Feb review part 2

I wanted to include a little of how I started with investing, and what returns have looked like so far.
So here are top 15 holdings with their individual performance overall, vs S&P, as well as Feb return and YTD. In future updates, I might trim this down to just more recent performance. For now, I have them listed in order of overall performance.


         FEB
TICKER  RETURN    YTD     OVERALL   VS S&P

NVDA    -6.9%     4.9%     480%      442%
NKE      8.1%    12.5%     165%       60%
FB       4%      17.8%     153%      109%  
WBA      5.4%     4.4%     133%       42%
AAPL    12.9%    18.3%     120%       69%
***      1.8%    11.6%     100%       62% 
AMZN     2.6%    12.7%      92%       61%
ATVI    12.2%    25%        82%       59%
PCLN     9.5%    17.6%      65%       30%
GOOGL    3%       6.6%      53%       17%
CELG     6.3%     6.7%      20%       -2%
DIS      --       5.6%      15%      -3.5%
CASY     --      -3%        11%      -14%
SBUX     3%       3%        11%       -8%
CMG     -0.6%    11%         8%       -6% 

When first looking at this table it hit me how much of a relation there is to how long I have held and performance. WBA, for example, by no means a high flyer, but pretty soundly beating “the market”. A couple exceptions are SBUX and DIS. I have held both for a several year, but added a lot to DIS last year when it was between $90-$100. Same for SBUX. This drove up cost basis, but I am very confident in both long term. They are actually the top two positions based on what I have invested.
The other thing is, I don’t want this to come off as “bragging”. These are just my top 15 positions in portfolio of 40 stocks. there are plenty more that don’t look nearly as good. Also some that have better gains, but very small positions. I just started really tracking my performance, but a look back shows until last couple years, I was pretty much around the S&P as far as performance. I feel a lot better about this going forward with the current makeup of my portfolio.

I started investing in late 90s. I was working for Walgreens, and could purchase stock thru payroll deductions at 15% employee discount. I knew next to nothing about investing, but thought that sounded like a great deal so I took them up on it. After a few years, I left to go to my current company. At that time, you needed to be there for 6 months or a year or something to start in the 401k. Well, I got a letter from the bank that handled the Walgreens stock transactions that they could continue to make monthly purchases and just deduct from my checking account rather than payroll deductions. My thought was sure. When I can start in 401k with current employer, then I can re-address the stock purchase plan. I did join the 401k, but never stopped those monthly purchases until about 15 years later. About 5 years into it, I did a start an account with sharebuilder. Basically doing the same thing, but with a lot more companies to choose from. And that was what I did for around 8 years or so. A small monthly purchase in WBA (it was WAG at that time) and then another small monhtly purchase divided between 5 or 6 companies. To start, I went with companies I knew and used. Not financials or performance, but companies whose products I knew or was familiar with, and felt were strong companies not going to go bankrupt. Early purchases were Nike, Intel, Oakley, GE, Honeywell. And that is what I did for years without really paying too much attention to returns, performance or anything. I did start to notice dividends, and thought, reinvesting them was a great way to add to my tiny but consistently growing portfolio. I still do that to build portions today. And still have several where the dividend is one of reasons I keep it, and one of the reasons for increased returns. Then, around 4 years ago I stumbled across the fool. Then around a year later, I found Saul on some of the stock advisor boards. What really hit home to me was how much sense the things Saul said made sense, and how some posters, just couldn’t seem to objectively look at let alone accept some of what Saul was bringing to the boards. That eventually led me here. With next month’s review, I will try to give a little more thoughts on individual positions.

Sorry for the “two-part” post. Ugggh! I wish we could “retract” a post, then I could have combined them.

Also, please let me know thoughts, ideas, criticism about format of how I do my review as well as thoughts on make up of portfolio and individual positions.

Thanks to all here!

Kevin

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thoughts on make up of portfolio and individual positions.

I’m always happy to provide thoughts (lol) but I’d probably just encourage you to sell CMG and maybe CASY. Not sure exactly what you want to talk about…might help if you said a little about the individual companies. That said, I like most of what you own and you’re doing quite well too. Obviously I agree with you on your sale of SBNY (since I don’t own it) and purchase of SHOP (since it’s a top 5 position of mine).

How many positions do you own total? You might consider looking for ways to trim the fat there. FB is one we both own that I am adding to right now.

Bear

How many positions do you own total? You might consider looking for ways to trim the fat there. FB is one we both own that I am adding to right now.

That was poorly worded. I meant that you could trim some of the small positions and add to some of your higher conviction picks, like Facebook.

Bear

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Bear,

I have 40 positions total. That is down from 52 a year or so ago, so yes I agree there is room to trim but I am making progress here and going a little slower with it now. But since a fair number of companies aren’t the rapid growth, volatile stock it makes keeping up with them and hanging on to them a little easier. Your could think of it like having a portfolio of mini-portfolios. Some growth, some value, some dividend, some in the gray areas i between.

I was planning on giving thoughts on individual companies next update, but I guess now as good a time as any to get going with it.

First, CMG and CASY.

CMG - I bought between $350 and $400. They were hit hard with e coli problem, and stock was hit hard too. It was probably way overvalued before the problems. But, I was following it, and that seemed to be about the “bottom”. Also, will have some very easy comps coming up as they will now be comparing to quarters when traffic dropped dramatically. I remember Jack in the Box. Same story, but worse. People actually died from e coli problem in the 90s. Look at their stock since. I think in a few years, results could be similar. This is probably one of the stocks I’m looking at more of a short term to a few years holding. More of a “turn around” than long term holding. Different problems but same could be said for SKX. Both have made great companies to have a “trading position”.

CASY - I think the original thesis, what made it popular on this board for a while is still intact. They have run into some hiccups, and is taking a little longer to play out. With it’s size in my portfolio, I can be patient. Also, this is one of my positions I view as “cash”. Rather than just have cash sitting there doing nothing, I can at least get a dividend and have potential for gains. If needed, I can always cash some/all out and probably get back in at similar or better value.

SKX - this one has been hashed out pretty good here, so I probably don’t need to say a whole lot. What I will say is that it has been a great trading position for me. BOFI and CMG too. Earnings, rumors, or news comes out and stock price takes a hit. Businesses keep chugging (or sometimes stumbling) along and stock price inches up or sometimes shoots up on any real or perceived good news. When stock takes a hit, I would buy some. When it goes back up I would sell some. BOFI has increased to the point I no longer use it like this. And CMG has been over or around $400 for awhile too, so I haven’t had chance for awhile with it either. Until following this board, I never would have thought of trying this. But I feel I follow and know the companies close enough that I am comfortable to do it when I see opportunity.
Basically, can use it to drive returns, or if still building position, to lower cost basis.

DIS - Another solid company that is actually growing at pretty good rate. Stock has been held down over concerns about ESPN segment and the shrinking cable market. I think with this one it pretty much comes down to if you feel they can overcome that. I feel they can.

FB - I am comfortable with where it is. Would add more, but right now have others I would add to first. SHOP is one that currently building up more.

Hope that is answers your questions, and a good start to my thoughts on companies I hold.

Kevin

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Not sure how much feedback (ok pushback) you want, so I’ll try to be brief.

CMG - I bought between $350 and $400. They were hit hard with e coli problem, and stock was hit hard too. It was probably way overvalued before the problems. But, I was following it, and that seemed to be about the “bottom”. Also, will have some very easy comps coming up as they will now be comparing to quarters when traffic dropped dramatically. I remember Jack in the Box. Same story, but worse. People actually died from e coli problem in the 90s. Look at their stock since. I think in a few years, results could be similar. This is probably one of the stocks I’m looking at more of a short term to a few years holding. More of a “turn around” than long term holding. Different problems but same could be said for SKX. Both have made great companies to have a “trading position”.

Ok - Not sure what JACK’s valuation was in the 90’s, but after many good years JACK is a $3B company today. CMG, even with it’s now “depressed” share price, barely more than half what it used to be, is an $11B company. PE was basically 500 last year…I’m not kidding. EPS was 0.77. Now, it’s projected to be 8 bucks this year, so FWD PE is more like 50. Does that seem reasonable to you for a turn-around?? Sooooooooooooo much optimism is still baked in.

On the others I get your arguments. With CMG you said it was “probably way overvalued before the problems.” I totally agree – I honestly believe that CMG is, and has always been, propped up by Fool.com (not saying there’s anything nefarious here, it’s just that so many people here seem to have an emotional connection with the stock). It was so completely overvalued, so why do you think it will return to those levels? It’s going to take optimistically a few years to get fundamentals back to 2015 levels (if that can happen at all…remember that costs are rising too and it’s more competitive than ever out there), and even if they get there fundamentally, why should they achieve such a lofty valuation once again?

Bear

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Bear,

I appreciate all the pushback I can get! And I will re-examine my thoughts on CMG. I guess I feel pretty much like you do, but trying to use that to m y advantage. Use the propped up, emotional attachment to cash in. That was my thought when I bought in, and what current plan is. I don’t expect return to previous (over)valuation soon, or at all. But as fundamentals get closer to 2015 levels, now with an even higher store count, I believe there will be enough emotional support to lift the price high enough that I can take advantage to then cash out. Also gives me the option to re-examine at that time to see if I really do want to keep it long term.

I realize, it is a gamble. And as you can tell with the bulk of my top holdings, not my normal investment style. I will mull it over some more, and eventually decide. Or, more appropriately, CMG company performance, stock performance will decide for me. It has rarely bit me to just do nothing for awhile when it comes to investing.

Appreciate the reply.

Thanks,

Kevin

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I forget where I read it recently, but some columnist mentioned that Chipotle is opening an awful lot of new locations, and considered this to be a negative. I would think that it would at least delay a serious EPS increase, since each new location has startup costs and takes a while to build a clientele.

Even if it’s a popular brand, it’s always possible to open too many new locations.

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