Thursday, February 6, 2014

Annual Portfolio Review

Annual Portfolio Review [Edit or Delete]0 comments
Portfolio goal. Growth. This is high beta, unapologetic growth portfolio with some safeguards and some boring investments. The goal remains unchanged.
Basic Principles. Most of the stocks in this portfolio were chosen for long term investment, which, for me, is about 18 months. Every stock is under review all the time, with a major review of the portfolio twice a year. I can trade around any position if I feel like it. The portfolio is not diversified by sectors. Diversification reduces risk, but it also reduces potential gain. No change in basic principles either.
Strategy. As I already mentioned in my blog before, political environment doesn't look good for the economy. Strategy changes: increased cash cushion, reduced long positions, more trading around positions. This estimate is not changed, despite huge bull run on the end of the last year and extremely bearish beginning of 2014.
Paradigm Changers. These are stocks of companies that are changing business in sectors or even in the whole world.
Google (GOOG)
Ultimate disruptor. Google is changing the advertising world. The company is also aggressively moving to mobile internet advertising.
Risk: All great empires were destroyed by internal problems. There is also a risk of search ad market saturation.
No changes since last review.
Plan: Hold, trade around.
ARM Holding (ARMH)
Pure brain company. Company designs ARM CPUs for a wide range of mobile devices and licenses them to different companies. Most smartphones and all tablet computers I know run on ARM CPUs
No changes since last review
Risk: Tech world is changing quickly, somebody can invent a revolutionary new design and beat ARMH.
Plan: hold, trade around.
Facebook (FB)
Not the only social network company worth investing anymore. But the most profitable so far.
No changes since last review.
Risk: Wall Street hates the company.
Plan: hold, trade around.
Yes, retailer can be a paradigm changer. This is a great company and I like shopping there.
Added to position since last review.
Risk: Any retailer is a high risk company. Anything can go wrong.
Plan: hold.
Restoration Hardware (RH)
Creamer's recommendation. As a part of research, I visited a local store. And liked it a lot. Company sells various home improvement stuff, mostly restored old furniture and other decorations. There is no real competitor in US, because unlike others, this company got style.
Added to position since last review.
Risk: as any retailer, RH is a high risk company.
Sold since last review: Red Hat (RHT).
Banks / Financials
Banco Santander (SAN)
Probably the best Spanish, and maybe European bank out there. High yield, big investments around the world. Bought it because I believe in resolution of Euro troubles. This is also can be placed in International part of the review.
Reduced position since last review.
Risk: Currency fluctuations, more problems in Eurozone.
Plan: Hold.
HSBC Holding (HSBC)
As far as I know, the biggest bank in the world. European, more to the point, British. And UK loves her banks.
New position.
Risk:currency fluctuation, another financial crisis.
Plan: hold.
Steady growers / high yield. Companies with steady growth, high dividend or both. I am increasing weight of this group, such companies are best investments in depression times.
Airbus Group (OTCPK:EADSY)
One of two big aircraft manufacturers. As Cramer would say, we love duopolies. Company has at least 8 years of backlog.
New position.
Risk: currency fluctuation.
Plan: hold, add on weakness.
Polaris Industries Inc (PII)
One of the best recreation equipment manufacturers out there. Local (for me) company as well.
Traded around position since last review.
Risks: another recession, people don't like buying discretionary items in recessions.
Plan: Hold, reinvest dividends.
3M Company (MMM)
Most innovative company in Dow Jones index. Another company headquartered in Minnesota.
Added to position since last review.
Risk: another recession, management mistakes.
Plan: Hold, reinvest dividends.
Diana Containerships (DCIX)
When Cramer recommended to by Diana Shipping (DSX), I did some analysis. I think material intensive growth in China is over, country is trying to change growth model to less material intensive. Which means less demand for general cargo shipping in the world (i.e. raw materials). Which, in turn, means that DSX is dead money. Not only China demand for raw materiel is not growing, but also a lot of general cargo ships have been built in the last 10 years. Less demand, more supply, no profit. I decided to go with DCIX, because it owns container ships, which should do good when trade is growing. So far, stock didn't live to expectations and I am not sure it's not a mistake.
Risk: multiple risks related to supply/demand in container ship business.
Plan: Not sure. Thinking about it.
Sold Applied Materials (AMAT) since last review. Also bought and then sold FIAT(OTCPK:FIATY).
I wanted to buy cosmetics company for a while. Most of cosmetics are produced by diversified companies, which is not exactly what I wanted. I don't care about toothpaste, razors and cotton swabs. l'Oreal is a pure cosmetics company, located in France, fits the bill.
No changes since last review.
Risk: management, competition, economic downturns.
Plan: hold.
Fixed Income
I have a group of closed-end funds, which are bought when at discount to net asset value or at low premium and sold at high premium. There are two groups of funds: corporate bond funds and muni funds. There are too many of them and they are rotating too fast to present them in the portfolio review. Watch my trades on stocktalk of Seeking Alpha.
Additional disclosure: Positions can change any time.

No comments: