Previous Month Summaries
January: I didn’t start doing this until February
This Month My Portfolio - 0.46% S&P 3.42% Nasdaq 2.59% Russell 2000 11.06% YTD My Portfolio - 16.89% S&P 7.58% Nasdaq 6.32% Russell 2000 16.86%
With results like these, one might think that I’m likely to get tired of posting each month. It doesn’t look great, but I’m actually just happy this month wasn’t much worse. Four business days into the month I was actually at -6% for November, and at my lowest point for the year, almost -22%.
So another way to look at things is that I’m up ~6% since then! How did it happen? Well, I got raked over the coals during earnings season, AGAIN, even though it was somewhat mitigated since I sold large amounts of several companies before they reported. But doesn’t that say something about my confidence level in these companies, at least in the short term? I’m finally catching on: I have to avoid stocks that are simply “too difficult.”
I wrote about that this morning. The post was (supposed to be) called: “It’s so cheap” is not an investing thesis. You can see it here: http://discussion.fool.com/quotit39s-so-cheapquot-is-not-an-inve… But the upshot is simple. Valuation is only one piece of the puzzle. I was treating it like the holy grail! It illuminates the market’s expectations – it’s worth understanding what those are. They may not be (read: basically never are) as crazy as they may seem at first.
Changes this month, and why I made them
SEDG - Luckily I sold a lot before earnings came out. Then I sold the rest. Per guidance for next quarter, demand growth has finally gone negative. For how long is a mystery, so I don’t really know how to value them anymore. “Too difficult.”
SUNW - Very similar story to SEDG, just on a smaller scale. Luckily I sold a lot before earnings came out. Then I sold the rest. “Too difficult.”
SSNI - http://discussion.fool.com/why-i-sold-out-of-ssni-32479890.aspx “Too difficult.”
FIT - Didn’t need a whole post to explain this one: they (finally) changed their tune about margins. I should say they finally admitted they don’t have any. Sales guidance disappoints too. I have no faith left in management.
WSM - Took profits. This was more of a value play that a long term investment. Up more than 15% in a month, I’m happy to take the money and run.
TWTR - Sold some to raise funds.
SKX - Just trimmed a little around $23. Figured if it should fall near $20 again, I’ll buy some back. Just wanted to leave myself a little room to buy…position was getting a little too big. And it’s still my third largest holding.
AMN - Sold some to raise funds. Thought about selling out as three quarters of flat revenue has me uninspired, but on the CC they said organic rev is up double digits. Gonna be one to watch, but I’m going to take it slow.
AMZN - A post-election buy. At about $730/share, I couldn’t resist. Added more around $750.
FB - A post-election buy. At about $115/share, I couldn’t resist.
SHOP - Probably won’t get many more chances to buy under $40. But if I do, I will add to this already way oversized position.
PAYC - Great month to add.
XPO - Glad I got another chance to add some in the low $30’s early this month. Shares are worth 37% more at the end of November than they were at the beginning of the month.
HUBS - Added around $51.
YELP - Added on dips. Love the growth and the future.
Other, and Watchlist
The only stock in my portfolio that I didn’t touch this month was PERI. And it’s just a tiny watch and see position. Here’s some other stuff I’m watching:
HDP - Bert wrote about this one. Its growth is great, it’s far cheaper than HUBS, SHOP, etc., but I think I know why: They’re BURNING CASH. Losses are huge compared to these others. I’m just keeping it on the radar until they show that they’re at least moving toward being cash flow positive.
SNCR - Saul’s had this for a while. I’ve just never been interested in the company. As he’s increased his position, my interest has been increased too. The stock is still very reasonably priced, and the company has been doing better than expected.
VEEV - as a short! I don’t think I would actually short anything, but this company is now at a P/S well more pricey than even SHOP, while growth is nowhere near SHOP’s. It looks insane…so hmm…is the market saying revenue growth and or EPS will accelerate?
That’s really about it. There are a couple of stocks Bert has written about that I glance at a little, but nothing else I’m really following. I’d sooner add to the stocks I already own than buy anything else I’ve seen. Which is a good feeling.
My Current Allocations
The two new columns are:
- position rank last month, and
- whether I added or subtracted
Shopify 20.6% 2 + Paycom 11.6% 5 + Skechers 11.3% 1 - Amazon 10.6% NEW XPO Logistics 9.4% 7 + Hubspot 6.9% 11 + Yelp 6.6% 15 + Square 5.9% NEW LGI Homes 4.3% NEW Facebook 4.2% NEW Seaspan 3.2% NEW Twitter 2.9% 8 - AMN Health 1.8% 9 - Perion 0.8% 16
Random Thoughts and Conclusions
I say this every month, but I’m feeling much better about my holdings than I did last month. I cleared out some things in the “too difficult” category and I’m in companies I think are hitting on all cylinders. I just don’t see what’s stopping my portfolio going forward. And that scares me to death.
But I think if I’ve learned anything this year, it’s: bet on the sure thing. Or at least: don’t bet on the long shot. Don’t invest because you feel like the market is wrong on a stock (GPRO, SEDG, INFN, RUBI). Buy reasonably priced companies that are knocking it out of the park quarter after quarter with a model that is sustainable and dare I say…predictable (SHOP, PAYC, YELP, HUBS).
It is scary to feel confident. I don’t want to be disappointed again. But it feels good that it’s no longer “Me against the market.” Frankly I don’t like those odds.
I would love to hear your thoughts!
My best to all,