May Brief Reviews on all my positions

I posted brief informal reviews of all the 15 stocks in my portfolio in April, so I thought I’d give you an update. Remember that I did them for myself, so they will vary in quality, thoroughness, and length. The stock prices are as of the day I was writing them so they may not be up to date. Please remember that my conclusions may change anytime.

May 2016 – AMZN - My Review
I love Amazon and think they have both online commerce and the cloud sewed up, as much as any one company can sew them up. I have been adding small amounts whenever I could, and AMZN is now up to about 11% of my portfolio, so I have slowed down on adding. The price has risen as well, and is $711 as I write. My only concern is the absence of significant earnings (which is a real lack). Even the $1.07 in earnings last quarter is a drop in the bucket for a $700 stock.

May 2016 – ANET - My Review
Arista used to have a much higher PE. A year and a half ago it had a PE of 80, but now at $68 it has a PE of about 26. That’s much more reasonable, and why I established a position in spite of the ongoing lawsuit with Cisco, and the (minimal?) threat of “white box” competition. For the March quarter Rev was up 35% and EPS was up 36%. Trailing earnings are up 47% so this quarter they slowed somewhat. I’ve been building my position slowly and it’s only at currently at 5.6% of my portfolio. I’ll keep going slow. Especially as I’m not a techie and don’t really understand what they actually do.

May 2016 – CBM - My Review
They supply little pieces and finished compounds, and generic meds to big drug companies like Gilead, and also many others, but Gilead is still a big part of their business. They’ve just built out a large facility with plenty of empty space so they can “keep up with demand”. But at the same time they give very conservative guidance of maybe 15% revenue growth. On the other hand, EPS is up 135%, from 99 cents to $2.33, between 2013 to 2015.

I started to buy at $36 in February and to my surprise it’s now up to $48. Its PE is 19 and it has grown up to a 7.1% position due to price appreciation and my adding a little here and there on the way up. They successfully provide shovels to all the miners who want them, but they will never shake the world. I wrote last month that I was expecting quite good first quarter earnings comparisons, but earnings were up 72%, which was better than I anticipated. They are still giving conservative guidance of 15% CAGR for revenue.

May 2016 – FB - My Review
I’ve sold small positions twice because of concerns about PE or growth rate, and each time it’s been a mistake. I’ll take a small position and keep it. PE is 45 but rate of growth is also 45% at least, and accelerating! Earnings were up 83% last quarter and revenue was up 52%. It’s my smallest position, but I add regularly and it’s up to 1.7%.

May 2016 – LGIH - My Review
You don’t get much better than this. Annual Revenues of $143, $241, $383, $630 million dollars. Annual Earnings of 43, 107, 138, 250 cents. It fell from $35.50 to $19.50 amid fears that the oil crunch would kill the market for houses in Texas and the west. That hasn’t happened at all, at all, AT ALL. It’s my biggest position now at 16% of my portfolio, with a PE of 9.4. The price is now at $25.60. I have added recently in spite of it being my largest position. I probably won’t be adding more because it’s such a big position.

May 2016 – MITK - My Review
This a really small company (Market Cap $270 million). It has some great things going for it though, and it is expanding as fast as it can. In fact, they said that expansion and hiring new sales teams for cross selling will cut earnings growth to zero or less this year, but first quarter earnings were up 40% from 5 cents to 7 cents. I’m not sure how much that means. The good news is that they keep signing up large new clients. The bad news is the expenses mentioned above, and the legal expenses that they are now taking out when figuring their adjusted earnings. I bought at about $4.40 about four months ago, and to my amazement they are now at $8.39, up about 90% at the midpoint. This means their PE has grown to 31, which makes me nervous! Granted, they have a huge open field in front of them, but a PE of 31 with little growth expected for this year, is a bunch. My position has grown to about 4.5% with the price appreciation. I had been tending to add a tiny bit, but now my position has grown probably to maximum for such a little company. I plan to just hold now.

May 2016 – PAYC - My Review
Andy first brought this stock to the board in June of 2015. It’s been off and on my radar ever since, and I just started a position (this time) a week ago. It’s a 1.9% position at the current price of about $40. That makes it my second smallest position, out of 15, just above Facebook at about 1.7%. It has a current PE of roughly 65, which is much larger than I like, but it is growing trailing earnings currently at 126%. I figure that for 2016, it will slow down to about 80%, and I’m willing to tag along with a small position for now. It does have a lot of things I like: significant ownership by founders who are still active, positive cash flow, renewable revenue, that kind of thing. And Bert just wrote a nice article about them.

May 2016 – PN - My Review
I’m not really sure what to do about this one. It seems to be an interesting company which has found its niche and is growing like a weed (annual revenues of $56, $103, $210 million dollars!). That’s pretty amazing even if a large part is by acquisitions. And it’s profitable. The price had fallen to $3.65 in early March in connection with manipulation over warrant exercises, and now, in May, is at $8.18, which is up over 100% from the bottom. Although the PE is still at just 10.5 this position had grown to almost 8% of my portfolio. Somehow, I just didn’t feel comfortable with this, after the price manipulation in March. And although everything seemed okay, in the last earnings call analyst questions about related party transactions, lawsuits that I didn’t know anything about, and something about “changing control” or something like that that was denied by management, all together made me more uncomfortable. I reduced my position at an average price of probably about $8.10 down to about 2.7% and I feel much more comfortable here.

May 2016 – SBNY - My Review
This remains one of the best banks in the world! I’m not exaggerating about this. Forbes rates the largest 100 banks in America on a series of metrics, weights them mathematically, explains explicitly how they rated them, and publishes the results as “The Best Banks in America” or somesuch. SBNY has been in the top ten for six years running. They scored 2nd in the Americas in 2014, 1st, actually number one (!) in 2015, and 6th on their metrics this year. March quarter earnings were announced. Very good (but not outstanding) earnings (which were up 23%), great growth in Book Value, incredible Efficiency Ratio of 32.2%. Some concern over their exposure to Taxi Medallion loans, but those are only about 4% of their total loans. They are my 5th th biggest position at 9.1% of my portfolio (being passed by AMZN since the last brief review in spite of their percent of the portfolio going up), with a PE of 17 at the current price of $132. (Price has been as high as $162 and as low as $120 in Feb). I’ve been in since January and I bought from $140 to $120 and back. I’m holding now.

May 2016 – RUBI - My Review
I wrote a long review on RUBI just a week ago here:…
That will have to hold you. Its current price is $14.30 and it makes up 3.8% of my posrtfolio.

May 2016 – SHOP - My Review
They have been doing wonderfully, doubling revenue every year compounded: 24, 50, 105, 205 million dollars. Still no earnings but ttm losses are shrinking every quarter (40, 33, 21, 15, and 13 cents). Revenue seems to be all recurring. They dominate their space. Even AMZN closed their competing product in 2015 and told people to use Spotify. It’s quite expensive with a P/S ratio of about 10. It’s very atypical for me. It’s my 10th largest position out of 15 positions at 4.2%. Current price is $26.50, down from $32.00 in the past two weeks in response to an earnings report in which revenues were up 95% (!), but they are still putting off positive earnings and concentrating on massive growth. I got into it when one of the Fool services recommended it two months in a row. Just this month Bert wrote a nice article on it.

May 2016 – SKX - My Review
This company is doing wonderfully, with no obvious threat in sight. It sold off for no particular good reason, except that the price had risen a lot this year. I’m comfortable with it as one of my big three largest, and oversized, positions. It’s currently about 15% of my portfolio, at a price of $31, and a PE of 17. This is a great company, and selling at a very low price when compared to other companies in the same field. I may add a small amount but it already is a quite large percent of my portfolio.

May 2016 – SNCR - My Review
This isn’t a company that is going to take over the world, but it’s an interesting, relatively unknown, boring sounding, but surprisingly innovative little company that is quite profitable, moving into new areas, and consistently growing revenue, and consistently growing earnings at 25%. It’s at a very low PE of 15.6 at its current price of $35. It also has started positive Free Cash Flow, which went from $0 in 2014 to over $60 million in 2015. Its cloud revenue, which is recurring, is now over 50%, and growing more rapidly than the legacy activation revenue. They are spending money building out products with Goldman Sachs and Verizon, which affected EPS negatively in the first quarter so that it was flat with the year before.

What worries me is whether they will be able to compete with the big boys in the cloud area (AMZN, MSFT, GOOGL, etc), but SNCR is in customer cloud, not enterprise cloud. The price dropped from $52 to $22.50 on these fears, abut it’s now back to $35. It’s just a 4.25% position, and I’ll hold for now.

My 2016 – SSNI - My Review
This is a little position I got into because of an article by Ophir Gottlieb. It’s an internet of things company that sells smart lighting software to cities for instance. Their trailing earnings were (-50) in Dec 2014, (-42) in Mar 2015, (-20) in June, +04 in Sept, +09 in Dec, and +22 after the recently announced Mar quarter. That’s pretty impressive but it still gives them a PE of 65 at their price of $12.80. I have a 3% position and they are my 4th smallest position.

May 2016 – SWKS - My Review
Although I really like the company, its prospects, and the management, I decided I had had too much in SWKS (and in other companies that make and sell tech products like AMBA, INFN, etc) so I reduced the size of my SWKS position by a third from 21% to 14%. I will now just hold it, especially as the price is only $62.40, and the PE is 11.


May 2016 – CASY - My Review
We all know and love Casey’s, the company. Everyone who knows Casey’s stores loves them. But CASY, the stock, hasn’t done much since I bought it from $104 to $108 about eight months ago. Casey is expanding, building new distribution centers, etc, trying new stuff like deliveries and pizza apps, and maybe investors are a little skeptical. And probably worried about a potential rise in the price of oil, as low gas prices are their sweet spot, but gas won’t stay this low forever. I decided to exit my 4% position for now to raise cash because Casey was at a PE of 21, but had declining earnings for the first time in eight quarters, and I had other companies with PE’s under 15 which were growing a lot faster and perhaps more reliably. If I hadn’t needed cash I probably would have stayed in, and may reenter in the future, maybe even higher than the price I exited.

May 2016 – CYBR - My Review
It’s obvious to everyone that security from hackers is more and more important in the modern world. This little company has an important niche where it has become the dominant player. It’s growing rapidly, profitable, cash flow positive, has plenty of cash and no debt, all the things you’d hope to see in a little company in early expansion, but rarely do see. So what’s the catch?

First, it has earnings of $1.06 and a price of $41, which gives it a PE of 39 times! (The good news is that roughly a year ago it had a stock price of $75, earnings about 71 cents or less, and a PE of over 100. This is a much better price).

Second, there’s always a threat that one of the much bigger cybersecurity companies will decide to make a determined move into their little niche, with a better mousetrap. (Not sure it will happen as all those companies with CYBR’s products already installed are simply not going to change their whole internal security system unless they have a good reason. And CYBR’s niche may be too small for the big guys to want to get in a fight over it.)

Three, it’s an Israeli company which gives it more of a war-risk than most. (It has offices and manufacturing all over though.)

It was my smallest position last month because of its high PE, and I said I was in cautious mode. This quarter its rate of growth slowed, and security stocks in general seemed to have slowed down, so I exited for cash, but am keeping it on my radar.

May 2016 – GBX - My Review
As I wrote last month, this was just a little dalliance for me. This company is a dominant and innovative figure in railroad car construction. When the oil boom was on they were booming too. Now that oil isn’t booming for the time being, they are priced as if no one will ever use a railroad again.

They have a backlog that will last for a couple of years and only about 10% of it is energy related. I bought shares about 7 weeks ago at a PE of less than 4 and a price of $27. When they announced earnings just where they said they would be, and confirmed earnings for the fiscal year at about $5.90 (down from trailing earnings of a max of about $7.07 a couple of quarters ago), the price went up to $32.50, , but when it proceeded to settle back to where I bought it I sold out for cash. I’m not a value type investor.

May 2016 – INFN - My Review
I wrote last time that I really had to wonder what’s going on with this one. Everything seemed good. Revenue is substantially up, earnings are way up, margins seemed stable to up, they are going into new fields, growing geographically, there is more and more need for bandwidth, etc etc. So I wondered why the price was stuck in the $14 and change range, down from $25 a year ago??? I presented a couple of possible reasons.

One, it is no longer the story stock with a great story and future but no earnings. Now it’s a regular company and is being evaluated according to its real earnings and has a real PE.

Two, it’s a technology company and it lives in a tough neighborhood, with tough competitiors and tough customers.

I said that I didn’t think we are going to see any future PE expansion. Then they came out with an earnings report which was a disaster to me, and I sold out. It’s no longer on my radar. My reasons were extensively spelled out here:



Immensely helpful. Thank you.



May 2016 – CYBR - My Review

First, it has earnings of $1.06 and a price of $41, which gives it a PE of 39 times!

A PE of 39 in cheap in this space for a small rapidly growing startup like this one, in a segment whose potential is sky high. The wars of the future will be fought online without bullets and bombs.

Second, there’s always a threat that one of the much bigger cybersecurity companies will decide to make a determined move into their little niche, with a better mousetrap.

No, this is not how it is done in the tech segment. The big players do not and cannot innovate. They are busy defending the legacy products that got them here, in the first place. Innovation is the territory of startups. If a big player wants to get into this niche space, they will acquire CYBR at a premium.

Three, it’s an Israeli company which gives it more of a war-risk than most.

That country had been through the ringer for 70 years and it did not slow them down any. Besides, making software is not tied up to any specific geography. I can move my source code from here to the other side of the planet in two seconds.


May 2016 – SHOP - My Review
…Even AMZN closed their competing product in 2015 and told people to use Spotify…

Typo there - that should be Shopify, not Spotify.

Listening to music won’t help you sell stuff - and Amazon still has a Spotify competitor (sort-of) in its Amazon Prime Music offering.

1 Like

Saul, interested in why you write that CBM ‘will never shake the world’.

I can see the limitations as the company stands, but on the other hand there is FCF, enabling them to expand their remit if it is well-allocated.

Saul, interested in why you write that CBM ‘will never shake the world’.

All I meant was that it will be a steady grower, but it doesn’t have a huge greenfield like AMZN had,or FB, or like SHOP possibly has, or even like SSNI possibly has. I have nothing against it. In fact I have a 7% position in it.


Thanks for sharing Saul. Very helpful indeed.