What Ive been doing, if you keep track

Investment Analysis Clubs Saul’s Investing Discussions
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What I’ve been doing, if you are interested in keeping track.

On Monday and Tuesday I sold:

2.5% of my SKX position at $154.30, just to prevent me from going over 20% (I was still over 19% after the sale), and
some more of my CRTO at $47 for reasons I’ve already discussed, and to raise cash.
all my tiny position in SWIR for cash.

On Wednesday I sold:

20% of my ABMD position which had gone from $65 to $100 in 5 weeks and to raise cash because it wasn’t down on a day when everything else was a bargain.

On Monday,Tuesday and Wednesday I bought

SEDG at $28.00. $27.51, $26.96, $27.56, and $26.58 (I knew they’d have good results because SCTY was installing a lot of solar panels).
SKX, bought just a little back at $148.80 (I couldn’t resist).
ANET, a little at $82.9 and a lot at $78.70 (gradually building a position)
SNCR at $48 and then around $47
PAYC (a new small position, my smallest) at $37.78, $38, $38.46, $38.14 and $36.66.

SEDG and ANET are now 4% positions (small)
SNCR is now about a 3% position. (smaller)
PAYC is my smallest at 1.7%

I have 13 positions total.

Saul

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We’re very interested, especially as the market volatility is up, in what your thinking is. Wins can become losers pretty quickly in a market turn, especially small-caps, and it’s also extremely useful to head-check against other people’s ACTIONS rather than their thoughts.

Please do keep us updated – many of us have close analogs to your holdings, or at least carry some of them.

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Saul,

Thank you for posting this kind of info.

Being (hopefully) very close to retirement, I’ve been spending a lot of time thinking about how to let my portfolio evolve once I’m no longer adding funds, and in fact withdrawing funds. If you want to add (or add to) a position, you need to sell something else first. What and how much to sell? How much to add?

I really appreciate your examples (especially the “why”). It helps me to consider them and whether they fit my situation and style (and perhaps adjust my style if I see a good way of looking at things).

-Mark

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I’ve just gone through a round of this myself … not because of a retirement or anything, but just because it was time to pay attention to things I had been ignoring. I had overlarge positions in ARMH and QCOM which are two holdings I had had for many years. QCOM had grown nicely and ARMH was the size it was because it had grown dramatically. I had been taking the position that I would slice off little bits for this and that and so had reduced both positions somewhat in the last couple of years, but recently I decided that I really shouldn’t have such oversized positions and so should reduce them and put the money into something else. This stimulated me to do a 1YPEG type analysis of all of my holdings and the things I was interested in. One of the results of this was that I realized that ARMH was still pretty attractive from a Saulish perspective, but that QCOM was not, having a small 1% decline in earnings growth and a small 1% gain in revenue growth. Even though I knew that QCOM was not doing that well in the market lately, this was an eye opener for me because I assumed that QCOM fundamentals were nothing like what I assumed they must be based on what seemed to me to be a strong technological position in a still expanding set of markets.

Fresh viewpoints are useful!

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Tamhas - ARM was my first ever 10 bagger. I sold out because I needed to involuntarily release a lot of money. It was nowhere near the recent peak and I have wanted to get back in. I thought it was over valued but that it would probably grow into its valuation - assuming that Intel didn’t steal its mobile business. It has since come down 25% from the subsequent peak and earnings have grown 25% per annum.

A year or so ago I also invested in QCOM (when I had re-established some funds). Although down from its own peak, I had hopes for its future.

Since discovering Saul’s board I have absolutely come to the exact same conclusions, both from a technical basis (1YPEG) and from a discipline perspective (there is a better home for my money).

I will be selling up my QCOM stock and re-allocating and I will be re-entering ARM.

Ant

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I sold out because I needed to involuntarily release a lot of money.

Interesting turn of a phrase.

Condolences on your divorce, or congratulations, or maybe neither. :<)

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I must say that a 1YPEG of .11 for ARMH and -8.97 for QCOM sure caught my attention. I am reluctant to dump QCOM entirely, yet, since it seems like they should have a pivotal position in IoT, but if I don’t see an uptick in earnings and revenue, it may not be long before I leave it behind.

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I am reluctant to dump QCOM entirely, yet, since it seems like they should have a pivotal position in IoT
That’s where Saul’s discipline of answering the question - is there a better place to put your money is just as important as the analysis.
Ant

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Yeah, well, apropos the caution to not just follow what Saul does, I am now doing a mix of things, some of which is based on the story. But, even so, looking at the earnings growth, revenue growth, and the like is giving me a better view of what I have, even for the companies which still have negative earnings. E.g., EXEL, which is still negative, but shows a 20% growth in earnings and 12% growth in revenue. I am willing to let that ride a bit.

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Condolences on your divorce
Yeh - not quite divorce as we weren’t married but the irrational and emotional scorn of a ex girlfriend meant it was a “gun to the head”, buy me out of the joint off plan property investment immediately situation.

Fortunately I managed to get over it and come to terms with matters thanks to learning important life lessons like this.

https://www.youtube.com/watch?v=hKWmFWRVLlU

Ant

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While going through a painful divorce many years ago, my dear sweet 80 year old mother gave me some wonderful advice:

Mother: “Jim, do you know why divorce costs so much?”

Jim “No, why?”

Mother (laughing) “BECAUSE IT’S WORTH IT!”

We both laughed hard and hugged in mutual love and understanding.

One of my best memories of this beloved woman.

Jim

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Yeah, well, apropos the caution to not just follow what Saul does, I am now doing a mix of things,</I.
Yep and I have different portfolios representing different investment strategies (high yield vs growth at reasonable price vs new paradigm etc). Whichever my strategy however I realized I couldn’t justify QCOM in there at all - there was always somewhere better for my money. It doesn’t matter how much I like the IoT story nor how positioned QCOM is - others were going to grow more.
A

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I’m not quite there yet, but I am certainly waiting for them to prove their case … and, if not, time to move on.

Note, part of this is that mostly I am interested or not interested. So, it is very uncharacteristic for me for a company to go out of favor and ever have a chance of getting in favor again, or even get paid attention to. My first possible exception to this is KNDI, which I am out of, but still paying some attention to. Maybe QCOM will be a second.

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Tamhas - whilst I’m still into mega theme investing (as well as high yield investing in the UK), where I think Saul’s technique and discipline counts irrespective of his specific selections is differentiating investor potential opportunities vs straight up story stocks.

This means I am able to hold a conviction choosing Fortinet, Imperva and CyberArk vs a FireEye, Barracuda or CSCO in cyber security or SWIR vs QCOM in IoT and Infinera and Ruckus vs Ubiquiti & CSCO in cloud and big data growth.

It also gives me conviction in buying into a stock at an all time high like INBK rather than bottom fishing for spurious value targets just because of price.

It has meant being able to be ruthless and prune some holdings from my portfolio that are ex growth and where there are “better places for my money” such as GE, AIG, NTAP and EMC or not able to sustain traction - such as Nimble.

On the other hand yes it does mean I can apply that thinking to targets that Saul either doesn’t cover or hasn’t chosen - such as Hain, Infoblox, Logmein and even some Chinese plays (like Noah and CTRP).

Cheers
Ant

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Ant:

You absolutely hit the nail re QCOM.

Look at this TEN YEAR chart on QCOM:

http://bigcharts.marketwatch.com/quickchart/quickchart.asp?s…

Those that “hung in there” got 50% gain over that period of time…10 years…50%. That is equivalent to a 4% compound interest!

That is pretty pitiful really particularly as regards other investment options.

One thing that Saul has espoused many times and is emphasized in his compendium…don’t hang on poor performing stocks…move elsewhere and don’t look back.

That is great advice…and one that could have dramatically improved returns for the QCOM stalwart.

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Annualised return column in a portfolio is a great help in seeing what may have become poor performance.

On returns, I think investors should be honest with themselves and include both capital gains tax and inflation.

Say I make 20% in one year on an investment of $5,000 (I know, I know, that’s chicken feed for you people but bear with me).

So I have made $1,000. But as someone said, ‘It ain’t what you make, it’s what you keep.’

I get taxed at 28% on my gains and I will put in inflation at 2% for convenience, whatever the period, for the sum. I will say I lose 30% of my gain. I regard fees as irrelevant, being so miniscule.

Instead of making $1,000, I have actually made $700. And $700 is a 14% return on my investment. Thus I would never say ‘I have made 20%.’. I have made 14%.

Tax is meaningful. Much of Buffett’s success is down to a lifelong study of eliminating tax from the equation. For traders, it’s a killer.

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That is equivalent to a 4% compound interest!

Yes, but only if you focus on the arbitrary 10 year period. E.g., if instead one takes the beginning of 2009 to July 2014 the price climbed from 30 to nearly 80. That is more like a 19% CAGR.
http://stockcharts.com/h-sc/ui?s=QCOM&p=D&st=2009-01…

Or, being even pickier, 7/1/2010 to 7/31/2014 which is like 27% CAGR
http://stockcharts.com/h-sc/ui?s=QCOM&p=D&st=2010-07…

The lower figure from your data is due to a relatively flat price from mid 2006 to mid 2010 and the fall in price after 7/31/2014.
http://stockcharts.com/h-sc/ui?s=QCOM&p=D&st=2005-08…

So, one can argue that one should not have held it in the early years, but that was quite a while ago, and one can argue with the benefit of hindsight that one should have sold it somewhere around the 50/200 cross, but, given the unreliability of that cross as a signal, what would have driven the sell signal?

There was clearly a notable drop in price prior to that signal. I don’t remember what trigger that, but my guess would be that the 3Q14 earnings report was poorly received. I believe that is the 4th number in the earnings and revenue figures below … the high point the last 2 years in earnings and near the top in revenue. All I can think is that there must have been reduced forecast for earnings in 4Q14 or something that scared people.


$1.05        $1.26        $1.31         $1.44        $1.26 $1.34         $1.40        $0.99

6,480.0     6,620.0     6,370.0     6,810.0     6,690.0     7,100.0     6,890.0     5,800.0

It looks like there was another dip with the 4Q14 announcement in November, but followed immediately by a recovery. There was a lot of volatility between the two, but an overall pattern of recovery. Here is a close up on this period
http://stockcharts.com/h-sc/ui?s=QCOM&p=D&st=2014-01…

Unless one was going to mechanically act on the 50/200 cross, where in here would one be sure of the pattern? The 200DMA looks like it started to fall about November but other than some more dips at earnings announcements followed by recovery it is just a slow erosion in price.

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