Austin's May'18 Portfolio Review

May 2018

Mostly Importantly, Thank You!
This is my first monthly review and I want to start by saying thank you. Thank you to Saul for starting this whole thing and remaining so consistent and passionate about sharing your knowledge/experience. But let’s not forget the incredible community that exists on this board. There are so many contributors here that add so much value by adding insightful investment analysis, thoughtful and respectful disagreement, and industry experience they might have to share with others. Thank you all. This board has completely changed the way I invest.

Also, thank you so much for keeping this board mostly free of politics. I come here for thoughtful investment discussion, not to read a bunch of grumpy old gals/guys moan and groan about this and that. That part was a joke…kind of.

A Quick Introduction
I’m a 29 year old father of two, husband, and recently transitioned from the Active Duty Air Force (was stationed near Seattle, WA) to the Air National Guard, living in Atlanta, GA and working at a no-travel consulting firm. Part of what gave our family the ability and confidence to make that big transition which was ultimately to spend more time together as a family was the safety net our savings/investing lifestyle has provided.

That is why I invest. To ultimately have flexibility and the freedom to spend my time the way I want (with my family).

In the 5 months I’ve been following this board, I’ve restructured my portfolio from holding 80 or so stocks and slightly underperforming the market since Nov 2014 to now outperforming the market significantly (not just for 5 months, but since Nov 2014) and holding 13 meaningful long positions and a few small short positions.

The outperformance since investing the Saul’s Investing Discussion way has already had a HUGE impact on our lives. I wish I would have found this board 4 years ago, but I’m so happy to have found it before I become an old man at the age of 30 (that’s another bad joke) so compounding can do it’s magic.

Okay Enough Mushy Gushy.

First, I know I will take a pretty hefty capital gains tax hit from the transition of 80 holdings down to 13, but I think the outperformance since the switch has already more than paid for the taxes. With that being said, now that I’ve officially transitioned and feel comfortable with the positions I’m in, I want to invest with the intent of holding positions for a 5+ years. I know that won’t always be the case, but it helps me to think that way. Also, I plan to get out of the holding short positions habit. I don’t think the small % increase it may have had on my performance thus far is worth the stress of holding the positions knowing if something GOOD happens unexpectedly, it could be very harmful to my returns. Also, there are many here that have much better performance than my portfolio without holding short positions. To me, this says something about intensely focusing on making sure only the BEST stocks are in their portfolios…another reason to get rid of the shorts.

Returns (TWR according to Interactive Brokers because I’m not good at calculating things myself…):

Since Nov 2014:
SPY: 44%
RLG: 51%
XLK: 81%
My Port: 75%

3Y:
SPY: 36%
RLG: 40%
XLK: 68%
My Port: 67%

1Y
SPY: 15%
RLG: 21%
XLK 26%
My Port: 46%

YTD:
SPY: 3%
RLG 6%
XLK: 10%
My Port: 31%

MTD:
SPY: 3%
RLG: 4%
XLK: 7%
My Port: 5%

7 days (included because IB shows me and because I’m down…BIG):
My Port: -5%

What happened over the last 7days?!?

Well…after seeing the crazy rise in TTD after their earnings, I got bit by the short-term bug. I love how well PSTG is executing and think their future looks really really bright. Because I’m so excited about their long term prospects, I thought they were going to surprise with awesome earnings and all those wall-streeters were going to be wowed and chase like they did with TTD.

So I put about 1.5% of my portfolio into Jul 2018 PSTG, $25 calls. I’m going to hold until they expire (probably worth 0$), learn from this, and just move on. I let short termism and greed take over. Time would have been better spent with family or just learning more about one of my favorite companies. One small benefit is if it is a total loss, I can at least use it to lower some of the capital gains and lower the tax bill.

Why I chose SPY, RLG, and XLK for comparison.

I wanted to chose the indexes that I would be most prone to investing in if I was not investing in individual stocks. I love to invest because I love learning, but let’s be honest. If I can’t beat the other, less time-consuming options, it ain’t worth the time to pick individual stocks! I set these up to track against in Interactive Brokers. I will probably remove EFA and add a Small cap or tech index for a better comparison.

SPY: Tracks the S&P 500
RLG: Russell 1000 Growth
XLK: Tech Select Sector SPDR Fund

My Holdings:
Long:
TWLO 13%
NKTR 11%
NVDA 11%
AYX 10%
PSTG 9%
PVTL 9%
OKTA 8%
MDB 8%
NTNX 7%
ANET 6%
SHOP 5%
SQ 4%
HUBS 2%
ILMN 1%
MU .5%
VRNS .3%
RDFN .04%

Short
SPY -.78%
SEAS -.53%
SBH -.47%
WING -.45%
PG -.39%
K -.39%
GE -.28%

In the middle of trying to finish up a Salesforce and AWS cert for my new job so I plan to get more in depth with deeper coverage of my holdings, how I understand them, key metrics for each company, risks I’m aware of, and what could change that would make me sell.

To more accountabilty (for myself). Thanks again everyone!

  • 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

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