A Portfolio Update And Two Powerful Insights Every Serious Investor Should Read

Portfolio Update

Yesterday I made some adjustments to my portfolio and the portfolios I manage and I just wanted to update those positions.

Personal Portfolio and Portfolios I Manage:

• Bought Strattec Security Corporation $STRT

Personal Portfolio:

• Sold Altria $MO up 18%.
• Sold Philip Morris $PM up 24%.
• Sold Intel $INTC up < 1%, could have sold a while ago up 30%, doh!

All sold positions are after fees but before taxes.  I never bought any of the above three positions for the portfolios I manage and I bought Altria, Philip Morris, and Intel before doing any kind of valuations or any kind of in depth research so I am a bit fortunate to end up anything in those positions.

I said a couple months ago that I planned to hold the above positions for the foreseeable future because I felt that I could have my results compound well over time in all of the three companies.  I still think that is true for all of the above companies but have still decided to sell them all.  Lately I have been gaining confidence in my abilities to analyze companies, and I now think that I am at the point where I am getting pretty good at analyzing companies and think I can find better opportunities in the smaller mid to nano caps that I am concentrating on now.

Also as Red reminded me of the other day, why would I try to compete with the millions of people who are invested in and analyze those massive companies when I can find less competition, potentially less efficiency, and more upside, in the much smaller companies.

After selling those companies to free up cash for future opportunities, my current portfolio stands as follows, ranked by position size.  Portfolio does not add up to 100% because of rounding:

1. $VIVHY.PK-28% of portfolio.
2. Cash-26% of portfolio.
3. $STRT-16% of portfolio.
4. $MAIN-11% of portfolio.
5. $CMT-8% of portfolio.
6. $DOLE-8% of portfolio.

Two Powerful Insights Every Serious Investor Should Learn From and Reread.

Fundoo Professor-Presentation On Moats And Floats.

The Red Corner Blog-Kfaftwerk; A look at economies of scale and how Wal-Mart changed its industry and made a ton of money.

I hope you enjoy the above links as much as I have.

I have already started researching another company and tomorrow I will post some links and ask your advice on something I have been thinking about quite a bit lately.

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Portfolio Update and A New Dole Article Planned

I just sold my entire position in Taseko Mines (TGB).  TGB released its most recent quarterly report yesterday and yet again it was a disappointment.  It seems that ever since I bought into this company every quarter has been a disappointment at least on some level with excuses being given by its management for why it is not performing as good as it could.  Also of note is that TGB had to resubmit its New Prosperity mine assessment report at the end of September and now a decision will not be made until sometime in 2013 about if the mine will be approved or not.  The original plan was to have a decision by this month which was the only reason I had even held onto it this long.

This is yet another company I bought before doing any kind of valuations and only minimal research and again I paid the price with a total loss of 47%.  The only thing that again saved me was that at least I was smart enough to make my positions pretty small when I first started out so I didn’t lose a ton of money.

My portfolio is now 23% in cash and I am down to owning stock in only six companies. After clearing out the only remaining company that I knew for sure I was going to sell at some point, I now only own stock that I think are good companies and have the potential to continue to compound into the future.

The three remaining companies I own from before doing valuations and anywhere near the amount of research that I am doing now: $MAIN, $MO, and $PM, are all by my estimates either fairly valued or overvalued by quite a bit and I may sell stock in each of these three companies if I detect deterioration in any of their businesses.  If I do not see deterioration in the businesses I will most likely hold these companies for years because I think each of these companies will compound their results well into the future, unless of course I find a better company to put my money into.

The three companies I have bought into since doing valuations and the amount of research I am doing now are: $CMT, $VIVHY, and $DOLE.  At this point I still think that CMT and VIVHY are undervalued and will let you know if I decide to buy any more stock in either of those two.

This gets me to Dole.  I got a request from one of the readers of my original Dole article that I posted on Seeking Alpha who liked my original analysis series on Dole, Chiquita, and Fresh Del Monte and he was asking if I would do an updated valuation and analysis article on Dole now that it has sold some of its assets and is able to pay off most of its debt.

The reader asked if I would do an updated article giving my thoughts on how Dole stands now after it sold some of its assets and paid down debt, if I still think that it is undervalued, and what I think of its operations going forward now that it eliminated its biggest problem.

I have learned a lot since that time and hope to use some of my new knowledge to see what I think about Dole now, if I still think they are undervalued after rising in price as much as 75% at one point and currently still being up 47% since I originally bought into it.  I am researching its land, other assets, and history more fully now in preparation so that when its next quarterly report comes out on November 15th I am ready to value the company with updated numbers and post the article shortly after that.

In the mean time I will continue to post any updates and links that I think contain knowledge.  I may also every once in a while ask some questions of you since I know some of you are more knowledgeable in certain areas than I am.  Since I am planning on adding some new things to this article I may need some feedback making sure I am applying the new techniques correctly.

Selling Universal Insurance Holdings $UVE, and Kinder Morgan Management $KMR

Universal Insurance Holdings (UVE)

I bought UVE before I was doing any type of valuation or anywhere near the amount of research I am doing now.  I originally bought into them almost exclusively for the huge dividend, and without reading any annual or quarterly reports at all.

I have thus paid the price for my investing indiscretion and will be selling out at a loss of around 37%, ouch.

Here are my thoughts after valuing and reading its annual and quarterly reports.

Pros:Undervalued on an asset basis.  UVE are also selling for less than its net cash per share, an extremely undervalued company at this time.  But due to reasons I list below, the undervaluation looks appropriate to me.

Cons: Most importantly, I do not trust management.  I called UVE’s IR department to ask some questions about how it invests its money: Who makes the decisions, how do they make the decisions, why do they buy the securities that they buy, are they a value oriented company, etc.  The IR department would not or could not answer any of those simple questions.

Especially worrisome since the investments UVE has been making have been losing the company tens of millions of dollars while the stock market as a whole has been going up a lot.

The CEO has been selling quite a bit of stock lately, almost 2 million shares in the past month, which is about 4% of its fully diluted shares.

The executives get paid a lot in my opinion for delivering very little in the time I have been an owner.

I do not see any competitive advantages within the company, and barring the insiders, who own 40% of the shares, taking the company private, I do not see a catalyst at this time that could unlock the value of the shares.

Decision: For the reasons above I will be selling my entire position in UVE.

Kinder Morgan Management (KMR)

I am also going to be selling my entire position in KMR.  This decision is a bit harder because I like Kinder Morgan’s management, and its vision for the future.

However, I have made the decision that I need to become more concentrated in my portfolio and free up cash so I do not miss out on another Dole that I find.  I have decided that KMR has the least amount of upside potential than my other holdings at this time, and I will be selling my entire KMR position at a 15% gain.

Blog update and portfolio update

Blog update

I just wanted to update everyone and let them know that I will no longer be posting something every day to the blog. Blogging is much more time consuming than I originally thought, and it has started to dig into my research and analysis time.

I will be posting a few times a week now, generally about my research, analysis, and valuations.  I will also be posting things that I find online that I think are important.  But I will no longer be posting the massive amount of links that I have been lately.  There are various other sites that do the same thing, and reading those to see which are best and posting them here has taken up the vast majority of my time lately.  I hope you understand.

Portfolio update

As you might know from my post last week, I have been looking over my portfolio in search of some sell candidates so that I can free up some cash and hopefully not miss out the next Dole I find.

I have found a few companies to sell but I am waiting for their next 10Qs to be posted so that I can read through them to make sure I will not be missing out on anything before I make my final decisions.  Whenever I do decide to sell, I will let you know which companies I sold, and why I made the decision to sell that particular company.

Until next time.