Top ideas for new money now

Investment Analysis Clubs Saul’s Investing Discussions
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What’s your top ideas for new money right, now? (Possibly start a new thread so that others can contribute as well, and this new discussion doesn’t get buried in the discussion around my portfolio.)
Anirban

Well, I don’t really have great ideas for new purchases and I don’t have any free money at present. However if someone doesn’t have any SWKS or BOFI I’d certainly think those would be good picks (and they are my two biggest positions so I’ve put my money where my mouth is). I’d also recommend CELG, CRTO, and WAB. if someone is looking for a small position (1% or less), I’d take a flyer in AMAVF. Not much bigger though. And another stock that I’d consider for a small position would be INBK (small because it’s not liquid and often has wide spreads between the bid and asked, and thus would be hard to get out of if there was bad news).

Hope this helps and I’d love to hear from others.

Saul

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I think INBK (warning though its a micro cap), CRTO, GILD, and XPO are good buys. Among small cap restuarants, CHUY and ZOES.

I am leaning towards XPO, and increasing CRTO position. Have enough BOFI, INBK exposure. Probably have enough GILD.

SKWS looks great as well but I have too much IoT exposure.

I am researching Air Lease (AL) which could be interesting as well.

Anirban.

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I just added some more SWKS myself on Friday. I would buy more BOFI but it’s my second largest position already. I’ve also recently purchased more PRLB.

Chad
PRLB Ticker Guide

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I keep thinking that this is the correction many of us have been waiting for. I take a dim view of forecasting but nevertheless one does react to events. I’m in no to hurry to add to my portfolio at this time. My last purchase was TRIP on Dec 4, after the big gap down:

http://bigcharts.marketwatch.com/kaavio.Webhost/charts/big.c….

I like businesses that have a strong network effect and no need for expensive fabs and debt. I like companies that don’t have just a few powerful clients which is a strike against AMAVF, probably the best bet in the 3DP industry. Most 3DP is commodities so there are no strong moats, again AMAVF’s patented EBM process being a known exception. The problem with stocks like TRIP is that they can easily drop by 50% at any time which keeps me from buying them when they are hitting new highs. I track several TRIP like stocks waiting for the big drops, not just 5 or 10% but 25% or more.

I sold AXP because I think it is now overbought. It’s a great business that historically yields round 12%. I bought in March 2008 after a big drop but still too early. No matter, at 15% I still have a better return than the stock’s long term average. Buying on dips and taking profits on rises works (most of the time).

http://invest.kleinnet.com/bmw1/stats30/AXP.html

I bought PFIE too early as well but I’m holding. Bad company news would make me sell but not the stock price drop. There is too much uncertainty in the oil business right now that I’m not adding either.

http://bigcharts.marketwatch.com/kaavio.Webhost/charts/big.c…

My highest conviction stock right now is KNDI, the leading Chinese EV maker. I started following and investing in the company back in 2010:

http://softwaretimes.com/files/investing+kandi+technologi.ht…

2011 and 2012 were difficult years but in 2013 I wrote a lot about Kandi because I felt the tide was turning, seven articles in all:

http://softwaretimes.com/archive2013.php

The price charts bears out my optimism, 2013 was the first breakout year when “smart money” was starting to have a look:

http://bigcharts.marketwatch.com/kaavio.Webhost/charts/big.c…

The PRC has set its collective heart on the success of New Energy Vehicles (NEV) and tiny Kandi has managed to become the leading provider mostly based on the founder, chairman and largest shareholder’s vision, Mr. Hu. 2015 should be the second big breakout year for Kandi. KNDI is 40% off its all time high and about 20% above the year long support level of $11.00. Deliveries should accelerate strongly in 2015. That is a powerful combination of stock price and main street market activity.

BTW, we have a KNDI board: http://discussion.fool.com/Messages.asp?mid=31590845&bid=120…

My big current speculation is in rare earths (TAS, TRER, UURAF) but I would not recommend it to anyone else.

Denny Schlesinger

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Not seeing too many stocks too buy either. Here is my portfolio

SBUX (12%) = Never selling until it passes MCDs in Market Cap. Then probably never selling after that. Buy on dips.
MIDD (8%) = Grown into a huge position over the years and still love this company. Using debt smartly when money is cheap is a great way to grow a business if you are good at it. Not looking too add to this company but not looking to sell
BWLD (7%) = Grown into a huge position over the years. Looking too exit a decent amount soon
MKL (7%) = Love too have some steady, long term,relatively safer stocks in my portfolio. No reason to sell this stock. Buy on dips
BABY (6%) = Owned for many years and has had a really nice 2 year run. I like their future
FDX (5%) = Bought this on the similar premise many years ago that the internet will lead to much more shipping. It has been great run and see no reason to sell. But, not really looking too add
AXP (5%) = Bought in the downturn and just wish I bought more of this stock. I was convinced that cash was going to be less relevant in the future. Sold some at $90 a few months back but plan on keeping the rest
GOOG (4%) = I like this company for the long run.
AAPL (4%) = Looking to exit sometime this year.
VZ (4%) = Love to have some safe dividend stocks in the portfolio that, hopefully, can withstand the next recession better than most other stocks.

Those are my main holdings. I recently bought a small position of BOFI at $81 and a small position of AIOCF at $14.2. Usually when I start branching into smaller, lesser known companies, that means that a healthy sell-off is on the way LOL

I’m really torn on AIOCF. I’ve read everything I could read on it the last few days. It seems like a great opportunity but something in my gut is saying something might NOT be right here. Plus, SAUL didn’t mention it in his above post for a good spot for new money, which makes me worried too. I hope it’s not one of those,“It’s too good to be true” type of scenarios.

Dave

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Saul -

Can you please share the link of your relative current holdings if you have shared that info?

Thanks

Anurag

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I’m really torn on AIOCF. I’ve read everything I could read on it the last few days. It seems like a great opportunity but something in my gut is saying something might NOT be right here. Plus, SAUL didn’t mention it in his above post for a good spot for new money, which makes me worried too. I hope it’s not one of those,“It’s too good to be true” type of scenarios.

Dave, I have 16 positions at present, I only listed 7 as top picks. It would be silly to list all my positions as top picks now, wouldn’t it? It doesn’t mean I don’t like the others. After all SKX, AIOCF and FB are my 4th, 6th, and 7th, biggest positions, and I’m certainly not selling any. I just restricted myself to 5 major picks and 2 little position ones:

…if someone doesn’t have any SWKS or BOFI I’d certainly think those would be good picks… I’d also recommend CELG, CRTO, and WAB. If someone is looking for a small position (1% or less), I’d take a flyer in AMAVF. Not much bigger though. And another stock that I’d consider for a small position would be INBK (small because it’s not liquid and often has wide spreads between the bid and asked, and thus would be hard to get out of if there was bad news).

That’s what “top” picks means.

Saul

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Saul - Can you please share the link of your relative current holdings if you have shared that info? Thanks, Anurag

Hi Anurag

Here they are in order:

Very large positions: BOFI, SWKS, CELG
Large position: SKX
Sort of average (or “Full Size”) positions: CRTO, AIOCF, FB, WAB, XPO, POL
A little smaller: SYNA
Small positions: JCOM, INBK, PSIX, AMAVF
Tiny position: UBNT

Hope this helps

Saul

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Thanks Saul. Can you give approx percentages as well? No need to be precise.

Anurag

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Denny,

I learned about KNDI from your posts on the NPI board, which I followed for a while. I was tempted to buy a few shares then, but didn’t. It would have been good if I had since the price has gone up quite a bit since then. I have accumulated some shares over the past few months and I believe there is great potential there, but my confidence is certainly less than yours. It’s reassuring to hear that you have such high conviction since you have done much more research on the company. It should be a revealing year for the company.

Steve

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Steve:

I can’t blame you for not trusting Kandi. Until I read Art’s articles I was firmly convinced that battery powered cars were a bust except maybe for specialized fleets like post office delivery vans that would be charged nightly in specially equipped garages. Add to that the losses I had on several Chinese stocks and I was not ready to buy into the idea.

What changed my mind was that Kandi had a profitable legacy business and the EV business model Mr. Hu was proposing. Small, light, and cheap with batteries not included. This went a long way in overcoming the known difficulties of battery powered cars so I dipped my toe into KNDI and followed the Kandi Story with great interest. It has gone forward with lots of twists and turns and Mr. Hu has shown remarkable skill in overcoming the difficulties. So here I am with a six bagger with a cost basis of $2.10.

But this is only the beginning. Chinese cities have a SMOG problem reminiscent of the famous London Fog. It must be solved and tailpipe emissions are a great contributor to the SMOG. For the PRC there are two additional benefits: a new industry and a reduction of oil imports. Just look at the boost fracking gave to the American economy. Energy is the one commodity that we cannot possibly do without. There are so many powerful drivers coming together that it is hard to imagine EVs not catching on and displacing ICE vehicles in time.

But Kandi is not risk free. Cars are essentially commodities and powerful players are getting into the game, for example Foxconn, the people who assemble iPhones. What Kandi has now is first mover advantage but that will only last a few years. Kandi must make sure it remains a low cost producer of cars that the Chinese market wants to buy, lease or rent. The Kandi Story must be followed carefully.

Denny Schlesinger

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I think one of my top new ideas for money has to be Amba. They have seasonality so next quarter should be a little light but if you look at their number here you can see that they have been having phenomenal growth especially in earnings.

AMBA	Q3 2012	Q4 2012	Q1 2013	Q2 2013	Q3 2013	Q4 2013	Q1 2014	Q2 2014	Q3 2014	Q4 2014	Q1 2015	Q2 2015	Q3 2015
Revenue	$28,778	$24,571	$25,921	$27,958	$35,669	$31,518	$33,941	$37,710	$45,990	$39,967	$40,921	$46,968	$65,689 
Net Inc	$5,048	$1,777	$2,602	$5,226	$6,717	$3,643	$4,741	$6,254	$9,126	$5,553	$5,260	$9,310	$18,327 
EPS	$0.19	$0.04	$0.07	$0.19	$0.25	$0.13	$0.16	$0.21	$0.30	$0.18	$0.17	$0.29	$0.57 
EPS YOY		$0.30				$0.60				$0.85			
FCF	$2,000	$6,705	$633	$5,125	$2,297	$1,445	$2,637	$12,009	$6,899	$11,104	$10,046	-$1,924	$8,393

If you plug these numbers into a log graph you will see how fast they have been growing this year. It might be best to wait till after next quarters report though for a better price. They report on 3/5/2015.

Andy

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One thing I would like to point out for newer investors is, this is earnings season. It is a good idea to know when a company you are interested in is reporting earnings, especially with smaller market cap stocks- they can move violently on earnings.

While it can be fun to buy before earnings if you get a positive surprise, earnings matter. And investors want to know the earnings. I would rather lose a pop on good earnings than buy before earnings are announced. Others take the risk and buy hoping for good earnings, but I think Saul has said in the past something like “don’t buy hope, buy earnings machines”, I am sure he will correct me if I got that wrong.

Just something to think about.

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Sorry for the long post. I wasn’t asked to list all my holdings but for top ideas, the most worthy candidates from me would/should be my highest conviction stocks. (It takes a lot for me to LOAD UP ON one stock.) With this list someone must then wrestle if the price is viable. That’s the hardest part for me.

Here are my top 10 positions which one would hope are the highest conviction choices. If any of those represent a good value at today’s prices, they would be candidates for purchase:

TOTAL STOCK POSITIONS: 40
SHORT STOCK POSITIONS: 3
TOP 10 HOLDINGS BELOW:

AAPL 11.7% of Portfolio
SBUX 6.5
BIDU 5.9
AMBA 5.9
KMI 5.5
LNKD 5.5
MKL 4.7
GILD 4.3
SWKS 4.2
ORCL 3.8

These 10 represent 48% of the total value including cash, (2.7%…too low, working on increasing that to 25-30% in 2015)

I’m working on lowering ttl stock positions during 2015…(these 40 positions are down from 72 in early 2014) but basically, I can’t/won’t/ don’t want to do deep analysis so I depend upon others for that work. My job then is to pick advisors carefully and use my wide business experience in assessing management and business models. Based upon my performance last year, I did pretty good though most of the time I wasn’t sure what I was doing, where I was going, if I was on track or not, etc.

I also have 55 options positions spread out over 2 years with single/multiple contracts and which require 51% required maintenance but no loan. (Too much see through risk considering we are OVERDUE for a sizeable correction and I am working on lowering that by March, 2015)

In 2014, option positions yielded 5 points of the 17.1 point performance I managed to attain for this portfolio. Thanks and adoration go to Jeff Fisher and Jim Gilies for that bump up in performance, otherwise I would have been better off in an index fund, spending my days and nights getting fat and stupid.

What I would put new money into at today’s prices?

I have lots of option positions on some of these stocks so I can’t really add to them without possibly overexposing myself, even if the valuation is acceptable. Plus, I have an IRA with some of these very same stocks so I’m not sure if I should add more in this portfolio, if I already have more of it in the other portfolio. For instance, I own MIDD, FB, AMT, AAPL, BIDU, LKND, in both portfolios…Having said that, I am looking to add, either via options or buying stock and at today’s prices, the following:

CELG (If you hold for 3 years even today’s price looks decent)
DIS (If you hold for 3 years even today’s price looks decent)
GILD (at today’s price, I think this is a STEAL)
KMI (at today’s price)
CMG (at today’s price)
SWKS (per Gaucho Chris at today’s price)
MA (at today’s price)

EVERY STATEMENT HEREIN SHOULD BE PRECEDED BY “In my opinion” and “DON’T DO AS I DO”: (The use of “HEREIN” makes that a legal disclaimer :slight_smile:

New money has to go into stocks that don’t look like a value trap on the way in, which is the thing I hate the most and with a retraction on the horizon, I’m very leary of buying in at a high valuation, mo mo price and then sitting there for 2 years fighting back to even…maybe. That’s why I sold AMZN recently, (Just before it finally crested my buy in price)and long ago dumped SODA and TCS after realizing even though they were recommended by venerables, they weren’t my cup of tea.

Here’s my IRA portfolio. Both of these portfolios stand between me and destitution so although I do gamble a bit, I pay the price if it all goes badly.

AAPL 9.0 %
BOFI 7.7
FB 6.8
LNKD 6.8
BRKB 6.2
UA 5.7
AMT 4.9
MA 4.3
BIDU 4.2
SYNA 4.0
UBNT 3.9

These 11 stocks out of 26 represent 60% of the total value and this portfolio is 13% smaller than the larger one. I have 3.5% cash in this one, and since I have less stocks, I have no intention of increasing the cash other than to have a bit more for a few pullback buys, like beefing up MA, MIDD and AMT (the latter two don’t show up in the top 11 but I’d like them to be there).

I also have a few options positions in the IRA but too few to mention, and I might add, this portfolio just about equaled the S&P performance in 2014, mainly less than the other one due to way less option traffic.

Hope that helps someone and I encourage feedback and/or criticism since, Feedback, whether negative or positive, is a gift.
Thanks,
Mykie

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