Hi all,
My portfolio has been dinged a fair bit over the past two months or so. In terms of costs basis (and excluding sales that have locked gains/losses), my long stocks are up a mere 1.28%. I also have exposure via long calls, diagonals, short puts, spreads (all good things from the MF Options world), which I 'm not delving into for this post. Suffice to say that options have also not been going great guns, but that’s for another day.
Okay, so back to my long stock holdings. The table below summarises my current holdings. The second column shows the percentage of the total capital investment allocated to each stock. The fifth column shows the size of the holding relative to the current NAV of the long stocks. There are some superb business in this mix, right? Apple, Starbucks, Tesla, Markel, Amazon, Facebook, to name a few. There are some big winners as well. Netflix has been a 6x (6-bagger). Facebook has doubled.
Several of the so called momentum stocks are significantly down over their purchase price. I 'm down close to 50% on Twitter. Twitter has a lot of potential but may be I acted too quickly in terms of filling out my position. The current pricing would have been a better entry point. What can I say? Hindsight is 20/20! Its the same story with another business that I think has much potential - The Container Store. I have strong faith in these companies, so I 'm sitting tight and I may look to add a bit at some point if these prices persist.
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stock %cap purchase current %portfolio Gain/Loss
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AAPL 4.24 $514.46 $597.51 4.87 16.14%
SBUX 2.83 $48.57 $70.94 4.08 46.06%
CSTE 2.75 $37.84 $51.41 3.69 35.85%
PGR 3.63 $24.91 $25.36 3.64 1.82%
WFM 4.39 $45.27 $37.91 3.63 -16.27%
NFLX 0.54 $56.04 $349.88 3.35 524.35%
UBNT 3.5 $36.04 $34.42 3.3 -4.49%
ISRG 3.6 $436.64 $374.09 3.05 -14.32%
BRK.B 2.99 $123.08 $126.86 3.04 3.07%
SCTY 3.3 $54.47 $50.19 3.01 -7.86%
AMZN 3.27 $336.45 $297.70 2.85 -11.52%
FB 1.29 $26.57 $58.02 2.78 118.37%
TSLA 1.58 $108.61 $191.56 2.75 76.37%
WETF 2.19 $7.50 $9.56 2.75 27.38%
MKL 2.27 $518.79 $624.67 2.69 20.41%
PSIX 2.43 $66.67 $70.61 2.54 5.92%
SWIR 2.62 $18.02 $17.64 2.54 -2.14%
AMBA 2.08 $19.47 $24.05 2.53 23.54%
MELI 2.83 $97.10 $84.99 2.44 -12.47%
PNRA 2.62 $168.96 $152.89 2.34 -9.51%
CBOE 2.43 $50.08 $48.72 2.33 -2.72%
ROIC 1.89 $12.99 $15.84 2.28 21.94%
GTLS 2.77 $87.93 $72.50 2.26 -17.55%
NUAN 3.13 $21.52 $15.28 2.2 -28.99%
SSYS 1.64 $67.72 $89.27 2.14 31.82%
CELG 1.73 $118.84 $147.32 2.12 23.97%
LNKD 2.98 $204.88 $147.02 2.11 -28.24%
CAMP 2.71 $22.31 $17.28 2.07 -22.55%
COH 2.89 $59.46 $41.99 2.01 -29.39%
INBK 2.28 $23.53 $20.38 1.95 -13.40%
CLNE 2.11 $10.86 $9.82 1.88 -9.58%
MTH 2.04 $42.01 $38.94 1.87 -7.31%
FIVE 1.89 $38.90 $37.64 1.8 -3.24%
INVN 1.7 $17.52 $17.44 1.67 -0.43%
MIDD 1.68 $231.47 $224.19 1.61 -3.14%
TWTR 2.98 $61.36 $32.26 1.55 -47.42%
BJRI 1.59 $32.67 $28.99 1.39 -11.26%
LQDT 1.78 $18.37 $13.91 1.33 -24.28%
TCS 2.08 $42.79 $27.34 1.31 -36.11%
QGEN 1.24 $21.28 $22.59 1.3 6.14%
RAX 1.5 $56.32 $36.12 0.95 -35.87%
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With respect to Table above, I should point out that I did add to some of my positions over the past month or so. I have added to
- Whole Foods (a small bite with respect to my original position)
- Wisdom Tree (I added a bit today)
- Ubiquiti Networks (I doubled my positions on the recent sell off, which looked totally unwarranted)
- CAMP and FIVE are relatively new positions.
I also made one sell decision (TXRH). I sold because I wasn’t really getting hooked to the company (so was lagging on readings the earnings release and transcripts etc) and I wanted to raise funds to buy Ubiquiti. Could be a bad decision, but we will see how it pans out.
Some other stats on the portfolio, before I start talking about my losers. The table below shows the market cap distribution for my holdings. My portfolio is heavily weighted towards small and mid-cap holdings (a majority drawn from Stock Advisor and Rule Breaker recommendations). A total of 26 out of the 43 holdings are in this small to mid-cap range. About 56% of my portfolio is allocated to these small to mid-cap businesses. Volatility is part and parcel of small and mid-cap investing. These stocks have been beaten down. But, in the long run, one would expect these small to mid-cap businesses to become much bigger … some of these mid-caps would likely become large caps, and therein would be the opportunity to get big gains.
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# holdings %NAV
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Mega Cap (100B, ) 4 13.54
Large Cap [10B, 100B) 10 28.29
Mid Cap [2B, 10B) 13 28.37
Small Cap [250M, 2B) 13 27.85
Micro Cap [, 250M) 1 1.95
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Now, let me blah blah about my looser, I worry/think a fair bit about Coach, Rackspace, and Liquidity.
Coach is having a tough time figuring out how to compete with the likes of Micheal Kors. When I visited Washington DC in March, I went to the Pentagon Mall. There the Michael Kors shop and the Coach Shop are pretty much next to each other. The Michael Kors shop was teeming with potential buyers, the Coach shop was empty. Honestly, I thought the product lineup at Micheal Kors looked great; I even made a purchase there. Bottomline, I think Coach is going to struggle for a while …
Rackspace is getting crushed by the price cuts by Amazon, Google, and all others in the cloud computing fray. Here, I think its probably very difficult for Rackspace to meaningfully sell ‘fanatical’ service as other services such as AWS will continue to improve their APIs making their service easier to use and maintain. But there may be a potential buyout here by one of the many trying to get a foothold into Cloud Computing. Oracle, IBM, and some others may be interested in buying Rackspace. Consolidation of this market has been ongoing for sometime and will not end anytime soon. There were some buyout rumours today, which pushed the stock up some 20%. So, here, I think patience is required. At current values, Rackspace looks cheap compared to competitors, and I think a lowball buyout offer may eventuate sooner than later … so I 'm going to just let it play out.
And, then there’s Liquidity. I better not get started on that one!
Should I sell? Let’s start with Coach. Right now, I think the multiples look cheap enough that selling doesn’t make sense. I will wait till September when their new lines are suppose to come out, and then decide what to do. Same story with Rackspace. Patience is required.
I 'm also getting more and more comfortable with Tom and David G’s line of thinking that selling more often than not results in performance deterioration, and often the best thing to do is to hold for a very long time. There are practical considerations though, in terms many companies one can meaningfully follow, but may be this works as long as one follows the bigger holdings.
If you got this far, thanks a bunch for reading all the way to the end. I write these commentaries with the intent of clearing my thoughts. But, I also do hope that some of the more experienced and astute folks out here will browse through it and share their thoughts.
Thanks again,
Anirban