Here’s the summary of my positions as of June 26. As in the past I’m doing my monthly summary on the last weekend of the month, as I have more time on the weekend than I do during the week when the market is open. (We’re just two market days early). You can consider this a six-month update.
At the end of May I was up 31.3% on the year, and the S&P 500 was up 2.4%. It’s now the end of June and I’m up 35.0% and the S&P is up by 2.1%, so I was up 3.7% more in June while the S&P lost 0.3%. I’m ahead of the S&P by 32.9% this year, after six 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.
We now wait for the earnings season to tell us more about how our companies have been doing.
My big three, SWKS, BOFI, and SKX, are still the same and make up roughly 52% of my portfolio. I did cap SWKS at below 20% as I indicated that I would last month.
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 $106.50, which is gratifying.
Here are the big three:
SWKS at 18.65% - trailing PE is 24.5 - ttm earnings growth is 77%
BOFI at 17.57% - trailing PE is 21.8 - ttm earnings growth is 39%
SKX at 15.56% - trailing PE is 31.7 - ttm earnings growth is 132%
Their 1YPEG’s are 0.32, 0.56 and 0.24 respectively.
My big three make up about 52% 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 26.0, which I’m quite okay with. Their average rate of growth of trailing earnings is 82.7%, which is even better. You’ll notice that these big three positions all have very 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 0.37. This is not an inherently risky portfolio.
Next, I drop down to a group of four middle size positions (AMBA, CRTO, INBK, and EPAM) which are much smaller positions than my big three at between 7.9% and 5.1%, but which I also have strong conviction about. I especially have strong hopes for INBK but can’t take a bigger position in it because it’s such a small company with lack of liquidity. I already have a much larger position than is probably prudent for me. I slightly decreased my position in CRTO briefly because, not being a techie, I didn’t understand all the significance of the Apple announcement. I gradually bought some of it back. I am comfortable with my current position (about 7.8%) and have no current plans to reduce it further. AMBA we’ve already discussed a lot on the board. I added a little at $100 this week when it fell from $126 and now will watch and see how it does. EPAM’s price just keeps slowly melting up.
AMBA - PE is 41.6 - earnings growth is 114% - 1YPEG is 0.37
CRTO - PE is 42.8 - earnings growth is 220% - 1YPEG is 0.19
INBK - PE is 19.0 - earnings growth is 49% - 1YPEG is 0.39
EPAM - PE is 30.5 - earnings growth is 33% - 1YPEG is 0.93
I’ve been prospecting for new stocks the last couple of months and have bought some small positions but these are definitely not high conviction stocks. I’m not really sure of any of them. They are try-out stocks. To do this I have reduced my positions in CELG and WAB, which are 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 strong convictions in WAB and CELG, (and a wait and see attitude about XPO), but when looking for additional funds this is where I raised money. These three are now all 2.0% or less.
My try-out positions are, in order of size (ranging from 4.0% to 0.7%):
Please note that all of these seven try-out positions together total as much as just ONE of my big three, 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 top seven stocks, about which I have strong convictions, make up 80.3% of my portfolio. These seven try-outs, plus the three positions I’ve reduced to get cash, all ten of them together, make up just 19.7% of my portfolio.
What I do is truly “modified buy-and-hold”. Of my biggest positions I’ve had SWKS and SKX over a year, BOFI for two and a half years, and CRTO for over six months. I’ve had CELG and WAB for two and a half years each, INBK for about ten months and EPAM for five or six. 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 but it may be updated early in July), which is a compilation of words of wisdom.
Hope this has been helpful.