samedi 4 mars 2017

Portfolio review (march 3rd, 2017)

In the recent weeks, I've made some slight changes to the Penetrator Portfolio. I've lightened some positions like Gilead (not enough growth), Dollar Tree (high debt and slow integration of Family Dollar), Tucows (it became too important in the portfolio with it's recent rise), United Therapeutics (still cheap, but it was too important on the portfolio, just like Tucows). I completely got out of Hardwood Distribution. I bought a little more Couche-Tard but I've been much more active on the selling side than on the buy side.

I have a lot of cash ready and I'll be patient even if it takes time before the right occasion comes.

On my watchlist, there's obviously my holdings and a few high ROE stocks like Mastercard, Accenture, Winmark, Hanesbrand... And some OK ROE stocks like MTY Food Group, Metro, Lassonde and a few others. I like Sleep Country too, but it's track record is short, which can bring bad surprises...

Anyway, for the moment, I don't see anything as a screaming buy. Maybe just some whispering buys.

Here's my portfolio, on march 3rd, 2017:


Alimentation Couche-Tard: 8,5%
Tucows: 7%
Constellation Software: 6,6%
CGI Group: 6,4%
Linamar: 5,3%
Knight Therapeutics: 3,7%
Stella Jones: 2,9%
Ceapro: 1,1%


Ross Stores: 5,8%
Bank of the Ozarks: 5,5%
United Therapeutics: 5,4%
Biogen: 4,7%
Novo Nordisk: 3,9%
Lithia Motors: 3,3%
Mohawk: 3,1%
Disney: 3%
Dollar Tree: 2,8%
Gilead: 2,6%
Bioverativ: 0,4%

Cash: 18%

Average portfolio ROE: 27
Average portfolio forward PE: 14,8
Average portfolio beta: 0,75

12 commentaires:

  1. You have a very disciplined and balanced approach to your portfolio management. My question:

    When you take some profits from your best winners, does it hurt if they double again in the next year or two? Or do you just see the logic of not over-committing to one stock? I mean, the Sequoia Fund did not start with one third position in Valeant. That specific stock went up a lot and they were letting their winnings ride. On the other hand, you may be limiting your possible winnings on a future super stock that becomes a ten or twenty bagger by cutting the position size.
    As for Sleep Country, they are projecting very strong earnings growth and further expansion in Ontario. But like you mentioned...we do not know how well they will manage that growth. They do not have the track record of a Couche Tard or Constellation.

    1. It doesn't really hurt if my best winners double after I cut my position because I usually cut positions because they're too pricey or too important in the portfolio.

      I think it's riskier to have a single big winner than trying to split that big position between two or three potential big winners. For instance, instead of having a 20% position in Constellation Software, I'd split that 20% between three positions like Constellation Software, Middleby and Priceline. Three expensive stocks, but three very well managed stocks in three different sectors.

  2. Portfolio management is an interesting topic, one that isn’t really discussed very much. I find it is an individual thing. There doesn’t seem to be one way of doing it. I think it depends on your temperament and how familiar one is with their various holdings. It’s more of an art form really.

    Howard Marks has said that over time the market will teach you and that lends itself to portfolio management as well. After a few years in the markets I have cobbled together an approach I seem to be comfortable with, for now anyway. The market is always looming in the background ready to teach you another lesson and challenge your current belief system.

    I currently hold 19 positions, seven of which are core holdings where the bulk of my money is invested. Brookfield Infrastructure Fund takes up about 20 per cent of my portfolio alone. I guess you could say I’m comfortable with that until I’m not. They have raised their distribution so many times over the years that I’m finding it impossible even to trim the position. I’ve also developed a lot of confidence investing along side Bruce Flatt and the boys at Brookfield Asset Management.

    Over my time in the markets I have found that the less decisions I make the better off I am. So ultimately I try to hold for the long term and take advantage of the short term nature of the other market participants.

    1. Yeah. When we take a look at specific portofolios, we tend to think that proportions in stocks are meticulously studied. I'm pretty sure that, in most cases, it's way less thought than what we think.

    2. What if you are sitting on 20% cash and after some research and careful thought, you decide there's no new stock that is a screaming buy. So, you decide you will put the money back into SOME of the 20 stocks you already own. Are you more inclined to buy more shares of your biggest winners or the stocks that have gone down the most lately?

    3. By the way...Here's the advice of legendary investor Peter Lynch on market timing:

      Lynch once conducted a study to determine whether market timing was an effective strategy. According to the results of the study, if an investor had invested $1,000 a year on the absolute high day of the year for 30 years from 1965-1995, that investor would have earned a compounded return of 10.6% for the 30-year period. If another investor also invests $1,000 a year every year for the same period on the lowest day of the year, this investor would earn an 11.7% compounded return over the 30-year period.

      Therefore, after 30 years of the worst possible market timing, the first investor only trailed in his returns by 1.1% per year! As a result, Lynch believes that trying to predict the short-term fluctuations of the market just isn't worth the effort. If the company is strong, it will earn more and the stock will appreciate in value. By keeping it simple, Lynch allowed his focus to go to the most important task – finding great companies.

    4. Many experts tell us to always be fully invested. They're probably right. But I don't plan to keep that 18% cash position for very long. I believe that a small part of a portfolio in cash is not a bad idea at all (probably less than 18% though).

  3. I’m usually fully invested myself but I do see the value of holding some cash at times. I’m really learning as I go along, like everyone else. Presently I’ve got about 7 per cent of my portfolio in cash right now. I seem to be very impatient and have a tendency to rush into the market and invest in something all the time. That has hurt me in the past. So you could say that the market is teaching me to be more patient.

    I’ve also got a position in CEF.A (a closed end fund that holds audited amounts of gold and silver) but that’s really just a parking place for some of my money right now. So maybe my cash position is closer to 10 or 11 per cent. Your personal circumstances will have an effect on how you manage your investment portfolio and everyone’s personal circumstances are different.

    The writings of Peter Lynch was my introduction to investing in the stock market. He was a great teacher. My favourite quote of his was, ‘you should be able to describe your investment idea with a crayon.’

  4. Has 10% cash so far, never borrowed and never will. Waiting for a hugh correction, then maybe switch for even better companies like Moody's when eventhing are on fire sale.

  5. Quick note re ZZZ. While it's true the company has a short history as a public company one could dig beyond and find out their financial history if they asked the company. I suspect ZZZ and ATZ and TOY (other companies that have a short history of being public) have been star ROE generators for a long time given they all started with a few bucks, a founder and a business idea/strategy. Just a thought...

  6. One more thing. Maybe you guys will skewer me about this but I don't get why Lynch is so highly regarded and deemed a legend. The time he managed his fund I believe he returned ~20% compounded while the market did 18%. I will say the fact he outperformed the market pushing as much money as he was and often holding hundreds of positions is impressive but not a legend in my eyes. He was a good steward of capital but no chance legendary. I've read his books, I like them but "buy what you know and can understand" isn't earth shattering and frankly will get a lot of people into a lot of doodoo. I eat at Freshii, I like the meal, I buy shares. In a raging bull market a monkey will make money thinking that way. Not in this market.

    Mes deux sous.

  7. I agree with you about not elevating anyone to legendary status as I think there are no investing Gods out there. But Lynch was my introduction to the fundamental side of the market and for that I will be ever grateful. I've been fortunate to have many good teachers in my time (Lynch, Buffet, Munger, Marks, Taleb, Mamis, Greenblatt). Frederick Martin is another name not too many people know about. People read books and fasten on one overiding theme and think that explains the whole book. There is a lot more to Greenblatt's first book other than spin offs. But the ultimate teacher I think is the market itself and what the individual investor is willing to take away from it. end of diatribe.