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.
Sunday, May 17, 2009
Saturday, May 9, 2009
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.
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.
Saturday, May 2, 2009
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.
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