Portfolio review - Kevin

Investment Analysis Clubs Saul’s Investing Discussions
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I figure I would give this a try here as well. Maybe as much for my own exercise as for the board, since i have more positions here than most. If the general consensus is that the board is getting bogged down with too many “my portfolio review” posts, I won’t be offended if asked not to keep it going on a somewhat regular basis. Quarterly? Annually?

My 2016 return was just at 8%. This was helped out by the year NVDA had, and held back by my largest position which was pretty much flat. I won’t include that one in my review. It is a long-term incentive award from my current employer and sits at about 25% of my portfolio. About 2/3rds of which come due at end of this month, so I will be cashing out most to diversify/add to current positions.

My January return was 5.1%.

I have 40 positions, but will just list my top ten and maybe throw in a few of smaller ones that have been discussed here with current portfolio %. Some I have held for years, other fairly recent. Most all built over time, not a one-time purchase.

XXX    24%     (This is current employer stock award)

WBA    9%      Former employer - It just kept growing
DIS    4%      Built over time, added  in low 90s thru 2016
AAPL   4%      Built over time, added on dips
AMZN   4%      Started in 2015, added in Feb this year
SBUX   4%      Built over time, recently added
NVDA   3.5%    My all time best performer. Started as tiny position, resisting trimming it
PCLN   3.5%    Built over time, added in Feb last year when market dropped.  
ATVI   3%      initially a couple years ago, added in Feb dip as well
CELG   3%      Started around time Saul was in this, never got out
FB     2.5%    Started buying early on, did trim some of this one over the years

Those are my top ten. I have small (but growing) positions in the following that are more relevant here.
All are from 1 to 1.5% of portfolio. Most started as small positions I added to over time, but they all did the lifting to grow to the top positions. DIS and SBUX are exceptions, as I have added a good amount to each in last 6 months or so.

ANET, BOFI, CASY, SBNY, SHOP, SKX, as well as tiny, just starting out position in IJS. As these grow I will include more detail, but honestly, not sure I can bring any more info than what is readily available here. Maybe just a different way of looking at some of them.

I got out of LGIH when it went way up, but is on my short list of new purchases. I am really trying to focus on adding to winners, but willing to add one that looks too good to pass up.

If there is interest, I can go into more of my thinking behind each one when I purchased and as I see them now.

Feel free to fire away any and all thoughts, questions, comments, criticisms…

Thanks,

Kevin

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Interesting thanks Kevin.

Priceline is of particular interest and had some wild swings between 900-1400 last year.

I always wanted in but never got a good entry point <1000 and then airbnb came along and spooked me out of the idea. Fortunately in the meantime I held CTRP in China which has been a 3x for me.

On the current employer holding - that’s a pretty large risk to be placing your salary, employment career, pension etc into along with 25% of your equity savings plus another 9% of a former employer (not sure if it’s the same sector).

It’s not the highest I’ve heard of, (someone on UK fool boards before they closed them had 50% in their employer - or to be fair ex employer), still it’s pretty high.

When my options in my employer vested along with my direct stock holdings I sold out of all the options in 2-3 tranches as I wasn’t comfortable holding what was at it’s peak about 65-70% in my company. It funded my way into a Saul-like investment direction. As it happens in the end I might have performed slightly better holding on but I didn’t want to take that risk.

I’m probably down to about 10% of my portfolio in residual stock in my employer company which because it is in the UK brokerage I will push into dividend/yield income plays like BDCs REITs and MLPs. Although having said that I’m exiting the firm and don’t have pensions etc tied to it so my total risk now is minimal.

Ant

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Kevin,

A few thoughts (some may be fairly obvious):

  1. Maybe just calculate your portfolio without the XXX position since you don’t really have control over it

  2. I’d take a hard look at WBA and decide if you really want that to be your #1 position.

  3. I’m guessing you have quite a few < 1% positions you didn’t list? Anything you’re thinking about selling or adding to?

  4. I’d be curious about your thinking when you purchased each. I think you might learn from putting the thoughts into words, as well.

Thanks for sharing your portfolio. I always love posts like this.

Bear

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Kevin–You have to be comfortable with your own portfolio. A good question I used to ask myself is–If i were to have to stop working tomorrow, will this portfolio provide the money I need to carry me through retirement with a similar standard of living I have now?

If the answer is no-then maybe that question will help guide you to make the decisions you have to make to get into that position.

Good luck

b&w

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If there is interest, I can go into more of my thinking behind each one when I purchased and as I see them now.

That would be great Kevin. That’s how we learn about them!
Saul

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I will try to respond to replies here in one post. Probably have to make some follow up posts as well.

Ant - Yes, PCLN has been one of my better performers, and 2016 was a little wild. I started with it around 2 1/2 years ago and tried to make timely adds.
I could not agree more with you on my current employer holding. However it is not “vested” yet. About 2/3rds vests at end of this month and I will sell to put into my higher conviction companies. As for my former employer, that was my single largest position, and have sold it down and diversified over the last 3 years or so. More on this in response to Bear.

Bear - 1) I have thought about not counting xxx(I guess maybe better to use YYY?) as part of portfolio returns, but decided to include it because it has contributed a lot to my overall portfolio. I have been selling regularly each year as portions “vest” and won’t really be an issue after this next portion vests and I can diversify as it will be around 8%.
2) see above for thoughts on WBA. Basically I have trimmed A LOT of this one. How did it get so big? A long story I will post(s) with my thoughts on each investment I have. At any rate, I am comfortable with it for now and hope to add enough to other positions so that it won’t be my top holding for too long.
3) You are correct I have several that are </= 1% positions. Most are in the range of 1-1.5%. I like to “buy in thirds” and 1.5% is about what I consider a starter position, or my first 3rd if that makes sense. Most of the positions in this range are ones that were bigger but I trimmed - SWKS, BOFI, SKX are in this category. My thoughts are/were like a lot of people on this board, but I didn’t want out completely. Others are positions, that are holding after statring or building up to this point - SBNY, SWIR. One other of interest here is my position in WDAY. It is pretty much a competitor of PAYC and I wrestled and still am wrestling with which to have. It is one I broke my rule of no companies with negative EPS, but I am keeping it on a short list and keeping an eye on PAYC as well. I might switch or end up with both for a while.
4) I will follow up in future post(s) with thinking on each as this one is getting rather long.

b&w - My portfolio right now would not be enough for me to retire, but it is getting there. It is simply not big enough right now. Am I comfortable with this? Yes, I have plan and budget in place to grow the portfolio with regular money each month and I have 20+ years until I am “retirement” age. My goal is to grow the portfolio to amount that it can sustain standard of living for the years until I can access my retirement funds, basically cover “early retirement”. I love your suggestion to sell worst and add it to best position. have done that several times over the last year and half and feel it is single best way to upgrade portfolio.

Saul - I will follow up with a post or a few that cover my thinking with each position. I plan on starting with one on my investing history and how it has shaped my investing “style”.

Thanks for the replies, and many thanks for all the info, insights, thoughts and opinions everyone brings to this board!

Kevin

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Kevin,

Thanks for your updates on your portfolio. My own portfolio has about 60% of your stocks, so it is great seeing how your views tie into mine. Looking forward to the additional thoughts.

Not sure who brought it up, but selling your dogs and investing in your best stocks has been a practice I have used from time to time–but not every time. The more I think about it though I plan on doing that more frequently. I currently have two stocks on my hit list: BOFI and SKX. I already sold my SWKS. Those proceeds will move into my top performers SHOP, AMZN, FB, NFLX, or AAPL.

The best strategy I have found is adding thirds like you have been using. If one of my stocks goes up 20% I’m adding money, if the story continues to be positive. I have also been keeping my portfolio under 20 stocks. I have found I can’t stay on top of my stocks when I’m above 20. This does allow me to have 3-5 stocks I’m trying out and learning. I’m trying out LGIH for example which has a great story.

Thanks

David

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“Those proceeds will move into my top performers SHOP, AMZN, FB, NFLX, or AAPL.”

I’d be a little careful of sector concentration. Likely all 5 of those will trade closely together.
You are leaving a financial and consumer stock for more tech.

Rob

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