My portfolio at the end of November
Here’s the summary of my positions at the end of November. As usual I’m figuring it on the last weekend of the month and missing several trading days. If you prefer you can think of it just as a “four-week” summary. My summary for December will go five weeks to the end of the month, and will be a true end of the month, and end of the year, summary.
Please note that any PE’s that I give are always based on adjusted earnings, usually as the company has given them, but rarely with small modifications of my own.
At the end of October I wrote that I was really pretty discouraged. I had lost 8.5% in October and had dropped from plus 6.5% to down 2.0% in the course of the month, due partly to Amazon, Skechers and Bofi falling after earnings, but mostly due to my largest position, LGIH, which dropped 20.6% over the course of October for no discernable reason. Shopify also dropped over 5% with no apparent reason.
So how was November? Well, I regained all I had lost in October, and then some, starting at down 2.0%, falling a little more before the election, but then rising like a rocket over the last two and a half weeks climbing 9.9% for the month, to finish at up 7.9% for the year so far. What a surprise!
Well what happened? Going through my positions alphabetically:
Amazon was actually pretty flat for the month, starting at $776 and finishing at $780. This is apparently because of worries that they might have troubles with the new administration, and partly because it’s perceived that limitations on free trade would hurt them.
Arista started the month at $85.10, and gained a only few percent until this last week, but then their work-arounds got approved by US Customs as not infringing on Cisco’s patents. This allows them to import them and Arista took off, finishing the month at $94.65, for a nice move of up 11% on the month.
Bofi made a big move, starting at $18.75, hitting $25.00, and finishing up 32% at 24.67, in spite of another short article. Its previous high close for the last six or seven months had been $23, so just maybe the shorts are through.
Hubspot started at $52.35 and finished at 57.75, up 10%. I trimmed some this last week.
LGI Homes bounced back a little from the disastrous October, finishing this month up 14%, rising from $29.19 to 33.23.
Mitek, my smallest position has continued to sink, and has fallen in two months from $8.30 to 5.95, a drop of 28%. There is no reason for the drop that I’m aware of except revenue growing without earnings growing. They had announced beforehand that 2016 would be an investment year, investing in grabbing market share in the spaces of verifying identity and of filling forms from mobile devices, so, to tell you the truth, I’m not sure what’s going on. And as I don’t understand what was going on, rather than adding to this small position, I reduced some of my position on the way down.
Paycom started the month at $52.50, dropped 25%(!) during the month to $39.35, but bounced back to close down 17.5% at $43.30. I bought some at $44.15 on the way down, and a lot more at $41.80.
Signature Bank, my second largest position at the end of October, and again at the end of November, had an exuberant month (because it is a bank, and banks had an exuberant month based on the election results). It started at $118.30 and finished up an enormous 27% at $150.20. I thought that this magnitude of rise was perhaps “irrational exuberance” and I trimmed a small part of my position on the way up.
Shopify started at $40.80, got as low as $37.90 during the month, but finished up 6% at $43.30. I bought some on the drop at about $40.00 and some more at about $38.40.
Skechers started at $20.75, and like so many others, dropped a little the first week, but finished the month 7% higher at $22.14. I trimmed some of my position at about $22.40.
Synchronoss started at $37, but boomed on earnings, and finished up 33% at $49.20. I added after earnings and the conference call, at about $46.60, and was very happy with my purchase. As I have mentioned, I feel they have truly turned the corner, and it should be nothing but up from here for some time. And even after the boom in price the PE is only 21.
Splunk remains range-bound (as it has been since I bought it twelve weeks ago), staying between $58 and $62 probably 95% of the time. It closed at $58.30. I kept adding small amounts during the month.
Silver Spring started at, $14.10, dropped the first week almost 10% to $12.80, got over $15.00 last week, and finished at $14.70, up 4% on the month. I trimmed my position a little.
Ubiquiti had also been range bound between $51 and $54, but broke out the last two weeks to finish at $57.40, up 10% on the month.
Now let’s get to my positions. At the end of October I was able to say that I had exactly the same 14 positions as at the end of September, with no additions or deletions. At the end of November I can say the same thing: I still have the same 14 positions with no additions or deletions. So let’s look at position sizes. Remember that a percentage of the portfolio can rise, not because I added, but because it rose more than the rest of the portfolio. Similarly, a percentage can fall not because I sold some, but because the price fell, or rose less than the 9.9% that the rest of the portfolio rose.
**October November**
LGI Homes 13.3% 14.2%
Signature Bank 12.1% 12.7%
Amazon 12.1% 10.2%
Shopify 9.1% 11.0%
Skechers 7.0% 5.7%
Silver Spring 6.2% 5.4%
Arista 5.8% 5.7%
Ubiquiti 5.6% 5.7%
PayCom 5.5% 5.5%
Synchronoss 4.8% 7.4%
Bank of Internet 4.5% 5.2%
Splunk 4.4% 4.6%
Hubspot 4.3% 3.4%
Mitek 3.4% 1.9%
So what’s changed and what’s the same?
Well the top four are still the top four, the only change being that Shopify passed Amazon for third place. That’s partly because I net sold a little Amazon, and partly because I bought a bunch of Shopify when I realized that they could become profitable whenever they wanted to (tomorrow if they wished). The top four as a group remained pretty stable, advancing just from 46.6% to 48.1%.
Next, Synchronoss went from 4.8% to 7.4%, moving it up to a clear grip on fifth place. This was because of a substantial price increase, and also because I added to my position. (see my discussion above).
Next we have Skechers, Silver Spring, Arista, Ubiquiti, Paycom and Bofi, at 5.7% to 5.2%. As they are all within a half of a percent of each other you could consider them essentially tied for 6th through 11th places. By tied I mean they could change places any day depending on normal market fluctuations. Last month they were more spread out, but still fairly close to each other. That takes us through my top eleven positions.
Bofi (which I included above), Splunk, Hubspot and Mitek are still my bottom four positions, and still in the same order, but Hubspot and Mitek have gotten relatively smaller, Mitek especially, because of the price decline and because I sold some. I also trimmed a little Hubspot, but its price rose.
I’m planning to write up a new series of Brief Reviews in the next few days, post-earnings season, so you can look out for it.
What I do is “modified buy-and-hold”. I’ve had SKX for 30 months, and LGIH for 14 months. I’ve had SNCR for 21 months. I had INFN for a year and INBK for a year and a half each before I sold them. I had SWKS for 26 months before I sold out. I had BOFI for about three years the first time before I sold it. I held CELG and WAB for over two and a half years each.
What I mean by modified buy and hold is that, when I take a position in a stock, it’s with the idea of holding it indefinitely, as long as circumstances seem appropriate, and NEVER with a price goal, or with the idea of holding it a few days or a few weeks, or with the idea of trying to make a few points and selling. I do sometimes take tiny positions in a company to put it on my radar and get me to learn more about it. I’m not trying to trade it and make money on it, I’m just trying to decide if I want to keep it long term. If I do try out a stock in a small position and later decide that it’s not what I want, I sell it without hesitation, and I really don’t care whether I gain a dollar or lose one. I just sell out to put the money somewhere better.
You should never just try to follow what I’m doing without making up your own mind about a stock. In these monthly summaries I’m giving you a static picture of where I am now, but I may change my mind about a position during the month. In fact, I not infrequently do, and make changes in the position. I usually don’t announce these changes until the end of the month, and if I’m busy or have some personal emergency I might not announce them then. Don’t just follow me blindly! I’m an old guy and won’t be around forever. The key is to learn how to do this for yourself.
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, which is a compilation of words of wisdom, and definitely worth reading (a couple of times) if you haven’t yet.
I hope this has been helpful.
Saul
For Knowledgebase for this board,
please go to Post #17774, 17775 and 17776.
We had to post it in three parts this time.
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