TMFHelical (99.01)

Helical Portfolio Update – Steady Course for Now

October 01, 2012 – Comments (0)

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.

Ralph

Helical Investor