People who read my blog, know that I typically have 30 to 40 positions. That seems like a lot, and frankly it is. The high count is really driven by my using three distinct portfolios - MFI, Dividend and Discretionary. MFI is comprised of 5 stocks a quarter over 4 quarters, so that is pushing 15 to 20 securities right there. Toss in 12 dividend picks and you can see why I am generally between 30 to 40 securities.
So I find it helpful, 2 or 3 times a year, to list out my holdings and talk through why I own them, and score them:
- I would buy more today
- I would buy more on a decline in price
- I would sell on a price increase
- I'd like to sell now - get me out of here!
Macro View
With the Moose in long duration bonds, the 50 ema for IWM crossing the 200 ema, David Tepper being nervous and what seems to be a very lukewarm gdp, I am more inclined to be selling than buying. I am also right now a fan of larger cap versus smaller cap stocks. One thing I am watching closely are interest rate sensitive stocks, such as banks and insurance companies. They have pulled back quite a bit as 10 year treasuries have gone from 2.8% to 2.5%. I hear people say we could be like Japan and had depressed interest rates for a long time, but that is not my belief. I believe over the longer term, 2 to 4 years, they are much more likely to go up than down. So I believe that companies like LNC and MET are worthy of watching for a good entry point very closely (MET is at 49.44 and was as high as 54.80. LNC was 53.26 and is now 47.25).
Current Holdings
Here are my current holdings.
Note, that GTAT does not look as good as it has in the past. That is because even though I have the same share count I had most of last year when I first bought at $2.73, I did add shares in 2014 at higher prices and then I sold a bunch of shares a couple weeks ago. In my record keeping, I sold the long term shares as they will be taxed as LT capital gains.
First 5
GTAT - this is my largest position. They fell 22% the week they announced their earnings, even though their earnings and guidance were pretty much "as expected". Clearly investors had bid the stock up, hoping for some sort of early announcement of AAPL-associated news. If GTAT is being totally honest, the stock is a great buy at current prices. Recall MS took a 5% share early in the spring, GS has a a buy with a $24 target -these are not stupid firms, so clearly they are drinking the kool aid. The only worrisome touchpoint is the CEO selling of stock and options. I went on about that at length (). While I still do not understand it, at these prices I think it is a risk you can live with. Rating: 1.
GNW - My second largest position. While they are up 13% on the year, I still believe there is further upside. They have also been hurt a bit of late (like LNC and MET) by the drifting downward of the ten year. But, it looks like the Australian IPO will be successful, and I think that will give GNW additional financial flexibility to pay down debt, buy back shares, start a dividend etc. In addition the US housing market improvement really helps GNW bottom line. While I saw an analyst ask if a housing slowdown would hurt, that is not the real issue. GNW is writing mortgage insurance against homeowners not be able to make their mortgage payments. So it is the foreclosure rate that is actually the important metric (home prices can also be important as if prices have gone up, it is less likely the bank takes a loss in a foreclosure). Having bought a house recently, I am going to predict that houses bought between 2010 and 2013 are going to have much lower foreclosure rates than the historical rate. So I think as those years mature, GNW is going to make a lot more money in mortgage insurance than they had in the past (in adidtion, I am sure they were able to increase their rates). Rating: 1.
KLIC - had a great run recently post their earnings call and an activist pushing for KLIC to do something with their mountain of cash (Open Letter To Kulicke & Soffa's CEO). I was under-whelmed by KLIC's management. In their earnings call, they were asked about their excess cash. What bothered me, is that their incentive plans strip it out! So they have incentive to attain a certain return on equity, but the denominator of equity extracts the excess cash. So by their approach, they have no direct incentive to return funds to shareholders. Very disappointing. That being said, I love their balance sheet, I love their opportunities to grow top and bottom line. I still think this could be a $17 to $18 stock. Rating: 1.
AOD - This is a closed end fund that yields 7.9%. They trade at a 14% discount to their NAV (15% has been the average the past 12 months). I like the discount, their NAV has stayed pretty flat all year, so pretty much moving with the market. I would buy more, if the discount moved towards 17%. Rating: 2.
BBEP - My favorite Oil & Gas play. Every time I read their earnings report, I am impressed. They seem to be able to get more production out of sites others find to be depleted. They yield 9.7% and it seems sustainable. I love the monthly dividend. They were cheap when I bought a bit over $16. At 20.55, they are not cheap. Rating: 3.
More to follow...
Current Holdings
Here are my current holdings.
| Stock | Avg Cost | Current Price | Dividends | Gain per Share | Pct Gain | Pct of Portfolio |
| GTAT | 8.64 | 13.89 | - | 5.25 | 60.8% | 8.5% |
| GNW | 9.16 | 17.64 | - | 8.48 | 92.7% | 8.4% |
| 11.43 | 13.83 | - | 2.40 | 21.0% | 5.4% | |
| AOD | 8.02 | 8.60 | 0.61 | 1.19 | 14.8% | 5.2% |
| BBEP | 16.74 | 20.55 | 1.36 | 5.18 | 30.9% | 5.1% |
| RPXC | 16.36 | 16.08 | - | (0.28) | -1.7% | 4.0% |
| PM | 78.60 | 85.77 | 0.94 | 8.11 | 10.3% | 3.7% |
| NTC | 12.01 | 12.59 | 0.23 | 0.81 | 6.7% | 3.7% |
| 17.39 | 20.35 | 0.20 | 3.16 | 18.2% | 3.6% | |
| FGL | 20.69 | 20.30 | 0.05 | (0.34) | -1.6% | 3.5% |
| CSQ | 8.67 | 11.51 | 1.83 | 4.67 | 53.8% | 3.5% |
| FSC | 9.57 | 9.25 | 0.20 | (0.12) | -1.2% | 3.3% |
| TPVG | 15.55 | 15.10 | 0.09 | (0.36) | -2.3% | 3.3% |
| LMNS | 12.49 | 9.01 | - | (3.48) | -27.9% | 3.1% |
| TGONF | 10.27 | 9.93 | 0.34 | (0.00) | 0.0% | 3.0% |
| RIOM | 2.14 | 1.95 | - | (0.19) | -9.0% | 3.0% |
| AVG | 18.32 | 19.95 | - | 1.63 | 8.9% | 2.8% |
| 70.20 | 90.99 | 0.23 | 21.02 | 29.9% | 2.3% | |
| AGX | 15.60 | 28.71 | 0.75 | 13.86 | 88.8% | 1.8% |
| HIG-WT | 21.24 | 25.60 | - | 4.36 | 20.5% | 1.8% |
| GA | 8.96 | 11.78 | 0.23 | 3.05 | 34.0% | 1.8% |
| 61.35 | 63.15 | 0.90 | 2.70 | 4.4% | 1.8% | |
| BAC-WTA | 5.35 | 6.81 | - | 1.46 | 27.3% | 1.8% |
| WNR | 39.80 | 39.73 | 0.52 | 0.44 | 1.1% | 1.7% |
| 12.55 | 12.79 | - | 0.24 | 1.9% | 1.7% | |
| 48.01 | 59.61 | - | 11.60 | 24.2% | 1.6% | |
| 22.79 | 24.37 | - | 1.59 | 7.0% | 1.4% | |
| NSR | 25.82 | 26.74 | - | 0.92 | 3.6% | 1.3% |
| RCII | 28.78 | 29.23 | - | 0.45 | 1.6% | 1.3% |
| CA | 29.54 | 28.99 | - | (0.55) | -1.9% | 1.3% |
| CF | 187.26 | 240.74 | 3.00 | 56.48 | 30.2% | 1.3% |
| O | 20.83 | 43.88 | 15.34 | 38.39 | 184.3% | 1.1% |
| OIBAX | 5.00 | 6.17 | 1.95 | 3.12 | 62.4% | 1.1% |
| FLR | 66.06 | 73.22 | 0.53 | 7.69 | 11.6% | 1.1% |
| EDV | 101.20 | 105.23 | - | 4.03 | 4.0% | 0.6% |
Note, that GTAT does not look as good as it has in the past. That is because even though I have the same share count I had most of last year when I first bought at $2.73, I did add shares in 2014 at higher prices and then I sold a bunch of shares a couple weeks ago. In my record keeping, I sold the long term shares as they will be taxed as LT capital gains.
First 5
GTAT - this is my largest position. They fell 22% the week they announced their earnings, even though their earnings and guidance were pretty much "as expected". Clearly investors had bid the stock up, hoping for some sort of early announcement of AAPL-associated news. If GTAT is being totally honest, the stock is a great buy at current prices. Recall MS took a 5% share early in the spring, GS has a a buy with a $24 target -these are not stupid firms, so clearly they are drinking the kool aid. The only worrisome touchpoint is the CEO selling of stock and options. I went on about that at length (). While I still do not understand it, at these prices I think it is a risk you can live with. Rating: 1.
GNW - My second largest position. While they are up 13% on the year, I still believe there is further upside. They have also been hurt a bit of late (like LNC and MET) by the drifting downward of the ten year. But, it looks like the Australian IPO will be successful, and I think that will give GNW additional financial flexibility to pay down debt, buy back shares, start a dividend etc. In addition the US housing market improvement really helps GNW bottom line. While I saw an analyst ask if a housing slowdown would hurt, that is not the real issue. GNW is writing mortgage insurance against homeowners not be able to make their mortgage payments. So it is the foreclosure rate that is actually the important metric (home prices can also be important as if prices have gone up, it is less likely the bank takes a loss in a foreclosure). Having bought a house recently, I am going to predict that houses bought between 2010 and 2013 are going to have much lower foreclosure rates than the historical rate. So I think as those years mature, GNW is going to make a lot more money in mortgage insurance than they had in the past (in adidtion, I am sure they were able to increase their rates). Rating: 1.
KLIC - had a great run recently post their earnings call and an activist pushing for KLIC to do something with their mountain of cash (Open Letter To Kulicke & Soffa's CEO). I was under-whelmed by KLIC's management. In their earnings call, they were asked about their excess cash. What bothered me, is that their incentive plans strip it out! So they have incentive to attain a certain return on equity, but the denominator of equity extracts the excess cash. So by their approach, they have no direct incentive to return funds to shareholders. Very disappointing. That being said, I love their balance sheet, I love their opportunities to grow top and bottom line. I still think this could be a $17 to $18 stock. Rating: 1.
AOD - This is a closed end fund that yields 7.9%. They trade at a 14% discount to their NAV (15% has been the average the past 12 months). I like the discount, their NAV has stayed pretty flat all year, so pretty much moving with the market. I would buy more, if the discount moved towards 17%. Rating: 2.
BBEP - My favorite Oil & Gas play. Every time I read their earnings report, I am impressed. They seem to be able to get more production out of sites others find to be depleted. They yield 9.7% and it seems sustainable. I love the monthly dividend. They were cheap when I bought a bit over $16. At 20.55, they are not cheap. Rating: 3.
More to follow...
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