OT?: What's a 'small' position

Not sure if this is OT or not, my apologies if so.

As I evolve ‘the mutual fund of Kip,’ from some 58 holdings I’ve acquired over the years to a much smaller number of companies that deserve my attention, what’s an entry point? Do I start with 5% on a new company to get my financial attention? 2%? 1 share? I’ve read a lot of ‘good advice’ suggesting to buy in ‘tranches.’

I’ve only done that a few times – bought the same company three times. Usually by the second time it’s a rocket ship or a dud, in my limited acceptance to buy. Anchored on price or looking for the next pretty bird. NFLX is the only stock I’ve bought more than twice so far, that covering a decade or more. I know the product :wink:

So far, learning here, I’ve taken two bites on ANET, TLND, SQ, PSTG. Learning about ‘price anchoring’ and investor (my) psychology. Still not ready to sell some of my anchors.

I could put 2% out on new ideas, or 5%. I’m not sure how to start small or yet how to give up on good companies that aren’t great.

Again, apologies to Saul and y’all if this is OT. I’ll be quiet with my learning, if not my gratitude for the education I’ve found here.


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Had this question too, Kip. I’ve seen some advocate a starter position would be around 2%. Kind of depends on your conviction and what percent you ultimately want to get to. I have seen 5% referenced for Saul. I am just getting into this type of more concentrated portfolio investing over the last few months. So, as I gain confidence and conviction in this methodology, I will start with higher percentages. For now, I start with 1.5-2%. I am a Supernova member and Odyssey 1 will often start with under 1% and build positions from there. That’s just me and hope this helps. I’d love others to chime in.

Best, John

Ask the question in terms of your goals for the whole portfolio. My example, I want about a dozen positions concentrated in high tech, finance, and healthcare, the fastest growing sectors of the economy. My largest positions are now over 12% and the smallest under 4%. I don’t rebalance as such but take care to maintain some order in the portfolio as I buy and sell individual positions on their own merit. Mine currently:

Finance (3)    29.9%
High tech (4)  26.0% (3 ETFs)
Healthcare (2) 24.2%
Other (2)      16.2%
Cash            3.6%
Total         100.0%

Buying in tranches or accumulating winners is a good idea – it’s a form of hedging.

Denny Schlesinger


Great question. Here is what I do:

I’ll try again:

  1. I typically buy my initial position at 2-3% of my portfolio. This allows me to start focusing on that stock.
  2. If it goes up say 20% plus I look at another purchase. This second purchase could be 2-3%. Often depends on how much money I have in cash, or from the sale of a low performing stock.
  3. I could end up buying another time or two depending on:
    the stock going on sale, or again selling a lower performer and putting it in my high conviction stock.

IMO I think you have to start with how big do you want your portfolio, before you decide what a starter % is.

If you stick with a very small number of stocks like Saul and have 10 - 12 at any one time, then an average position is 8 to 10%. Some others on the board have 20 or 50 stocks, and their average position is 2 to 5%. So IMO that has to be your first decision, how large is my portfolio going to be counted by number of stocks.

I like to keep it simple, so I generally have 12 to 15 stocks. Currently, I have 13 with ANET topping the charts at 13.96%, and I have 3 other stocks I have a high conviction in, and I own over 10% in those three. I have small stakes in Village Farms, Talend and OKTA, each of which I own less than 2%.

The remaining 6 stocks I own from SQ at 9.65% to WIX at 4.34%.

Some of the stocks grow so fast they grow themselves from a middle of the roader stock to over 10%. Shopify, Alteryx and Nutanix have all done that in the last 3 months. I have owned ANET for 2 1/2 years and it grew from an 8% stock to a 14% stock just on its own merits.

I bought Nektar 11/1/2017 and it’s price has doubled. I bought it as a small entry in my portfolio and it has grown into a 7.85% position in my portfolio without adding more shares.

So I would concentrate on how large a portfolio of stocks you want to manage and go from there. The ones you really like should be 50% larger than average, and the ones you are not sure should be 20% to 50% of average. Just my opinion.

I bought Nektar 11/1/2017 and it’s price has doubled. I bought it as a small entry in my portfolio and it has grown into a 7.85% position in my portfolio without adding more shares.

You sure you don’t mean quadrupled?
Looks like Nektar was at about $24.00 on 11/1/2017 and is over $100 at present.

Or maybe you hadn’t looked at your porfolio since December 6th?