Aleeb's June 2018 Portfolio Review

I started following this board and taking the Saul style approach at the end of December. During January and February, I was transitioning from about 80 holdings down to 9-12. I currently have 10 long holdings which make up around 94% of my portfolio. I have a few short positions (<3% of portfolio) in big companies with declining revenues, which I won’t go into detail about. I also own some long calls in my 10 core holdings, which I have included in the position size of each holding.

All returns are TWR calculated from my brokerage company. I didn’t calculate this myself which means it is accurate.

My Portfolio:
MTD: +7.4%
YTD: +46%

Comparison: I selected these two because I believe they give a good gauge at what I would likely invest in if I wasn’t investing in individual stocks. I would probably choose a split of Tech + S&P500 index. This is close enough.

FSPTX (Fidelity Select Technology):
MTD: (.28%)
YTD: 10.75%

SPY (S&P500 ETF):
MTD: 1.29%
YTD: 2.52%

So far, YTD, and since Nov 2014, investing in individual stocks has been far more profitable than indexing. Plus, I enjoy the sense of ownership and education I get from learning about these businesses.

My Positions:
I am still adding cash to my portfolio monthly and have 20+ years of planned compounding ahead so I am comfortable with position sizes up to 20%. I likely won’t add to positions near the 20% mark, but won’t feel pressured to sell either. I’ll let them even out as my portfolio grows.

PVTL: 19%
TWLO: 14%
AYX: 13%
PSTG: 13%
NTNX: 11%
MDB: 10%
OKTA: 9%
SQ: 5%
SHOP: 4%
NKTR: 3%
Cash: 3% (just added some, will likely invest in the coming weeks)
Short positions: -3%

Top 5 positions = 70% of my portfolio. I’m oddly comfortable with this. I plan to deploy my cash position plus another 6% or so of cash that I will have coming into the portfolio into NTNX, MDB, and SQ over the next month or so. Probably evenly.

I got burnt pretty bad on NKTR this month. I have no one to blame but myself, and my sentiment now is with the benefit of hind-sight, but I think the mistake I made was falling in love with their story and price anchoring. I bought about a 10% position size, then when it halved, I dove in for another 7-10%. At one point, NKTR was my largest holding at somewhere between 15%-20%. I sold all the shares I owned in my taxable account and, kept the 3% position I have in our IRAs. I will not add to this. If it becomes the next magic-bullet bio, then what I have will be enough. If it goes to 0, then it won’t kill me.

Fortunately, Pivotal more than made up for the NKTR mistake and at one point, I was up somewhere between 65-70% YTD. Then the recent sell-off happened and I’m proud of myself for keeping my emotions in check. I didn’t sell anything and am looking to add more. Whether that decision ends up being right or wrong, I’m proud for sticking to my process and not panicking.

I can kick myself for not timing it perfectly and dropping from the high to now being up 46%, but if I would have tried to time it in the first place, I probably would never have bought into these “expensive” stocks.

Feeling very fortunate to be up this much half way through the year. I know it’s a small sample size, but I believe in the type of investing taught here, especially with the reassurance of incredible investors at The Fool and Bert backing us with research on some of our picks.

Thanks for the time and effort you all bring to this board. It has made a major difference in my family’s financial outlook and I really enjoy this board.

  • Austin

Shopify (SHOP) Ticker Guide

For information on all of my current holdings view my profile here: http://my.fool.com/profile/CMFAleeb/info.aspx

22 Likes

Austin, congratulations on a transition well done. To go from 80 stocks to 10 you had to be ruthless, but it paid off. Great job.
Saul

2 Likes

Thanks Saul. The biggest mental obstacle for me was capital gains taxes. It was worth the hit to transition and set up for a more concentrated approach.

I got burnt pretty bad on NKTR this month. I have no one to blame but myself, and my sentiment now is with the benefit of hind-sight, but I think the mistake I made was falling in love with their story

OK, Saul said the same thing about Nektar and got support for that thesis from other board members. I fully agree that their cancer research is yet to produce a viable NDA. But 181 is real and they just submitted the NDA to the FDA very recently. This opioid substitute will be on the market soon.

At first they were going to off-load the marketing as they didn’t want to be labeled as a company that specializes in analgesin medicine (?, at least that’s what I recall as the rational), but they reversed course and decided to keep it in house. Any guesses why they would make that decision?

And, while I admit it’s still a “story,” their cancer research at least appears to be very promising. But even if the promise id not fulfilled near term, there’s still 181. The stock took a big hit recently, what will happen when 181 comes to market? I can’t see the future any better than the rest of the very smart people on this board, but to think that an effective alternative to opioids will just sort of do poorly is, IMO, not looking at the reality of the addiction epidemic here and abroad.

I have maintained a small position in NKTR (actually, it was never a big position for me in the first place as I don’t really understand the entire industry). I can’t imagine that this one drug alone won’t be an enormous seller. I’m not the only one out there with chronic pain. I got off opioids about a year ago. It wasn’t entirely my decision, my neurologist was just getting too much pressure from the legal establishment (yes folks, the government is making therapy decisions). I think this company, and hence it’s stock has carries a significant upside.

5 Likes

I can’t imagine that this one drug alone won’t be an enormous seller. I’m not the only one out there with chronic pain.

BrittleRock,

Would you have said anything different about Exparel, the non-opioid pain medication offered by Pacira (PCRX), which I owned for a short time? That’s the problem with Biotech to me – they all sound like they’ll save the world.

I prefer companies that can succeed simply by continuing on the path they are already on, not a binary event in the future.

Bear

7 Likes

“I have maintained a small position in NKTR (actually, it was never a big position for me in the first place as I don’t really understand the entire industry). I can’t imagine that this one drug alone won’t be an enormous seller. I’m not the only one out there with chronic pain. I got off opioids about a year ago. It wasn’t entirely my decision, my neurologist was just getting too much pressure from the legal establishment (yes folks, the government is making therapy decisions). I think this company, and hence it’s stock has carries a significant upside.”

I have a starter position in the 102s. I did double up in the 52 area with a stop loss at a small gain.
That stop hit, so back to original starter position only. I will watch the price action and may re-enter
to play for bounce due to upcoming news events. I too think this is not a lost cause.

Rob

1 Like

Brittle,

Thanks for your response. I’m not upset with myself for investing in NKTR. I’m upset with my lack of discipline. I love their pipeline, and think they have some real traction due to their terms of their partnership with BMY.

I would have been content with myself if I invested 5% or so knowing it was rather speculative due to it being a bio, and just left it. But instead, I price anchored and thought when it dropped 50% it was an incredible opportunity to double down.

Whether this turns out to be the greatest or worst investment of all time is separate from me trying to become a more disciplined investor.

3 Likes