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Tim Ayles
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We strive to build highly disciplined, sensible client portfolios. Portfolios that are focused on investing in businesses with solid free cash flows and solid dividend payouts. We buy businesses, not stocks. Tim is a Registered Investment Advisor.
My company:
Napa Wealth Management, Incorporated
  • Reporting On Our 8 Guru Stocks 9 comments
    Feb 15, 2011 1:09 AM | about stocks: KO, AIG, GCI, COP, TEL, ATLS, AAPL, VALE, POT, BMY, JLL
    The most recent 13F filings are out, which means it is time to look at our hypothetical guru index. Remember, we are tracking 8 guru's and buying their top holdings and holding for the next 3 months. 

    To refresh, the reason behind this idea is simple:

    "If you had followed a select group of what we consider the world's best stock pickers and their top picks, you would have in back testing, done very well. By searching through 13F reports of the greatest investors of our time, and investing in their top picks, an investor could have produced amazing returns this past decade. Think about it. You are an individual investor with limited resources and limited information. Doing a lot of homework, you come up with good investment ideas that you think should pan out. Some work, others do not. With 13F investing, you get the best research and investing minds this world has seen, for free. Let them do the work for you. Just piggy back off their best ideas, find a handful of managers that you know and love, and combine their top picks to create your portfolio.

    The logic behind the idea is simple. After putting in the research and gathering information on all the stocks in their portfolios, for whatever reason, there is always one stock in which they have invested more money than every other stock they own. Coco-Cola (KO) is Warren Buffett's top holding, for example. Currently, Bruce Berkowitz of the Fairholme Fund (FAIRX) has chosen American International Group (AIG) as the stock he thinks is worthy of more investment dollars than any other he has chosen. I realize these guys have more information and relationships than I can ever dream of, thus giving them a potential edge that I do not have. So what I do is try to piggy back off some of the best."

    Using the back tester from AlphaClone.com I am able to see that my 8 stock index returned a hypothetical 14% for the previous 3 months ending 2/14/11, compared to the SP 500 returning 10.1%. Not bad out performance. (Please see disclosure below about the inherent risks of backtesting.)

    That said let's take a look at the list for the next 3 month. We will track the prices of the index based on the opening prices of each stock for the date of 2/15/2011.

    Current 8 guru stocks:

    Selling:

    JLL
    BMY

    Buying:

    GCI
    COP

    Current index:

    AIG
    GCI
    COP
    TEL
    ATLS
    AAPL
    VALE
    POT

    That's it for now. If you want to see the hypothetical results of these 8 managers, take look at the previous article from a few months ago:

    seekingalpha.com/article/243914-reporting-on-our-8-guru-stocks

    I will post the opening prices of each of the 8 stocks in the comment section below.

    Other than that, we will see you in three months!


     




    Disclosure: I am long AIG, ATLS, AAPL, POT, BMY, JLL.

    Additional disclosure: Backtested results are hypothetical and do not reflect actual trading. the back tested results were achieved with the benefit of hindsight, and the trades were not actually executed. These backtested results do not reflect the complexities of actual investing and there are many material factors that could have affected actual results. These hypothetical results do not reflect taxes, commissions, transactions fees, management fees, brokerage and exchange fees, and other costs, nor do they reflect any dividends. These results are for educational purposes only for the reader to do their own research into 13F investing. We intend to only offer a limited amount of managers for the sake of creating a tracking index. It is in no way a comprehensive or diversified list, and we do not recommend anyone use this list for buy or sell recommendations.
    Themes: US Market, Fund Holdings, Long Ideas Stocks: KO, AIG, GCI, COP, TEL, ATLS, AAPL, VALE, POT, BMY, JLL
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This post has 9 comments:

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  •  
    The "Bests" make mistake too.
    Buffet bought BAC at $50 and progressively sold his stake in the company. Each time taking an even bigger loss!
    15 Feb 2011, 05:41 PM Reply Like
  •  
    Never said they didn't have losses. Not sure where you get that.

    On average, they are the best because they have gotten it right much more than they have gotten it wrong.

    BAC was not his top holding either.
    15 Feb 2011, 08:19 PM Reply Like
  •  
    How did you select the GURU managers? did you incorporate information from before the year 2000 to say "hey, I'll start with that guy"? or did you select present day guys and then research and back test based on who you selected present day?
    21 Feb 2011, 04:19 PM Reply Like
  •  
    Backtested guys whose styles I have admired for some time is all.
    21 Feb 2011, 06:29 PM Reply Like
  •  
    Oh, I see, it's all about style. That makes sense.
    10 Mar 2011, 01:53 PM Reply Like
  •  
    By style I mean method. Like Warren Buffet historically has been an intrinsice value guy. Bruce Berkowitz has historically been a value/Free Cash flow style investor.

    So yeah - that's what I did. I end up owning stocks I don't mind, rather than momo names like Netflix. Therefore, I don't weight heavy on the momo guys.

    Pretty simple.
    10 Mar 2011, 03:51 PM Reply Like
  •  
    Yeah, style method, up down, same difference. I'd go all long AAPL. Gosh, I hope you've got a lot running on them.
    10 Mar 2011, 04:07 PM Reply Like
  •  
    What is ATLS?

    Is it Atlas Energy UXR?
    23 Feb 2011, 01:16 PM Reply Like
  •  
    They were just bought out by CVX. The new stock from this manager to replace this one would be LYB.

    Regards,

    Tim
    23 Feb 2011, 01:43 PM Reply Like
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