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Alex Filonov
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I was born in 1956 in USSR. After graduation from college in 1979 I worked full-time as an IT specialist. Until 1990 I worked for different companies in the Soviet military industrial complex. I created a small software business in 1991, which failed in 1993. I worked for Oracle Corp in 1995 in... More
My blog:
Muddling Investor
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  • Why I Reduced Restoration Hardware Position

    It looks like I found this stock too late. I like the stores, I'm sure that they sell stuff appealing to rich home owners. But there is a small problem. There is nothing unique in the stores. OK, they recover, restore and sell beautiful (and not so much, but beauty is in the eye of the beholder) pieces of hardware for home decoration. But... Last Saturday I went to Home and Garden show. There were a lot of companies selling restored hardware. Granted, they don't have variety of Restoration Hardware (RH) stores. But it's just a matter of time.

    Another problem: one of the reasons I bought the stock in the first place was the fact that CEO was Italian. Well, that CEO is gone.

    I am not sure I want to close the whole position. I might as well be wrong. I am thinking about it.

    Disclosure: I am long RH.

    Additional disclosure: Positions can change any time.

    Tags: RH, Retail
    Mar 11 11:36 PM | Link | Comment!
  • I Am Ashamed To Be Russian

    I don't write here on political matters. But, the situation is way too dire.

    For the first time in my life I am ashamed to be Russian. When USSR entered Afghanistan, I was young and poisoned by Soviet propaganda. Later, I was happy when USSR fell apart. I thought that I could live in free Russia. By 1994 I found out that people of Russia don't want to be free and responsible for themselves. Now I live in USA, I am US citizen, proud of my new country and relatives are the only link to my former country. But now Russia invaded Ukraine. This is war. It doesn't matter that nobody died yet. Naval blockade, occupation of Crimea and its almost certain annexation are acts of war. And it doesn't look like the end. Russian military already probed approaches to Ukraine borders in the North (shortest way to Kiev). They retreated, when found out that Ukraine military are ready to meet them. Will they retreat next time?

    I know a lot of people in Ukraine. My heart is with them. I wish them all the luck, they need it.

    Ukraine sovereignty was guaranteed by US, UK and Russia in 1994 (Budapest agreement). Looks like this was just a piece of useless paper. US and UK don't want to defend Ukraine in any meaningful way and Russia is an aggressor. According to Budapest agreement, Ukraine surrendered all nuclear weapons on its territory to Russia. I don't think they are happy about it now. The lesson is clear.

    If Putin is not stopped now, Baltic countries will be next. This looks like beginning of World War III.

    My heart is with Ukraine.

    Слава Україні! Героям слава!

    Tags: Politics
    Mar 08 12:15 AM | Link | 4 Comments
  • Annual Portfolio Review

    Portfolio goal. Growth. This is high beta, unapologetic growth portfolio with some safeguards and some boring investments. The goal remains unchanged.

    Basic Principles. Most of the stocks in this portfolio were chosen for long term investment, which, for me, is about 18 months. Every stock is under review all the time, with a major review of the portfolio twice a year. I can trade around any position if I feel like it. The portfolio is not diversified by sectors. Diversification reduces risk, but it also reduces potential gain. No change in basic principles either.

    Strategy. As I already mentioned in my blog before, political environment doesn't look good for the economy. Strategy changes: increased cash cushion, reduced long positions, more trading around positions. This estimate is not changed, despite huge bull run on the end of the last year and extremely bearish beginning of 2014.

    Paradigm Changers. These are stocks of companies that are changing business in sectors or even in the whole world.

    Google (GOOG)

    Ultimate disruptor. Google is changing the advertising world. The company is also aggressively moving to mobile internet advertising.

    Risk: All great empires were destroyed by internal problems. There is also a risk of search ad market saturation.

    No changes since last review.

    Plan: Hold, trade around.

    ARM Holding (ARMH)

    Pure brain company. Company designs ARM CPUs for a wide range of mobile devices and licenses them to different companies. Most smartphones and all tablet computers I know run on ARM CPUs

    No changes since last review

    Risk: Tech world is changing quickly, somebody can invent a revolutionary new design and beat ARMH.

    Plan: hold, trade around.

    Facebook (FB)

    Not the only social network company worth investing anymore. But the most profitable so far.

    No changes since last review.

    Risk: Wall Street hates the company.

    Plan: hold, trade around.

    DSW Inc (DSW)

    Yes, retailer can be a paradigm changer. This is a great company and I like shopping there.

    Added to position since last review.

    Risk: Any retailer is a high risk company. Anything can go wrong.

    Plan: hold.

    Restoration Hardware (RH)

    Creamer's recommendation. As a part of research, I visited a local store. And liked it a lot. Company sells various home improvement stuff, mostly restored old furniture and other decorations. There is no real competitor in US, because unlike others, this company got style.

    Added to position since last review.

    Risk: as any retailer, RH is a high risk company.

    Sold since last review: Red Hat (RHT).

    Banks / Financials

    Banco Santander (SAN)

    Probably the best Spanish, and maybe European bank out there. High yield, big investments around the world. Bought it because I believe in resolution of Euro troubles. This is also can be placed in International part of the review.

    Reduced position since last review.

    Risk: Currency fluctuations, more problems in Eurozone.

    Plan: Hold.

    HSBC Holding (HSBC)

    As far as I know, the biggest bank in the world. European, more to the point, British. And UK loves her banks.

    New position.

    Risk:currency fluctuation, another financial crisis.

    Plan: hold.

    Steady growers / high yield. Companies with steady growth, high dividend or both. I am increasing weight of this group, such companies are best investments in depression times.

    Airbus Group (OTCPK:EADSY)

    One of two big aircraft manufacturers. As Cramer would say, we love duopolies. Company has at least 8 years of backlog.

    New position.

    Risk: currency fluctuation.

    Plan: hold, add on weakness.

    Polaris Industries Inc (PII)

    One of the best recreation equipment manufacturers out there. Local (for me) company as well.

    Traded around position since last review.

    Risks: another recession, people don't like buying discretionary items in recessions.

    Plan: Hold, reinvest dividends.

    3M Company (MMM)

    Most innovative company in Dow Jones index. Another company headquartered in Minnesota.

    Added to position since last review.

    Risk: another recession, management mistakes.

    Plan: Hold, reinvest dividends.

    Diana Containerships (DCIX)

    When Cramer recommended to by Diana Shipping (DSX), I did some analysis. I think material intensive growth in China is over, country is trying to change growth model to less material intensive. Which means less demand for general cargo shipping in the world (i.e. raw materials). Which, in turn, means that DSX is dead money. Not only China demand for raw materiel is not growing, but also a lot of general cargo ships have been built in the last 10 years. Less demand, more supply, no profit. I decided to go with DCIX, because it owns container ships, which should do good when trade is growing. So far, stock didn't live to expectations and I am not sure it's not a mistake.

    Risk: multiple risks related to supply/demand in container ship business.

    Plan: Not sure. Thinking about it.

    Sold Applied Materials (AMAT) since last review. Also bought and then sold FIAT(OTCPK:FIATY).

    l'Oreal (OTCPK:LRLCY)

    I wanted to buy cosmetics company for a while. Most of cosmetics are produced by diversified companies, which is not exactly what I wanted. I don't care about toothpaste, razors and cotton swabs. l'Oreal is a pure cosmetics company, located in France, fits the bill.

    No changes since last review.

    Risk: management, competition, economic downturns.

    Plan: hold.

    Fixed Income

    I have a group of closed-end funds, which are bought when at discount to net asset value or at low premium and sold at high premium. There are two groups of funds: corporate bond funds and muni funds. There are too many of them and they are rotating too fast to present them in the portfolio review. Watch my trades on stocktalk of Seeking Alpha.

    Disclosure: I am long ARMH, DSW, DCIX, EADSY, FB, GOOG, HSBC, LRLCY, MMM, PII, RH, SAN.

    Additional disclosure: Positions can change any time.

    Feb 06 3:59 PM | Link | 1 Comment
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