Here’s the summary of my positions as of May 29.
At the end of April I wrote that I was up 20.0% on the year, and that the S&P 500 was up 2.9%. It’s now the end of May and I’m up 31.3% and the S&P is up by 2.4% so it’s been a great month. I’ve gained 11.3% during May while the S&P has been flat, actually DOWN a half a percent, so I gained roughly 12% on the S&P this month and I’m ahead of the S&P by 29% this year, after five months.
Since you’ve all followed along with me, and know what I’ve invested in, I wouldn’t think that there is still anyone who doubts my veracity or doesn’t believe my results, but if so, go ahead and speak up. At any rate, here are my current positions:
Of my previous big four, CELG has fallen back into the pack, partly because I trimmed a quarter of my position due to the uncertainty introduced by all this question about patents, coupled with its relatively high PE in relation to its rate of earnings growth, and partly simply because the others have risen much more than CELG has. They have thus become my big three.
I bought back all the SWKS that I had trimmed and then some, between $91 and $99. With the large run-up to its current price of $109.35, it has become an obscenely large proportion of my portfolio, but I’ll probably cap it at 20%.
I also added a bit to my BOFI this month at $92.
Here are the big three:
SWKS at 19.94% - trailing PE is 25 - ttm earnings growth is 77%
BOFI at 15.22% - trailing PE is 19 - ttm earnings growth is 39%
SKX at 15.17% - trailing PE is 30 - ttm earnings growth is 132%
Their 1YPEG’s are 0.33, 0.49 and 0.23 respectively.
My big three now make up about 50% of my total portfolio. Although these are high-conviction stocks, that’s a real lot in three stocks. On the other hand I’ve currently narrowed down to 12 positions so it’s natural that the percentages go up somewhat. 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 24.8, which is fine with me. Their average rate of growth of trailing earnings is 82.7%, which is even better.
Next is CRTO, which is still in between my big three and my medium size positions. Here are its statistics:
CRTO at 10.56% - trailing PE is 43 - ttm earnings growth is 220%, 1YPEG is 0.19
You’ll notice that these biggest four positions all have very low 1YPEG’s. This is not an inherently risky portfolio.
Now we drop down again to my middle-size positions, ranging in size from 6.7% to 5.3%, in this order.
INBK
XPO
AMBA
CELG
EPAM
INBK has moved up from a small position to the largest of my middle size positions, on a combination of a run-up in price and my adding to the position. AMBA has also moved up into this group (by the same routes), and CELG, as I noted above, has moved down into it.
SNCR and WAB are a little smaller at about 4.2%. I’ve reduced my position in WAB, although I consider it very reliable, as its rate of growth is less than its PE and it has a 1YPEG of over one. SNCR has gone nowhere since I bought it as a MF RB recommendation. Of stocks that were middle-sized positions last time, FB and SYNA were in the bottom half of my middle-sized positions and they are now gone. Synaptics because I felt I had enough chip representation, and FB for reasons I discussed extensively on the recent FB thread on our board.
POL and PSIX were small positions and they are gone too. I have a new “small position”, INFN, which I have already talked about, at 3.7%.
You can see that what I do is truly “modified buy-and-hold”. Of my biggest positions I’ve had SWKS and SKX about a year, BOFI for two and a half years, and the “new” one, CRTO, for over six months. I’ve had CELG and WAB for two and a half years each, INBK for about nine months and EPAM for four or five. 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. When I try out a stock in a small position, and decide it doesn’t fit and 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 position has grown to over 300 times what I started with. That’s not 300%. It’s 300 times! Basically, over a 300-bagger on the entire position, not on any one stock, but on the entire position. That’s the power of compounding an average 30% growth annually, and that’s what investing is all about. Not holding on to individual stocks forever so you can eventually say you have a 10-bagger or a 20-bagger in an individual stock while large numbers of your companies have gone nowhere and you are still holding on to them. Or hanging on to what once was a great stock even after it has flattened out, so you can still brag that you have a 30-bagger in your portfolio! Right now, I don’t think I have a single full three-bagger on any of my current stocks, but who cares? It’s what my entire portfolio has done that counts.
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 FAQ/Knowledgebase that Neil keeps for us (currently post #7972 but it will be updated early in June), which is a compilation of words of wisdom. There are just a few things I might change now. I said that 25 to 28 stocks were the most you should try to keep track of, but I have cut that down now for myself to 10 to 17 or so. I currently have 12. That means that my biggest positions are bigger (and my smaller ones too) and it lets me concentrate more in my highest conviction stocks. As I have a lot of confidence in my high conviction stocks, and none of them seem over-extended to me at the moment, which doesn’t rule out a temporary decline starting the next trading day 
I see little incentive to search for less interesting stocks to add to my portfolio.
Hope this has been helpful.
Saul