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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
  • Semi-Annual Portfolio Review 0 comments
    Sep 4, 2013 9:45 PM | about stocks: AMAT, ARMH, DSW, DCIX, FB, GOOG, IFN, INTC, ISRG, LRLCY, MMM, PII, RH, RHT, SAN, QCOM, VMW

    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.

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

    Google (NASDAQ: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 (NASDAQ: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

    Sold some puts since last review.

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

    Plan: hold, trade around.

    Red Hat (NYSE:RHT)

    Company provides and supports Red Hat Linux, the most popular Linux distribution in enterprise world. Recently this OS became the most popular OS in clouds. But, as with VmWare (NYSE:VMW), I'm not sure that internal clouds are winning.

    No changes since last review.

    Risk: high valuation requires high growth. Any slowdown can crash the stock.

    Plan: reduce or liquidate position.

    Facebook (NASDAQ:FB)

    The only social network company worth investing.

    Traded around position since last review, with net increase in holding.

    Risk: Wall Street hates the company.

    Plan: hold, trade around.

    DSW Inc (NYSE:DSW)

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

    Reduced position since last review.

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

    Plan: hold.

    Restoration Hardware (NYSE: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.

    New position.

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

    Sold since last review: VmWare (VMW), Qualcomm (NASDAQ:QCOM), Intuitive Surgical (NASDAQ:ISRG).

    Banks / Financials

    Banco Santander (NYSE: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.

    Added to position since last review. Also sold some options (both puts and calls)

    Risk: Currency fluctuations, more problems in Eurozone.

    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.

    Applied Materials (NASDAQ:AMAT)

    Cramer's recommendation. He thinks that it's a spin-off candidate.

    Risk: Spin-off might not happen.

    Plan: Hold for a while. Sell in case of spin-off or if spin-off doesn't happen in a year since purchase.

    Polaris Industries Inc (NYSE:PII)

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

    No changes since last review.

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

    Plan: Hold, reinvest dividends.

    3M Company (NYSE:MMM)

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

    No change since last review.

    Risk: another recession, management mistakes.

    Plan: Hold, reinvest dividends.

    Diana Containerships (NASDAQ:DCIX)

    When Cramer recommended to by Diana Shipping (NYSE: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 Intel (NASDAQ:INTC) since last review.

    International

    Indian Fund (NYSE:IFN)

    India was the only part of BRIC which I liked lately. Not anymore. It looks like financial troubles of development world caught up with India as well.

    No change since last review.

    Risk: political, slowdown in developing countries.

    Plan: Sell into strength

    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.

    New position.

    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 AMAT, ARMH, DSW, DCIX, FB, GOOG, IFN, OTCPK:LRLCY, MMM, PII, RH, RHT, SAN.

    Additional disclosure: I have no positions in other stocks mentioned. Positions can change any time.

    Stocks: AMAT, ARMH, DSW, DCIX, FB, GOOG, IFN, INTC, ISRG, LRLCY, MMM, PII, RH, RHT, SAN, QCOM, VMW
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