TJ,
This got long, my summary is that in a concentrated portfolio being on top of earnings and calls is a must have to managing your money. I personally use beats and raises as drivers to add in AH or the next day depending on the situation. I use misses or disappointments to inform selling and trimming, but rarely do so with the same urgency as building a position.
Full Body
I won’t speak for Saul, but I will speak to a habit I’ve formed thanks to my time spent moving from mutual funds to my now concentrated portfolio as it relates to earnings and plans around them. I share because I learned this from here.
I track my stocks and the guided numbers, particularly on growth for the quarter and the year.
As soon as earnings are released, I put those numbers in the quarter and I make a mental note on how big of beat it was or wasn’t.
I then look at the guide compared to the previous guide.
If the numbers and guides are in line with what I expected, I am at a minimum holding and at a maximum adding.
What I do is dependent on my conviction in the company and its position in my portfolio.
For instance, I’ve built my TWLO (+60% weighted return) and TTD (+65% weighted return) buying on beat and raises to move them from 3% initial positions to 15% and 11% positions respectfully. I also built out my EVBG position based on solid earnings reports that keep proving the expand strategy out.
I’ve also used earning reports to trim or exit positions, but this normally requires me to listen to the conference call and understand the why. I just have to know if my conviction has changed and the story has changed. If it has, I may hold it a little bit until I decide where I’m moving money to (NTNX) because I’m generally to quote David Gardner (stocks fall faster than they rise), so you see bottom pretty quickly. But my decision is made to sell.
You’ll notice something critical about both decisions, listening to earnings calls and being on top of reports is really important in a concentrated portfolio.
I too share some timidness around valuation. However certain factors (accelerating growth and/superior growth rates) often can help alleviate my timidness.
I never try to game earnings reports or the markets reactions. I generally want to own the best companies for my money, and earnings are my quarterly peak to validate that I still feel I have the best portfolio for me and my investing profile.
Just a Fool