Bear's Portfolio at the end of June

Last month I talked about how perhaps I’ve been too active. I’ve exited and started a lot of positions. I’ve also changed the size of positions a lot. How much? Well I usually have around 20 positions at a time. In April only 8 positions remained untouched from the beginning of the month to the end. In May, that was down to 4! In June, I have tried to be a little more deliberate, and this month I actually had 10 positions that are unchanged, including 3 of my top 4. So things look fairly similar to last month in the grand scheme:

2 VERY large positions - SKX and LGIH

1 large position - SEDG.

Last month I had 3 positions I classified as “Medium.” This month I trimmed two of them considerably (PN and PERI), and XPO has fallen in value a bit. I also added to some small positions, so now the lines are blurred between medium and small. So I’ll just say:

19 “other” positions

That’s 22 total. Up from 19 last month. The only thing I sold out of completely this month was INBK. I bought four new stocks in June: SHOP, VEEV, AHS, and WATT. I’m ok with having more stocks as long as, like I said in my April conclusions, I am very careful about the ones I allow to become large. These high conviction picks should be not only high-potential, but ALSO good value. SKX, LGIH, and SEDG definitely qualify.

Previous Month Summaries

January: I didn’t start doing this until February

June Performance

Since I have been getting crushed by the S&P, which is heavily weighted in large caps, I thought it would be interesting to compare to the NASDAQ as well.

My Portfolio    -1.43%
S&P              +0.09%
Nasdaq          -2.13%

My Portfolio   -11.82%
S&P             + 2.69%
Nasdaq         - 3.29%

More thoughts on my performance in the conclusions section at the bottom.

Changes this month, and why I made them

Sales / Trims:

INBK - sold out. The issuance of shares bothered me, plus I don’t really “get” banks. But it sure does look like a good bargain.

FIT - I trimmed FIT considerably after a trip to Walmart the other day. People were looking at the Samsung / Garmin / whatever wearables, and I just got skittish. Similarly to INBK, I hate to sell any when it’s so cheap, but I just thought my money would be better elsewhere for now.

PN - Sold a lot after the buyout offer which saw the shares increase 30% in a day. Holding on to some shares, though, because I still think they might be able to get a better offer.

DY - Sold some after Brexit because it didn’t really go down. This was part profit-taking, and partly because the business isn’t quite as recurring revenue, razorblade model, etc, as I’d like. They sure are chugging along, though.

PERI - Sold a lot. This is a company trying to re-invent itself. I simply don’t know what will happen. May be the riskiest thing I own. It’s cheaper than ever, but I just sleep better with less riding on it.

Buys / Adds:

SHOP - Saul pick, Fool rec. Can’t argue with the growth. It’s pricey, but it could be like a snowball rolling. And at least they’re not losing a ton of money every quarter.

AHS - I think Kevin pointed this one out. Defintely a growth/value play. I don’t know a ton about the business, but I do think we’ll always need medical staff, and if they are able to make hiring easier on medical teams, I’m sure they can carve out a market.

VEEV - The Fool recommends and owns shares. VEEV works closely with Salesforce, which has to be a good thing. This is very expensive, but big growth. Similar to PAYC.

WATT - Another position that will remain tiny for the foreseeable future. Almost an angel investment. I just want to see them succeed at the awesome prospect of charging things without a cord.

RUBI - Added a bunch. Great value right now!

CBM - Added some for the stability factor. Seems a hard company to displace. Good relationships with clients. Seems to beat guidance.

MITK - Added a good bit. Cheaper lately…still not as cheap as some others. However, growth is expected to be phenomenal – but I actually think they’ll beat expectations.

INFN - Added some shares. Share price got down to 10 and change…just too cheap to ignore. May not be the story stock it once was, but once they “show me the money” it might regain some traction/love.

My Current Allocations

Skechers USA	       18.8%
LGI Homes	       16.5%
Solaredge	        7.6%
Mitek Systems	        5.0%
The Rubicon Project	4.8%
Patriot National	4.6%
Shopify	                4.3%
Infinera	        3.8%
XPO Logistics	        3.7%
Cambrex	                3.6%
Sunworks        	3.3%
LendingClub	        2.7%
Amazon	                2.5%
[](	        2.5%
Paycom	                2.3%
Fitbit	                2.0%
Veeva Systems	        1.8%
Dycom	                1.6%
Golden Entertainment	1.2%
AMN Health	        1.1%
Energous	        1.1%
Perion	                0.8%
CASH	                4.5%

Random Thoughts and Conclusions

Needless to say, I’m not happy with the performance so far this year. That said, we’ve gone through 2 violent down periods and a brutal earnings season. I am thankful that my bottom line looks how it does today instead of how it looked on Friday of last week.

I think June was a decent month for me in some ways. SKX hasn’t shot up like a rocket yet…but LGIH is doing so. Where these two go, I go, for now. And I’m ok with that. High Growth / Low Price / Low Risk - SKX and LGIH seem to have all three. Others are close: FIT, PN and SEDG are fast-growing and cheap, but are much riskier than SKX or LGIH. That’s why I’ve hitched my wagon to these two stocks right now. All the stocks I own are my best ideas. But these are the best of the best, which is why I’ve let them grow so big.

Still hopeful for the second half of 2016.

  • Bear

What are you making of Lending Club right now? I have read about them on another money forum and it appears that they are in trouble. Have you been getting letters from the CEO assuring you that everything is just fine?

I looked at their chart and thought, wow, this would have been a great short.


Ticker Guide: AMTD / PZZA • See my holdings here:

Hi Karen!

Re: LC, I’m keeping my position small because there is so much uncertainty. But the numbers loom large. Unlike other companies with big potential like PAYC, VEEV, SHOP, and MITK, who have P/S ratios between 8 and 11, LC’s PS is only 1.5. That’s lower than GOOG, AMZN, AAPL…mature companies whose sales will never increase by 70%+ YoY.

Also, unlike SHOP without any earnings or PAYC with a P/E over 70, Lending Club has a quite reasonable PE of 26.

I’ve said before that LC is one of the riskiest stocks I own, but it might also have the highest potential. It would have been a great short up until now, but it’s been pushed down far enough, in my opinion. The bad news and doubts are baked in, and its displayed growth and future potential are being overlooked.

Just my opinion. Always remember it is very risky.