I don’t post here, a midget among giants, I just read and watch and learn. But I want to ask of you all this one time to comment on my portfolio. My holdings largest to least.
- UBNT 15.5%
- VALE 14.3%
- RIG 13.7%
- BMS 13.6
- BLX 13%
- BLACK ROCK T 12%
- AMZA 7.4%
- HUB 5.8%
- SHOP 3.5%
- TGP 1.2%
I can’t articulate or decipher the numbers like most of you but in my own words here is why I own these.
UBNT based on following this board. I like the growth potential and disruptive nature of Peras company and his 70% ownership
VALE cyclical explosion waiting to happen. Pays a nice 4% dividend that was closer to 8% pre downturn and a low 7 PE
RIG Best in class of a severely beaten down group? Savvy management outwits bankrupting peers. Will return to 7% range divvys as offshore recovers. PE 5.5 In my opinion $100 dollar oil quintuples share price in 3 years.
BMS.Bemis company. My employer. Has an incredible track record of steady even handed growth and 34 years of increasing dividends. Nothing flashy it just soldiers on year after year while aquireing smaller players globally
BLX A Latin American bank with a solid 5.62% dividend. Small cap under a million with smaller PE than big banks at 12.3 It should perform and grow well in a central and South American recovery.
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BLACK ROCK US DEBT T FUND
The least worst option of horrible choices available in my company 401(k) plan
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AMZA massive 20% div no more no less
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HUB based off board input and growth potential.
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SHOP same as above.
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TGP what can I say? I oil and gas and low p.e. dividend payers that I believe will have explosive growth in an oil recovery.
I plan to use my dividends to fund new purchases of growth stocks on dips, namely HUB and SHOP. I also have an eye on Talend and Square. I lost a small fortune in chasing FCEL over the years and sold it and VEOEY recently. FCEL due to its crushing blow with the loss of a giant fuel cell project and VEOEY due to its high valuations and a less environmental friendly government.
I would very much appreciate any constructive criticisms and advice on strategy. Thanks, Tim.
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Hi Tim, I like UBNT too but I wouldn’t have it as my largest position.
There are a number of stocks that I don’t recognize:
VALE - It would help a lot and you’d get more answers if you’d give the names of the companies as well as the tickers, and say what they do. (If you read over what you wrote you’ll see there’s no way to tell).
RIG - from the ticker I’d guess it’s oil rigs, but off shore, on shore, oil, gas, where? What makes you think we’ll ever see $100 oil again? People thought oil prices were going to come back for many years, but it hasn’t. Natural gas and solar energy have totally undermined it from my totally ignorant point of view, and if the price rises even a little people will just use more natural gas and renewable energy. If there is more drilling and more fracking it just means more supply and lower oil and gas prices. What’s the name of RIG?
Bemis - You like the company and work for it, but what does it do?
BLX - What’s the name of the bank? Did you mean under a “billion”? Why a bank in Latin America?
AMZA - what’s the company name. My guess is that a 20% dividend means that people have no confidence that it will continue, or that the company will continue to flourish. 20% dividend doesn’t sound sustainable or everyone would buy the stock and then the price would be up and the dividend percent down.
I like HUBS and SHOP too but they seem very different than your other stocks.
TGP - what’s the name of the company? Why do you especially like it? If VALE is also oil and gas, you have a lot of money in oil and gas companies banking on an explosion in prices that I can see no rational for.
I hope my questions give you something to think about at least.
Best,
Saul
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Tim,
Thanks for posting. Saul’s response is extremely valuable, so I won’t really add to it, but I want to encourage you to really pour over it. His knowledge and experience are invaluable.
I had some similar interests to you when I first started following this board. At one point, I even had positions in RIG and SDRL (Transocean and Seadrill, for the ticker-challenged). I’m extremely glad I got out of them, as they have suffered mightily over the last couple years.
One thing I’ve discovered as I’ve followed the board, is that Saul does not have magical powers to predict the future. It may seem like it sometimes, though, because he is very good at avoiding value traps. Yes RIG may seem “cheap” in a lot of ways. But rarely do you see a company with a more uncertain future.
Saul has taught me that the uncertainty is far more important than the cheap.
Good luck pruning your portfolio. I think you’re on the right track, and I look forward to your involvement with this board going forward!
Bear
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I am not of the caliber as many who post here, but I’ll give you my opinion anyway, but keep in mind that I’m still rather an amateur, still coming up the steep side of the learning curve on this stuff.
UBNT, I was invested in it for a while, but sold out completely. Every nickel they make comes from selling a new piece of more or less commodity hardware. Many people (Saul included) like them due to their disruptive business model, which is certainly worth something, but now they are trying to establish a retail presence in outlets like Best Buy. I don’t see this as a good investment. Virtually no repeat business (after you buy a modem or router or whatever, it will be years before you buy another one). No on-going revenues. Sorry, not for me. Too many other, better opportunities.
$100 a barrel oil? How do you imagine that’s gonna happen. Fracking has ended the high priced oil, and there’s enormous shale reserves right in the US (the US has become a net exporter of oil). And that’s just the US. OK, it’s heavy and dirty and somewhat more costly to refine, but it will keep the price of oil depressed for the foreseeable future. That along with the fact that oil in general will suffer forever shrinking demand. It has already been almost completely displaced as a source of home heating energy. As a transportation fuel, it is being pushed out of the ground transportation business by electricity. Even as an air transport fuel, the US DOD has initiatives in work now to replace fossil fuels with net zero emissions fuels. Once the DOD get’s there, the commercial transport business will follow quickly, or might even lead the way. Boeing is currently working on different fuel programs including algae, crop oils and so forth. My estimation is that oil (along with coal) is already a dead industry. Even natural gas is destined to die, but it will take longer.
Investing for dividends doesn’t make sense to me either. You might think the cash flows are secure, but they aren’t. You’re much better off investing for appreciation and selling a bit when you need the cash or want to change your balance or whatever reason you might have for raising some cash. Although I must admit that AMZA with a 20% dividend gives me pause. I’m curious enough to want to know more and especially what makes you think that kind of return is secure in the long term.
I have no opinion on your other holdings in that I don’t know what they are.
Just my two cents.
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Hey BluecolarTim I was looking at your post and just thought I would offer up my thoughts on Rig. I too was looking at a play in oil looking out a couple years. I wanted to keep my portfolio diversified. My research found that the off shore companies are going to have a hard time as it just costs more to drill out over the water. With the relative new process of fracking the guys in the Permian Basin can bring up oil for $40 a barrel and still make money. Technology has really improved things in the past few years. The off shore companies can’t even come close to making money under $50 a barrel. You may want to look into that a little bit (just a suggestion). I ended up going with Apache (APA) as my choice, as I like the catalyst of the Alpine High find. They also have a big position in the Permian. I built s position in the $46 to $47 range.
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