - I think I shared it somewhere, but forget where.)

So I’m trailing you, but nevertheless very happy with my returns.

John

8 Likes

In the spirit of friendly competition, my YTD returns as of June 26 for the four accounts I manage were:

Me 25.8%
Fiona 31.6%
Anna 19.9%

SEP brokerage 15%

John, Let me make a suggestion that you figure unified results (at least it works for me). I make no distinction between accounts and consider them as a single pool of investment.

Thus I have a table like this called Distribution:


Stocks   Total    My account  Wife's accnt    IRA    Son's accnt  etc

ABC      60          25         14            21        0
DEF      43          12         13             6       12
GHI     120          35         40            20       25
JKL     etc
MNO
etc

I have it on Numbers, but I’m sure Excel would do the same. The program figures the totals automatically of course. I can immediately see where I have a positions in a particular stock. You only touch this table when you make a trade.

Then I have a second table called Spread where I have:


Stock     # of sh.     Price      Total    %-of-total
ABC          60         43.50      2610        8.3
DEF          43         12.00       516        1.7
GHI         120
...
Total                              17013     100.0

You get the number of shares from the Distribution table and only change it when you make a trade. Again, the Total and %-of-total are filled in automatically. You can update this table daily, or weekly, or monthly, as you please, by just putting in the stock prices. You can also have the spread sheet calculate what percent your current total is of what you started the year with (percent profit year to date)

Best,

Saul

4 Likes

Since we are doing a friendly competition, my YTD returns as of June 26 for the four accounts I manage were:

OK, guys, I am game! Here are my YTD numbers, which are handily beating my annualized 2% CAGR target:

My account: 2.1%

Rich

CED

19 Likes

OK, guys, I am game! Here are my YTD numbers, which are handily beating my annualized 2% CAGR target:

My account: 2.1%

Rich, I think you should be proud of yourself. You are handily demonstrating even far better results than you wrote about in your award winning post (with 87 recs, plus a Post of the Day Honor) demonstrating how to buy and sell. (Post #9599)

http://discussion.fool.com/as-we-discuss-sauls-approach-to-buyin…

I’m sure as you modify your technique your results will become far more spectacular, even, than this. Plus, like the rest of us, we’re all learning.

okapimoon

1 Like

OK, guys, I am game! Here are my YTD numbers, which are handily beating my annualized 2% CAGR target: My account: 2.1%

Rich,

From one curmudgeon to another, I fear you’ve been turned to the light side. No matter. We can fix that. We can fix that.

Dance: Ten; Looks: Three

Val realized she wasn’t getting parts because she was all steak and little sizzle. So she went out and got the necessary accoutrements. It changed her life.

You can do that, Rich. You can do that. Okay, so 2.1% return on investment…maybe you’re no steak and little sizzle. We can fix that, Rich. We can fix that. You just need the necessary accoutrements.

Learn from the CEOs, kid. Now CEOs should be measured by their return on investment. But long ago they figured out that investors don’t want that. Too much work to figure that out. Investors just want a number. Hence, PE. And if the steak is a bit lean, we’ll give em adjusted earnings. And growth, we we’ll give em growth. And if that don’t work, we’ll goose the investment – that’ll give em earnings and growth, without breaking a sweat. No need to mess with that return stuff.

You can do that, Rich. You can do that. Fix the chassis, Rich. E and G. Earnings and Growth. Never mind this CAGR stuff. Never mind this returns stuff. E and G. Give us your E and G. And look, if that don’t get you national tours, take out a home loan, up that 401k amount. That’ll juice your E and G, kid. Now you knock and someone’s there.

E and G
What they want is what cha see

Ears

4 Likes