Lean Long-Term Growth Portfolio - March 2016 Update

by: James Sands


The Lean Long-Term Growth Portfolio is up 8.5 percent since its inception in early February 2016.

Top performers during this time period included WhiteWave, Netflix, Amazon and JB Hunt.

The portfolio currently is managing seven holdings with the goal of staying around the 10 to 15 level.


The Lean Long-Term Growth Portfolio, or LLGP, was created in early February 2016. The objective of this portfolio is for long-term capital appreciation and will include companies that pay dividends. Not all companies in the portfolio will pay dividends however, as this is not the primary objective for wealth creation. A monthly update will be provided for investors.

The portfolio will remain lean for the foreseeable future. What this means is that the number of holdings will most likely remain somewhere near the 10, or so level. The limit placed as of this update is 15, so ideally this limit will be maintained.

As of March 31, 2016, the fund currently comprises seven companies including:

  • Amazon.com, Inc. (NASDAQ:AMZN)
  • Deutsche Post DHL Group (OTCPK:DPSGY)
  • Canadian National Railway (NYSE:CNI)
  • J.B. Hunt Transport (NASDAQ:JBHT)
  • Matson, Inc. (NYSE:MATX)
  • Netflix, Inc. (NASDAQ:NFLX)
  • The WhiteWave Foods Company (NYSE:WWAV)

The focus of the portfolio will always dictate that a majority of the holdings will be in the freight sector. This is a primary area of research and focus. However, other companies including Netflix and WhiteWave have been long-term investments where research has diligently been performed since these companies were public entrants to the stock market.

Amazon is a critical e-commerce business and is interested in pursuing freight service activities. There are many companies as well which may have more direct relationships to the freight sector. Over time, other non-freight specific companies may be added to maintain diversification.

Current Holdings Performance - Initial Update

As of March 31, 2016, the table below provides the initial date of purchase and stock price paid, including transaction fees, for each of the current seven holdings.

Since these holdings were purchased in February and March, no dividends have been paid out yet. All dividend payouts will be included in the performance to illustrate total returns.

Source: Personal Database

All holdings from the March 9, 2016, initial update have been maintained. The only new position added included DHL Group. A buy alert was placed on March 22, 2016, providing investors with the justification and short thesis as to the investment potential for this action.

Click to enlarge

Source: Personal Database

Sixty-one percent of the portfolio's composition is within consumer discretionary. This includes Amazon, DHL Group, JB Hunt and Matson. Since the portfolio is focused on remaining lean, it should be expected that consumer discretionary will continue to represent a substantial proportion moving forward. However, due to unknown future actions, other sectors could see increased investments.

Click to enlarge

Source: Personal Database

The portfolio is much more balanced when considering its capitalization composition. However, the large cap category is now the largest, based upon the addition of DHL Group. As stated above, due to the leanness of the portfolio, changes could occur in the future which may offset this balance due to management strategies. Amazon reflected the sole mega cap holding.

Benchmark Comparison and Performance

As noted, the portfolio was developed in February 2016; as such, the benchmark performance below is as of February 4, 2016, to provide a comparable review.

Click to enlarge

Source: Yahoo! Finance and Personal Database

To date, the portfolio is up 8.5 percent. The portfolio has moderately outperformed its primary benchmarks. The benchmark comparison is not so much a direct comparison in that the portfolio would ever boast of outperformance, but rather the benchmark is a general comparable to gauge whether the LLGP is fitting anywhere close to major indices performance.

The major transportation indices have also been included as a substantial portion of the fund will contain holdings within the freight sector. To date, 60 percent of the holdings in the portfolio are within the freight sector.

The LLGP expense ratio stood at 1.3 percent from all transactions for the year. It should be noted that all performance includes transaction costs, so the 8.5 performance is the pure return to date of the portfolio.


The stance for managing the portfolio will be biased towards holding companies over long-term periods of time for capital appreciation. However, due diligence will be performed to consider trimming positions or in worst case scenarios, exiting a position entirely if the business fundamentals change and merit such a move.

The benefits from this approach is that the LLGP is taking the risk as an example for investors to follow and consider if any of the companies are suitable for their own investment goals and objectives; as always separate due diligence should be performed.

To date, performance is off to a great start. The fund's advantage is the fact that it was created at a time when companies were lower than compared to 2015 year-end. The expectation is that 2016 should allow for all of these initial positions to perform well during the course of the remainder of the year. Cash reserves are ample; and companies will be averaged aggressively if the market turns sour.

Disclosure: I am/we are long AMZN, CNI, DPSGY, JBHT, NFLX, MATX, WWAV.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.