All's Quiet on the Monkee Portfolio Front

I haven't posted lately because I've been very inactive with my portfolio lately.

My latest move was a sale of Umpqua Holdings Corporation (UMPQ). I don't have the exact numbers yet but it was around a 50% loss. I sold on a recommendation from one of the Motley Fool newsletters I subscribed to.

In short, the recommendation was based on the regional bank's exposure to commercial real estate. The Fool believed that UMPQ was sufficiently capitalized to weather the mortgage bubble and conservatively lent money to home owners. They feel, however, that isn't the case with the banks commercial real estate portfolio. While they don't think it will break the bank, they don't feel the risk outweighs the benefits anymore. Better to cut losses now and look for other places to invest with what remains.

One thing the Fool preaches is to learn from all your investments. Especially to learn from the mistakes so you won't repeat them. The Fool made the call to invest in UMPQ in 2007 before the housing bubble bursting. Even after it hit they recommended to hold. Did they make a mistake in recommending the stock? Obviously yes or else I wouldn't be looking at a 50% loss. However, small or regional banks can pay off big. Unfortunately no one saw the damage coming in the economy. I saw a housing bubble but I had no idea it would affect the economy like this. So I really can't fault the Fool for the losses. The don't guarantee success.

One other recommendation is to diversify over different stocks and sectors. Buy the best. No one will be perfect in the market but you can minimize your exposure. My portfolio contains eighteen stocks after the UMPQ sale. Of the remaining stocks, eight are in the black. Three of the winners are up significantly. BWLD is up over 150%, NFLX over 200% and CTRP over 150%. My point is even with a significant loss in UMPQ I still am in the black. Those three stocks have more the held up my portfolio through the rough economy.

In the future I expect some losses due to the inherent risk in investing. However, if I make my selections and vet them well, I expect my returns to outweigh my losses over the long haul.

One last note on my inactivity. I transferred jobs within my company. So there was a lack of overtime in my new assignment lately. My investing policy is to use only extra cash. Usually that means overtime money goes to savings and investments. Lately though it's just been paying bills and car repairs. If I didn't have the car repairs I'd probably be more active. I have some extra cash this month so I'll be making some buys soon. When I do I will post my selections.

Sell Visa?

This article from the Motley Fool recommends selling Visa (V).

The writer, Morgan Housel, makes the claims that Visa's recent run up in price is cause to sell. He further states that Visa is now priced for perfection. On the valuation side, he claims that Visa already has future growth priced in.

To quote from the article:

Say Visa meets 2011 earnings expectations of $3.95 per share, and still commands a multiple of 20 times earnings. Under these assumptions, it'll reward shareholders with annual returns of less than 8% per year -- nothing to sneeze at, but nothing to drool over, either.

To finish up the article, he states that banks are cutting back on credit lines and that is the core business of Visa. Credit transactions account for two thirds of business versus the rest made up by debit transactions.

Combine the recent run up with the downturn in the economy, the richly priced stock and credit lines being cut, Housel recommends selling Visa.

My Visa
I hold a position of Visa in my portfolio. I don't hold as large a stake percentage wise as I do other stocks like Netflix (NFLX) and Buffalo Wild Wings (BWLD). Visa has risen in value since I started purchasing but I never filled up my full allotment due to I believed that there were better stocks to buy. I never sold my holdings because I believed that there some value remaining in Visa. Today I continue to hold my position without adding anymore unless the price drops and it becomes undervalued.

According to Housel's valuation, Visa can return less than 8%. As with any valuation, there is some guess work and assumptions baked in.

Based on Housel's work, I don't feel compelled to sell Visa. Factoring in the dividend and Housel's valuation, I feel Visa has enough room to grow for me. While 8% isn't world beating, it's better than most CDs and savings accounts. My position in Visa is two thirds of a full position. Overall, Visa comprises about 3% of my portfolio. My risk tolerance is high and my horizon is over 15 years.

There is no guarantee that Visa will ever make me a return on my initial investment. However, combining overall market conditions, my risk tolerance and horizon, valuation of the stock and the overall position Visa takes up in my portfolio, I feel comfortable holding my shares.

Disclaimer: This is an update on my personal portfolio. I post my thoughts and opinions on the markets to help me think out my ideas as well as possibly providing insights. Likewise, I post for others to see my ideas and point out any flaws in my ideas or investment thesis.

This is not a recommendation of any kind for Visa or any other stock mentioned in this blog. Due your own due diligence or consult a financial advisor before purchasing any securities.

Monkee Cage Holdings

I created a web page to illustrate my stock holdings without giving away dollar amounts. Everything is in percentages. For example I have a dollar amount what I consider a full position of a stock. That is usually the most I'll buy for a holding. However sometimes I think a stock is to risky or the price shot up quickly while I was accumulating. In those cases I am underweight. Other times I think a stock is vastly under priced so I may overload on it and acquire more than I normally would. 100% represents a full weight position while greater than 100% is overweight and under 100% is underweight.

My portfolio can be found at Monkee Cage Holdings

I also included the cost per share and the percentage each stock takes up in my portfolio. The table only includes stocks I buy outside of my 401K. The 401K is mostly company stock and index funds. I want to track stocks I buy on my own.

Now that all my holdings are out there, I have a few notes I'd like to pass on about a few of the stocks.

Activdenity Corp (ACTI)
ACTI was a complete accident. I never intended to own any shares. Unfortunately I didn't double check my ticker symbols before I hit buy. I intended on buying Activision Blizzard (ATVI).

Since I own a small slice of it, I'm going to do some digging around on ACTI and see if it's worth adding more or just letting the little slice of it grow. I don't even think the position is big enough to warrant selling.

Lo Jack Corp (LOJN)
I'm considering selling LOJN. I must double check my notes but I believe they lost some contracts and that will hurt the bottom line in the future. So right now I'm considering selling my shares.

Buys
I'm not considering any other sells but I'm still acquiring shares in Teradata (TDC) and Wiley John & Sons (JW.A). I'll soon be topping off my position on KHD Humboldt Wedag International (KHD).

As always, mimic what I'm doing at your own peril. Always do your own due diligence or consult with a financial expert before you make any financial moves.

More on the NFLX sale, Two New Buys

I unloaded about 35% of my Netflix (NFLX) holdings for two primary reasons.

The first is valuation concerns. I thought NFLX took a nice run and reached a high point for now. If the share price becomes attractive again then I'd think about buying back in.

NFLX ballooned up and comprised 26% of my portfolio. The other reason I sold was to bring that number down and rebalance some.

I also plan on using the NFLX proceeds to pay down my margin loan and start building out new positions. I'll reveal my next two stocks further down.

I have no problem with a stock taking up that much room in my investment account. However, coupling the high percentage with the run up in price, I decided to lighten up the holding.

In buy news, I'm currently in accumulation mode on two new stocks. I'm buying a full position on John Wiley & Sons (JW A) class A shares. I'm also opening a position on TeraData Corp (TDC) with intent to fill a full position. Currently I own 25% of what I intend to own in both shares.

Out of respect for the Motley Fool's product and my subscription to it, I won't go into details on reasons to buy the new stocks. I will in future writings but they are recent recommendations and don't feel right revealing information others and I paid for.

As usual, I write this blog as a tool for me to keep track of my stock ideas, buys, sells and reasons behind it all. I in no way endorse any security, stock, bond or any other financial instrument. Nor do I endorse anything that I might mention in this blog that I cite from the Motley Fool or any other publication. Each person's situation is different than mine. Therefore, you must do your own due diligence and consult with a financial advisor before you follow any moves announced by me on this blog.

When I'm off from work this week, I'll reveal all my stocks and their weighted position they hold plus what percentage of a full position they hold.

Buys, Sells and other Monkee Portfolio Updates

Buys, Sells and other Monkee Portfolio Updates
Before I left on my week for the woods, I executed a few trades in the Monkee Portfolio. Note that this many trades is a rare event in my investment approach. I don’t blindly buy companies (thanks to the Motley Fool newsletters) but I don’t sell without good reason either.

First off was I sold a portion of my Netflix (NFLX) holdings. I did this on my own without any sale notice from the Motley Fool Stock Advisor (MFSA). First a little background. I bought on the newsletter’s recommendation and built up what I consider a full position. When the price fell I decided to go overweight on it and increase my holdings by 50%. That move was on my own but it was reinforced by the fact that NFLX was recommended more than once by MFSA. The move paid off very well as I’ve more than tripled my initial investment.

As the price bounced around in the mid $40s, I started having questions about valuation and how much of my portfolio it took up. NFLX made up 26% of my investments (not including 401k). As I glanced at the pricing metrics (P/E, earnings, etc.) I felt okay with the current price. While the valuation might be high, for a growing company like NFLX sometimes the P/E runs high. While the price wasn’t screaming buy, I wasn’t so nervous about losing value. So I decided to take some of the gains off the table. I sold an amount equal to my initial investment in NFLX including the 50% I went overweight on. I’ll give my reasoning on the amount sold after I go over my other trades.

I sold off my entire holding of MVC Capital (MVC) on a recommendation from the Motley Fool’s Hidden Gems (HG). In fairness to those who pay for it and the Motley Fool who charges for the service, I won’t go into detail. MVC invests in small and diverse private businesses. They facilitate private funding for those companies and receive ownership and other future considerations as well as making loans to these compaines. How MVC issues a valuation to the individual companies and sum it up to come with a net asset value (NAV) is cloudy. No third party audits the findings. Thus the Fool decided to sell and look for more transparent companies to invest in. One thing must be said. This is not a knock on the company. They maybe telling the truth. It’s just without an outside auditor it’s hard to feel comfortable with money invested with them when NAV almost always seems to be above the stock price.

In addition to the sells, I also made two buys. I bought shares to close out my accumulation of KHD Humboldt Wedag and the same with Dolby. I now own full positions of shares in my portfolio.

What to do with sell proceed?
That is the question I ask myself while trying to figure out a sale. Typically I’d roll it to the brokerage account until I decide my next investments. Not so this time.

Note: I will update this entry in the next couple of days to complete my reasons for selling Netflix and explain what I plan on doing next.

Intro to the Monkee Portfolio

The Monkee Portfolio

That’s right. Unkle Monkee also runs his own investment portfolio. Of course I don’t do it all on my own. I use newsletters from the Motley Fool to help decide my investments. I subscribe to the Fool’s Hidden Gems (HG) and Motley Fool Stock Advisor (MFSA). I don’t know exactly by how much I’m beating the market (using the S&P 500 as a benchmark) but I am in the black. And it has been a wild ride. I’ve been up and down during this economic tsunami. Having an even temperament and not getting my emotions caught up in the price of my investments has helped me actually turn from red to black.

Don’t get me wrong, the majority of my portfolio is in the red. I have several stocks under my initial buy price. I’ve even added more of certain stocks hoping to take advantage of prices that have gone to low. For instance, when Morningstar (MORN) hit the low $30s, I increased my holding by 25%. I wanted to double down but just didn’t have the stomach to pull the trigger. I compromised and went with a modest increase instead.

Basically two stocks have buoyed my holdings into the black. The first is Neftlix (NFLX). I initially bought shares a few years ago on a recommendation from MFSA. Of the top of my head, I believe my buy in price was around $18-20. When the stock fell further to $12-15 I bought more shares (about 50% of my initial investment). That move has paid of handsomely as the stock hovers in the $40s. Right now I have some valuation concerns with the price but haven’t heard anything from MFSA to indicate selling. I haven’t trolled the NFLX message board either to get a feel of what others think. I’m tempted to scale back to rebalance some. If it runs to the $50s I more than likely will pare it back some (maybe 25-30%). It’s a hold right now.

The other holding that’s keeping me above water is Buffalo Wild Wings (BWLD). This one was a HG recommendation. In addition to the recommended buy, for a while I kept adding shares when ever the price slipped below $30. I sold a portion late last year on a HG recommendation. As it approached $47 they cited concerns about valuation. Instead of selling the entire portion though, they recommended paring back and possibly buying back in when prices fell. I used the proceeds from the BWLD sale to open up positions in three other stocks. Now that the stock is back above $40 I regret I didn’t at least add more shares like I did previously when it dipped below $30.

That’s the good. There is also the ugly.

At the beginning of 2008 I thought Citigroup (C) was undervalued. I didn’t realize or grasp the depths of the impending implosion of bad loans. If professionals missed it, someone like me who isn’t savvy enough to read bank filings was definitely doomed. I bought solely on brand name and stock price. I didn’t read SEC filings or press clippings. I thought Citigroup is a big bank and shares are cheap. I got slapped hard by reality. I bought for around $25 and dumped my shares at around $6. Fortunately I hadn’t built up what I consider a full position of shares. Or else the damage would have been worse. I decided to apply what was left over from the carnage to my margin account loan.

In a future posting I’ll reveal all my holdings. I haven’t figured out what format I want to use. I don’t want to reveal dollar amounts or number of shares I own. I’ll probably give general percentages in relation to what I consider a full position. For example, if 100% means I own a full position of a particular holding then anything under 100% means I’m underweight and probably still adding shares. Anything over 100% means I’m overweight due to my buying more than a full position or the shares have appreciated that much.

I want to be as transparent as possible without giving dollar amounts away. I have to keep something private. I also want to post reasons for buying, selling and holding without giving to much away from the Motley Fool subscriptions. Since it’s a subscription service, I don’t think it would be right to give away information that me and other subscribers have paid for.

Now if I make a buy or sell based on information I get outside the Motley Fool, I won’t hesitate to post that in full. For any stocks I find on my own, I won’t mind posting my full reasoning and thesis for buying, selling or passing on it.

Note: This blog is for informational purposes only. Any decisions on what to buy or sell are solely my own. I gather information from the subscription services, stock screens and my own research and decide whether or not to proceed with a transaction. Everybody’s financial circumstances are different. Anything mentioned in this blog is not a recommendation. Do your own due diligence or consult with an appropriate professional to make you decisions.