Here’s the summary of my positions as of July 31st. Right at the end of the month this time as the 31st fell on a Friday. The summary is longer with more detail this month.
At the end of June I was up 35.0% on the year, and the S&P 500 was up 2.1%. It’s now the end of July and I’m up 48.8% and the S&P is up by 2.2%, so I was up 13.8% more in July while the S&P was up 0.1%. I’m ahead of the S&P by 46.6% this year, after seven months.
Please note that I don’t ordinarily measure against the S&P, or any other index, but since I started this board I post my results against it since the MF uses it as their yardstick. However, I am amazed that my entire portfolio is up by 50% in seven months in which the market, or the S&P anyway, has been just about flat. Please don’t expect another 50% in the next five months. 
My big three, SWKS, BOFI, and SKX, are still the same and make up roughly 55% of my portfolio. This is even more than they made up a month ago. It’s not because I’ve added to them, it’s because I did such a good job of selecting my highest conviction stocks. These stocks have simply grown faster than the rest of my portfolio, especially with the huge advance by Skechers. BOFI and SWKS seemed to take turns being first and second depending on their daily price variations, but the big run-up in SKX after earnings moved it into first place the last couple of days. I definitely will cap each of them at below 20%, as I said that I would a couple of months ago, but I hope that the rest of the portfolio will grow enough with them that they won’t bounce against the ceiling.
I noted last month that I had added a bit to my BOFI in May at $92. I bought a lot more in June between $92 and $94 (even though it was already an oversized position), and then bought some even a little above that. It’s now at $122.8, which is very gratifying. This month I added a bunch to SWKS between $91 and $102, mostly after it fell back after great earnings because other chipmakers had poor results. It’s not clear yet how that will turn out. In fact, all three of these stocks have already announced great earnings. SKX rose $22 over the next two days, BOFI rose $9.50, and SWKS… fell because other companies (not them), in the same sector, had weak earnings or weak outlooks. Oh, well…
Here are the big three:
SKX at 19.1% - trailing PE is 34.6 - ttm earnings growth is 107%
BOFI at 18.4% - trailing PE is 23.05 - ttm earnings growth is 39%
SWKS at 17.8% - trailing PE is 19.65 - ttm earnings growth is 76%
Their 1YPEG’s are 0.32, 0.59 and 0.26 respectively.
My big three make up about 55% of my total portfolio. Although these are high-conviction stocks, that’s a REAL lot in three stocks. They are in entirely different fields: microchips, banking, and retail clothing. This wasn’t by design, but it spreads the risk. Their average trailing PE is 25.8, which I’m quite okay with. Their average rate of growth of trailing earnings is 74.0%, which is even better. You’ll notice that these big three positions all have low 1YPEG’s. It’s not really meaningful to average 1YPEG’s as it is with PE’s or rate of growth, but if you are curious, they average at 0.39.
This is not an inherently risky portfolio, even after the run-up. For comparison, consider UA, which I recently wrote about with a PE 107, a rate of growth of earnings last year of 27%, and a 1YPEG = 3.96 !!! To me, THAT’s risky.
Next, I drop down to a group of three large to middle size positions (INBK, AMBA, and CRTO), which are much smaller positions than my big three at between 8.6% and 7.8%, but I also have strong conviction about them. I have been saying for months that I especially had strong hopes for INBK but couldn’t take a bigger position in it because it’s such a small company with lack of liquidity, and that I already had a much larger position than was probably prudent for me. It indeed has shot up since then, and has grown on its own to become my fourth largest position in spite of my concerns. Combined with my big three, these six make up about 80% of my portfolio. Only INBK has reported to far.
INBK - PE is 19.1 - earnings growth is 123% - 1YPEG is 0.16
AMBA - PE is 47.5 - earnings growth is 114% - 1YPEG is 0.42
CRTO - PE is 47.5 - earnings growth is 220% - 1YPEG is 0.22
Note that all three of them grew earnings at over 100% for the trailing twelve months.
Next I have two stocks with middle-sized positions between 5.0% and 5.4%.
ABMD - PE is 67.3 - earnings growth is 112% - 1YPEG is 0.60
INFN - PE is 39.8 - earnings growth is 142% - 1YPEG is 0.28
I like both of them, but I haven’t built quite as big positions in them because of
A: Not enough money,
B: Not quite as much conviction,
C: As far as ABMD, I’m still learning about it, as far as INFN, it’s in a tough industry.
These eight so far make up about 90% of my portfolio. Seven of the eight I had last month. ABMD is the only new stock. My big three are still the same, my next three are still the same and INFN was seventh last month, so 7 of my top 8 representing about 85% of my portfolio haven’t changed at all. I’m emphasizing this so you won’t think my messing around with my tiny try-out positions represents big changes in my overall portfolio.
Finally I have four small positions between 2.4% and 3.0%. These are EPAM, ANET, SEDG, and SNCR, and a tiny try-out position in SWIR at 0.6%
EPAM - PE is 31.4 - earnings growth is 33% - 1YPEG is 0.95
SEDG - PE is 103 - earnings growth is 200% - 1YPEG is 0.51
ANET - PE is 47.5 - earnings growth is 85% - 1YPEG is 0.56
SNCR - PE is 23.4 - earnings growth is 32% - 1YPEG is 0.73
I reduced the size of EPAM somewhat this month as it was fairly priced (1YPEG about 1.00), and used the money to add to other positions. Please note that all of these small positions together total just about 11.6% of my portfolio, and they have higher PEG’s, so please DON’T get all excited about them and go take a big position in one of them because I’m in it! (The positions add to a little more than 100% because I have about minus 2.4% in margin). The top six stocks, about which I have strongest convictions, make up 80% of my portfolio.
Last month I indicated that I’d been prospecting for new stocks the last couple of months and had bought some small positions but that these were definitely not high conviction stocks., and that I was not really sure of any of them. They were try-out stocks. To do this I had reduced my positions in CELG and WAB, which were growing slowly in relation to their PE’s, and also in XPO, which is growing revenues enormously, but not yet making money. Note that I have no gripe with any of these, and certainly have like WAB and CELG, (and a wait and see attitude about XPO), but when looking for additional funds this is where I raised money. I’m now out of these three, and have reinvested the cash.
Those try-out positions last month were, INFN, SEDG, SWIR, PAYC, SNCR, FB, LOGM. Since then I have dropped PAYC, FB and LOGM, three of the smallest positions I had last month.
INFN moved up to a 5% position. I still have small positions in SEDG and SNCR, I added one in ANET, and EPAM moved down to a small position. As I mentioned I have a tiny keep-on-the-radar position in SWIR.
What I do is “modified buy-and-hold” . Of my biggest positions I’ve had SWKS and SKX over a year, BOFI for two and a half years, CRTO for over seven months, INBK for about 11 months and EPAM for six or seven. I kept CELG and WAB for over two and a half years each. In no way is this “short-term trading”. When I buy a stock, it’s with the idea of holding it for as long as circumstances seem appropriate, NEVER with a price goal or the idea of trying to make a few points. If I try out a stock in a small position, and later decide it doesn’t fit and I sell it, I really don’t care whether I gain a dollar or lose one. I just sell out to put the money somewhere better.
Since I began in 1989, my entire portfolio has grown enormously. If you are new to the board and want to find out how I did it, and how you can do it yourself, I’d suggest you read posts #4 through #8 at the beginning of the board, and especially the Knowledgebase that Neil keeps for us (currently post #9286) , which is a compilation of words of wisdom, and definitely worth reading if you haven’t yet.
Hope this has been helpful.
Saul
