Helical Portfolio Update – Steady Course for Now
The Helical Portfolio is now 21 months old, and as I noted last month currently cash heavy. The market continues to chug along, and I continue to be nervous and seemingly overly cautious. I intended this portfolio to be monolithic in regards to risk, which in the behavioral framework I employ means 1/3 low risk, 1/3 medium risk, and 1/3 speculation. As with any framework this is just a guide, a tool whose purpose is to force me to explain (to myself) why I deviate from it when I do. Before revisiting the risk profile of the portfolio, the numbers to date.
The Helical Portfolio grew modestly in September, ending with $67,518.15, up ~$850 for the month. Cash on 9/30 was $29,697.75 at ~44 % of the portfolio. At the end of September, the Helical Portfolio has risen with a CAGR from its introduction in 12/31/2010 of 18.5% and the IRR has been 13.1%. These are satisfying numbers, but of late have trailed the market. Year to date the portfolio is up 19.9% counting the added cash, and 11.0% not counting it. As previously noted, I added $5,000 4/10/2012 though it has not been deployed to date. Nothing helps an investor reach their goals like adding cash to a portfolio, especially a young one (helps the CAGR anyway, not so much the IRR when it does not get invested).
I last updated the portfolio risk profile after June 2012. At that time it stood at:
High 27.4% Medium 27.1% Low 45.5%.
Today it is:
High 22.2% Medium 17.1% Low 60.7%.
And it breaks down as follows (numbers are midday today, and higher in a few cases than the September close values):
Symbol Qty Mkt Value % of Port Risk
AFAM 200 $4,266.00 6.3% Medium
BRLI 200 $5,924.00 8.7% High
CAH 100 $3956.00 5.8% Low
CVS 100 $4,873.00 7.1% Low
GHDX 160 $5,715.20 8.4% High
HCN 50 $2,858.00 4.2% Low
ICLR 300 $7,383.00 10.8% Medium
MR 100 $3,496.00 5.1% High
Cash $29,697.75 43.6% Low
Gone from the portfolio since June, are high risk MAKO Surgical, and medium risk UNH and Wellpoint. These sales really pushed up the cash balance. While I still tend toward the cautious, justifying a weighting more bottom heavy than my 1/3 on each level framework, I am not truly as pessimistic as the current weighting shows. I still won’t rush into an investment, but should be giving more consideration to putting that cash to work, particularly in the mid-risk range.
It was also after May that I considered how to weight the holdings within each risk basket. Specifically I noted I’m going to accept a speculative position of more than 4% of the portfolio, specifically, up to 8%. This is a high end, and the preference is for such weighting to be a rarity. With Genomic Health still considered high risk in my opinion, it should again be pared back (not that I need more cash). I have also considered expanding the guideline so that no medium risk is more than 14% and no low risk more than 20% (except cash). These are not currently issues, but my largest holding ICON plc bears watching. I’ve been giving consideration to some pie-chartish portfolio weighting framing as well (more hopefully later).
AFAM and CAH have been trailers this past quarter. I’m content to stay the course with AFAM, but I have to think more on Cardinal, particularly as it has trailed its peers AmerisourceBergen and McKesson of late.