My portfolio at the end of the year (2015)
I finished the year up 16.0% with the S&P down 0.7% and the Russell 2000 Small Cap Index down 5.7%
I currently have fifteen positions total. SWKS, SKX and INBK are still my three largest positions, in the same order. Their PE’s are, respectively, 14.57, 19.37, and 16.03, which is quite respectable and gives them an average PE of roughly16.7, which is rather remarkable for stocks growing earnings at an average rate of 84.7%.
These big three make up about 48% of my total portfolio. Although these are fairly high-conviction stocks, that’s a real lot in three stocks. They are in completely different fields: microchips, banking, and retail clothing. This wasn’t by design, but it spreads the risk.
Now we come to my middle size positions, a group of seven stocks which descend in size from about 8.5% of my portfolio down to about 4.8%. These include LGIH, SEDG, CASY, INFN, SNCR, AMZN, and CBM. Together, the seven of them make up about 47% of my portfolio, and combined with my large positions make up 95%.
If I exclude Amazon as a special case (which you can consider as you like), the other six have an average PE of 21.5 and an average rate of growth of annual earnings of 92.7% (also excluding Amazon).
SEDG has big earnings in the trailing 12 months, with a loss in the 12 months before that, so I capped its rate of growth of earnings at 150% for the purpose of this calculation. (If for some reason you decided not to count it, the rest still have a rate of growth of 81.2%, so the difference is academic).
I’m well aware that these companies probably won’t continue to grow earnings at that same extrordinary rate of growth for the next 12 months, but you’ll have to decide for yourselves if you think a PE of 21.5 and an historic rate of growth of annual earnings over 90% is risky.
Then I have three small positions, ranging from 3% to 2% of my portfolio. These are CYBR, CELG, and AMBA. Combined they make up about 7% of my portfolio.
Finally I have two tiny positions, AMAVF at about 0.9%, and FB at 0.2%. These are really tiny in the context of my usual position size. You don’t have to tell me that these positions don’t fit into the guidelines I’ve preached. I know. That’s why they are so very tiny.
This all adds up to over 100% as I have about 3% on margin.
What I do is “modified buy-and-hold”. Of my biggest three positions I’ve had SWKS and SKX well over a year (about a year and six months and a year and seven months), and INBK for more than a year too. I had BOFI for about three years before I sold it. I held CELG and WAB for over two and a half years each. In no way am I a “short-term trader”. When I buy a stock, it’s with the idea of holding it indefinitely, actually for as long as circumstances seem appropriate, and 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, I sell it, and 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 #9939), which is a compilation of words of wisdom, and definitely worth reading if you haven’t yet.
Hope this has been helpful.
For Knowledgebase for this board
please go to Post #9939.
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