The Tiptree Port: June 30, 2017

In the spirit of disclosing our portfolios, let me offer you my very first portfolio review. This should provide a good contrast to most portfolios described here, since mine has relatively few “Saul Stocks”, and I tend to hold my positions for a long, long time.

Month-by-month (which is far too short of a time frame for me, but it is the tradition here to report such results), my portfolio returned:

January  +4.7%
February +9.8%
March    +4.0%
April    +4.8%
May      +5.0%
June     +0.2%
**YTD     +30.5%**

So, my portfolio grew 30.5% from Dec 31, 2016 to today. That compares favorably with the various indices, including the S&P500, but trailing Saul, Bear and others. This was done with only two new companies added, and two companies sold, over those six months, so my level of activity has been much lower than most here.

My large holdings (over 10% of porfolio):

 **Company (symbol)          % of Port     % Gain (since purchase)**
(1) Mastercard (MA)            21.8%             126.2%
(2) Arista Networks (ANET)     21.0%              96.4%
(3) Shopify (SHOP)             15.2%             148.3%

My middle-sized holdings (5-10% of portfolio) are:

(4) Bank of the Internet (BOFI) 7.5%               0.8%
(5) Walker-Dunlop (WD)          6.8%             225.5%
(6) Cambrex (CBM)               6.3%              56.1% 
(7) Facebook (FB)               5.3%              58.9% 

My small holdings (<5% of portfolio) are:

(8) Paycom (PAYC)               4.8%               5.4%
(9) Starbucks (SBUX)            4.2%              54.2%
(10) Skyworks (SWKS)            3.6%              18.0%   
(11) MarketAccess (MKTX)        3.5%              24.1%

I currently hold about 5% of my portfolio in cash.

The only portfolio moves I made during this six month period were:

January: I had some option contracts on SWRKS executed, selling me out of my position but buying back a smaller position at a lower price.

February: No activity

April: I started a small position in BOFI due to short puts being exercised.

May: I bought more BOFI (at a much lower price!) and started my position in PAYC. I also sold my positions in MANH and SKX.

June: No activity

I sometimes use SWRKS and BOFI as the closest thing I have to “trading position”; I tend to sell options on them, given their volatility. But most of my holdings are longer-term positions; I have owned SBUX and MA since March of 2013, for example.

While this year and last have seen my accounts relatively stable in terms of holdings, 2015 and 2016 saw a lot more activity in my account than normal, as I moved decisively into small caps. My positions in CBM, ANET, SHOP, MKTX and WD were all started over those two years. Starting 6 new positions seems like no big deal for this board, but for me, that was a big deal. :slight_smile:

Side note: In 2014, I decided to split our holdings and let my wife manage about half. She had been eagerly learning about investing in our small investment club, and I felt the time was right for her to learn “real” lessons. I gave her our HUGE position in AMZN, our position in GOOG, and some others. Accordingly, she has done remarkably well. I remain a bit jealous (or rather, kicking myself for giving her my best holdings!). Her results have been better than mine, but I will not include them here. I must say I am proud of her. She has demonstrated what many studies have pointed out: Women are far better at controlling their emotions in investing then men.

Tiptree, Fool One guide


Hi Tiptree,

You have Arista, Shopify and Paycom which I am also in.

You also have MasterCard, Facebook, Bofi, and Skyworks which I have held in the past and am familiar with.

But you have some stocks that I have never heard of like Market Access, Walter-Dunlop, and Cambrex. I wonder if you could tell us a little about them and why you like them and are invested in them? I would appreciate it.





But you have some stocks that I have never heard of like Market Access, Walter-Dunlop, and Cambrex. I wonder if you could tell us a little about them and why you like them and are invested in them? I would appreciate it.

Sure, I can expound a bit on the unfamiliar ones. Let’s go down the list.

MarketAxess Holdings (MKTX)

From the “company profile” on my brokerage:

MarketAxess Holdings Inc. operates an electronic trading platform that enables fixed-income market participants to trade corporate bonds and other types of fixed-income instruments using its trading technology. Institutional investor and broker-dealer firms are users of trading platform, accessing global liquidity in the United States corporate bonds, emerging markets and high-yield bonds, European bonds, the United States agency bonds, municipal bonds, credit default swaps and other fixed-income securities. Through Open Trading protocols, it executes trades in certain bonds between and among institutional investor and broker-dealer clients in a trading environment on a matched principal basis. It offers trading-related products and services, including market data to assist clients with trading decisions; connectivity solutions that facilitate straight-through processing; technology services to optimize trading environments, and execution services for exchange-traded fund managers.

Fixed-income trading has always been a fragmented, often opaque, but HUGE market. The fragmentation got worse after the 2008 crisis, as most of the “market makers” were the huge US banks; one by one, they exited this segment of their business, causing investors to scramble to find new sources of bonds. MKTX is making great strides consolidating this industry upon their electronic trading platform. Each month, the number of bonds that are traded on their platform ticks up, and the company continues to grow at a solid pace.

Why I like MKTX
Like some other asset-light software companies, their margins are fat, they show great “effectiveness” ratios (ROE and ROIC are both over 30%; ROE is barely leveraged), and they are growing EPS faster than revenues, indicating that they are in the rapid-expansion phase (and beyond the need to invest their revenues in their own growth). Over the past five years, revenues have grown by 16.57% annualized, and EPS by 21.64%. Even though I am not a dividend investor, they do pay a tiny (0.66% yield) dividend that is growing at a 24% annualized rate. I also like that they have refrained from the often excessive share dilution that many software companies are prone to, have ZERO debt, and have a large addressable market to grow into. Their market cap is $7.5B, so the law of large numbers is not yet a worry.

Walker & Dunlop Inc (WD)

From the company profile:

Walker & Dunlop, Inc. is a holding company, which conducts its operations through Walker & Dunlop, LLC. The Company provides commercial real estate financial products and services primarily to developers and owners of multifamily properties. The Company originates, sells and services a range of multifamily and other commercial real estate financing products, including Multifamily Finance, Federal Housing Administration (FHA) Finance, Capital Markets, and Proprietary Capital. It originates and sells loans through the programs of the Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac, and together with Fannie Mae, the government-sponsored enterprises (GSEs)), the Government National Mortgage Association (Ginnie Mae) and the Federal Housing Administration, a division of the United States Department of Housing and Urban Development (together with Ginnie Mae, HUD).

Walker & Dunlop really is the “little company that could” when it comes to multi-family property mortgages. Though based in Chicago, they have been acquiring local expertise by buying small firms in specific markets, primarily for the critical local market knowledge that they can utilized. They succeed in creating financing packages for MF projects that other lenders cannot replicate.

Why I like WD
It is an incredibly efficient institution, with ROE and ROA in the top decile for its industry segment, and an ROIC nearly 7-fold of the industry average. Both revenue growth and EPS growth are accelerating, with revenue averaging an 18% growth rate for the past five years, but the most recent year they grew at 42%. Earnings have averaged a 30% annual growth rate over the past five years, with the most recent year clocking in at nearly 80% (!). This is a company with a $1.5B market cap that seems destined to be a much, much larger company.

Cambrex Corporation (CBM)

Company profile:

Cambrex Corporation (Cambrex) is a life sciences company. It provides products and services for the development and commercialization of generic therapeutics. It operates through four segments, which are manufacturing facilities that have been aggregated as a single segment. Its manufacturing facilities are owned by the subsidiaries, including Cambrex Charles City, Inc., Cambrex Karlskoga AB and Cambrex Profarmaco Milano S.r.l. Its products consist of active pharmaceutical ingredients (APIs) and pharmaceutical intermediates. It delivers services, such as custom organic synthesis and process development; current good manufacturing practices (cGMP) manufacturing of API and intermediates from grams to hundreds of kilograms; cGMP analytical services; controlled substance research and development (R&D) and manufacture, Schedule II-V, and contract research. It has API R&D and cGMP facilities in the United States and Europe. It supplies over 90 generic APIs.

I stumbled across Cambrex as I was studying Gilead Sciences. Basically, they provide the small-molecule ingredients for many of Gilead’s blockbuster drugs (and for other companies as well). They are the biotech equivalent of a contract manufacturer, like Taiwan Semiconductors is for the chip business.

Why I like CBM
Like most of my investments, this is a small-cap ($1.9B) with industry-beating ROE (24.5%), ROA (16%), and ROIC (19%), fat margins, and can leverage high growth earnings growth rates from solid revenue growth (EPS five-year average is 41% on revenue growth of 14%). They are prudent users of debt (currently they have NO debt!), and generate tons of cash. They have no exposure to regulatory risk; they merely provide the key ingredients for drugs other companies must develop and run through trials. Even when a drug goes generic, they will still be able to supply the ingredients. I think this company has a long, long runway ahead.

So, there you go… I hope you now have a better feel for those companies.

Tiptree, Fool One guide


Thanks Tiptree, That helps. I realized that I did once have a position in Cambrex but exited because I felt they were too dependent on Gilead. I knew nothing about the other two, but they sound interesting to take a look at.

Holy cow Batman! We (My wife and I) got our work cut out for us. All three of those look interesting.

However, my tongue was hanging out like 14 year old drooling over a super model in a bikini while I read about Market Access.



I don’t know WD but I like the others too.

I have a good but not full holding in MKTX though I am nervous about my limited knowledge of the bond market. Like banks, I don’t really know what’s inside and what is to come. However, this ‘mechanical’ (came through) investment has worked well so far.

Ditto CBM which I have had, but sold on what seemed very high valuation for some lumpy figures; it is on the watchlist for a much lower price.

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