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JohnCLeven (77.31)

Virtual portfolio update - 9/3/13

Recs

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September 03, 2013 – Comments (7)

As I mentioned in a previous blog post, although the Fool is an awesome site, the 0-100 player rating system doesn’t do a very good job of showing you which players are really great investors, and which are just really good at “gaming” CAPs points. In order to more accurately track performance, I created a virtual fund at Marketocracy.com, and will be posting my virtual holdings/performance every 3-6 months. I would encourage other Fools to do the same. IMO Marketocracy is a great supplemental scorecard to the Fool, but is certainly not a replacement. (They have no community)I have two reasons for posting these: 1) To facilitate learning and encourage the exchange of investing ideas on the Fool. And 2) To keep myself honest, and have a proven record of performance (positive or negative) over the long-term.

Also, the reason that I’m going to be concentrating on my virtual portfolio, and not my real-life portfolio, is because I will actually be winding down my real-life portfolio in the coming months. I’ll be starting school in a few weeks, and I think I can get a better, safer return on investment on my education than my stock portfolio. I will probably exit most of my real-life positions over the next year or so, and reallocate that capital towards tuition. No new real-life positions will be added until after graduation in 2.5-3 years.

In lieu of a real-life portfolio, my virtual portfolio will track my picks and performance for the next 2-3 years.Here is my first 6 month update. A virtual 13-F, if you will.The current holdings of my virtual fund, Teego Capital (inception Mar 2, 2013), as of today are as follows:

 

symbol - value - % of portfolio

LUK - $255,900.00 - 22.93%

DTV - $239,973.00 - 21.51%

IBM - $104,877.15 - 9.40%

NOV - $90,875.34 - 8.14%

AAP - $83,749.53 - 7.51%

CHRW - $83,099.50 - 7.45%

COH - $82,992.00 - 7.44%

MSFT - $43,566.60 - 3.90%

ORCL - $43,497.00 - 3.90%

cash - $87,297.69  - 7.82%

total = $1,115,827.81  from an original amount of $1,000,000

 

New buys: LUK, IBM, CHRW, MSFT, ORCL

Added: none

Reduced: COH

Sells: BBBY, BP

Unchanged: DTV, NOV, AAP 

 

Since inception virtual returns have been 10.5% (22.17% annualized) vs 8.7% (18.21% annualized) for the S&P 500.

TEEGO CAPITAL is a long term value-oriented virtual fund that seeks to deliver market-beating returns by buying a small number of very high quality businesses at fair-to-cheap prices. We believe excessive diversification is madness, and try to be as concentrated as possible on our very best ideas.

Thanks for reading!

-John

7 Comments – Post Your Own

#1) On September 03, 2013 at 12:52 PM, Mega (99.95) wrote:

I like your portfolio John. I've also been buying shares of LUK and DTV.

You might check out another value investing message board: http://www.cornerofberkshireandfairfax.ca/forum/. There are a lot of smart people on there and I think you'd be a good fit.

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#2) On September 03, 2013 at 1:06 PM, JohnCLeven (77.31) wrote:

Wow, that link is a jackpot!

Thank you VERY much, Mega!

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#3) On September 03, 2013 at 9:24 PM, awallejr (85.56) wrote:

I am not quit sure why you would make LUK and DTV about 45% of your total portfolio.  I don't see any real catalysts for strong growth replacing at least yield for either.  In fact both have been getting crushed since April as compared to the S&P. 

While I am not a fan of diversification since all the rich people made it rich by not diversifying, wouldn't it be more prudent for you to spread out those 2 holdings?  If you are going to concentrate it wouldn't it make more sense if you rolled the dice on more "disruptive" companies like biotechs or say 3D or even Tesla?

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#4) On September 03, 2013 at 11:16 PM, JohnCLeven (77.31) wrote:

@awallejr

I want to first start off by saying thanks for the contrarian comment. Challenging your own ideas is the only way to get better.

You asked, "...why not roll the dice on more "disruptive" companies like biotechs or say 3D or even Tesla?"

My answer is that 1) I don't understand those companies, and find them difficult if not impossible to predict, and 2) I personally like weighing the riskier ideas more lightly. For example, MSFT an ORCL are basically 1 position for me, cheap, high return, staple technology...split between 2 companies.

I think LUK below book value, and DTV at current prices have a very very high probability of getting above average returns over the next few years. LUK and DTV both provide moderate growth, that you can really count on, for what I think are pretty low prices.

I don't want to "roll the dice" with 45% of the portfolio. I want safe and cheap.

Biotech, 3D, and TSLA are all flashy new tech...and it's pretty hard to do well (I think) betting on popular companies. I've seen way too many Motley Fool articles on those companies.

Few follow LUK. People think DTV's business is gonna get swallowed by GOOG and AAPL. IBM is very unpopular. CHRW is droppin big time. No one thinks AAP is a great company. COH is gonna get killed by competition. MSFT and ORCL are dinosaurs.

We shall see.

 

 

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#5) On September 04, 2013 at 10:27 AM, Mega (99.95) wrote:

It would make sense to be more diversified if there were a lot of opportunities in the stock market. Unfortunately that doesn't seem to be the case - the market is fairly expensive right now, and there are a limited number of high quality companies trading at cheap prices.

I think DirecTV and Leucadia are appropriate core holdings. Not only are they the right price, they're run by great capital allocators with an owner's mentality.

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#6) On September 04, 2013 at 12:12 PM, awallejr (85.56) wrote:

Don't get me wrong I am not questioning those 2 stock picks in general.  I am questioning why make those 2 nearly half your portfolio.  That to me is gambling on your part to begin with.

I would suggest selling at least half of each and pick up some yield. BX, KKR, PSEC, AINV, BBEP, SDRL, BWP, ARCC, PVR, MMLP just to name a few for consideration.

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#7) On September 04, 2013 at 2:03 PM, JohnCLeven (77.31) wrote:

Thanks for the feedback!

Is 45% too much? I'm not sure. I believe it betting heavily when the odds are strongly in your favor. Only time will tell if i'm right or wrong.

Also, I really appreciate the names you've offered for consideration. I'm not really familiar with any of them, but will def check them out.

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