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Weekly Update: 2nd External Capital Inflow, Fiber Optics Mishap 2.0, And November Shopping On The Way

Summary

Portfolio slightly up week-on-week.

Bought 22nd Century Group and Momo. Sold Oclaro.

Earnings season for my holdings are mixed but generally positive so far.

New capital added for the second time.

Excited for major purchases coming this week/month.

^Portfolio Logo Collage by Market Value 11/03/17 (Highest to lowest from left to right, then top to bottom)


Holdings Weekly Value Change

Portfolio was slightly up +0.20% week-over-week, excluding the newly infused capital of $8,295 last Friday. 

Out of 35 holdings still in the portfolio as of the end of Nov. 3, 2017, 20 holdings trended higher, whereas 15 dipped lower last week. This excludes Oclaro which also trended lower but is no longer part of the portfolio.

Weekly Top Leaders and Laggards

Top Leaders Top Laggards
MU +7.0% XXII -12.7%
INTC +4.4% HPJ -8.8%
TCEHY +4.3% PWR -6.1%
BABA +4.0% GE -3.1%
GDS +3.9% NTNX -2.0%
BMY +3.8% BEP -2.0%
PYPL +3.3% T -2.0%
CONE +3.0%
JD +2.8%
DLR +2.2%
CRM +2.0%

Oclaro (OCLR), which is no longer in the portfolio, is the worst laggard last week dropping -18.4% week-on-week due to weaker guidance, in spite of beating both EPS and revenue. My realized loss in OCLR is a bit larger though at -22.20%.

As for holdings still in the portfolio, speculative bet 22nd Century Group (XXII) led the decline by -12.7% WoW. My two new industrial stocks also slided last week: Highpower International (HPJ) by -8.8% wiping out all gains & leaving me with a minor loss, and Quanta Services (PWR) which had a post-ER sell-off market reaction making its last week's performance -6.1%. Fortunately, PWR still left me with about half of its former gains. Other relatively substantial downward movements include Nutanix (NTNX), Brookfield Renewable Partners (BEP), and AT&T (T) which were all lower -2% WoW.

Fortunately, paper losses (excluding actual loss from Oclaro) were countered by unrealized gains in more holdings in the portfolio last week.

Top leader last week was Micron Technology (MU) which rose by +7%. Intel (INTC) continued its ascent last week too by +4.4%. Both would have probably been higher weren't it for a slight drop due to Friday afternoon's rumor/news of a possible Broadcomm (AVGO) - Qualcomm (QCOM) M&A deal, which could possibly affect the semiconductor industry. 

Most of my Chinese stocks also led last week's slight lead: Tencent (OTCPK:TCEHY) +4.3%, Alibaba (BABA) +4%, and GDS (GDS) +3.9%. Bristol-Myer Squibb (BMY), PayPal (PYPL), and CyrusOne (CONE) were also stepping higher week-on-week ≥+3%. JD.com (JD), Digital Realty (DLR), and Salesforce.com (CRM) rose as well by more than +2% but less than +3%.

Newbie Holdings Total Unrealized Gain/Loss

Top Gain $ Bottom G/L $ Top Gain % Bottom G/L %
CRM +1,711.55 JD -453.90 GDS +64.42% XXII -13.66%
NTNX +1,452.48 XXII -314.95 CRM +49.99% PEGI -6.00%
BOX +1,306.60 PEGI -289.90 BOX +45.74% JD -5.58%
GDS +1,257.73 HPJ -45.27 NTNX +36.19% HPJ -0.87%
MU +1,086.05 BX -22.94 MU +33.06% BX -0.58%
DLR +1,041.43

PYPL +14.71%

CONE +782.08 MOMO +16.65 TCEHY +14.27% MOMO
+0.94%
TCEHY +590.05 AMZA +17.05 DLR +12.28% AMZA +1.03%
PYPL +470.55 HASI +54.00 CONE +10.75% HASI +1.14%
BABA +468.90 BEP +170.05 PWR +8.39% BIP +4.54%
PWR +276.05 BIP +183.65 BABA +6.84% BEP +5.34%

Top-tier newbie holdings: Digital Realty (DLR) and CyrusOne (CONE) return to top-tier status after last week as both once again met the criteria (≥ +$500 gain and ≥ +10% gain). Tencent (OTCPK:TCEHY) is also now part of the top-tier newbie holdings. Sadly, Quanta Services has been moved down to 2nd-tier status due to post-earnings report negative price reaction. Nonetheless, all other top-tier holdings Salesforce.com (CRM), Nutanix (NTNX), Box (BOX), GDS Holding Ltd (GDS), and Micron Technology (MU) retain their star status.

This week I decided to consolidate "fairly decent newbie holdings" into second-tier newbie holdings. Officially, the grouping includes holdings between top-tier and borderline positions. DLR, CONE and TCEHY have moved upward from this category, but Quanta Services (PWR) has replaced their position here. PayPal (PYPL) still occupies this level as it almost ascended with the other three, but missed a bit by the amount $ criteria. Highpower International sadly took a dive last week and is not currently grouped with the PWR and PYPL. In lieu though, Alibaba Group (BABA) now joins the two to be above borderline status but doesn't make the cut yet for top-tier recognition.

Borderline newbie holdings again are those within a standard deviation of +/- 4% and/or +/- $200 from cost basis or zero. Brookfield Infrastructure Partners (BIP) and Brookfield Renewable Partners (BEP) are now part of this category as the amount gained is recently less than +$200. Hannon Armstrong (HASI) and InfraCap MLP ETF (AMZA) are still part of this group on the green side, whereas Blackstone Group LP (BX) is also still in the same group, but now on the red side joined with Highpower International (HPJ) which unfortunately took a dive last week. Newly added Momo (MOMO) is also in this group but slightly in the green area.

Bottom-tier newbie holdings are led by JD.com (JD) when it comes to amount $ loss and by 22nd Century Group (XXII) when it comes to percent % loss. They are joined by Pattern Energy (PEGI), with all three currently possessing unrealized losses below -4% and below -$200.

Position Changes Last Week

  • OCLR -500 sharesOclaro Falls Off A Cliff. Nothing really good to add here. In spite of beat in Q3 results, future guidance in coming quarters appears weak. No recovery yet from the telecom in China. On top of that there seems to be new short-term weakness in data center demand as well, and low to no near-term visibility when demand would kick in. Got burned for the second time in this sector. First, Applied Optoelectronics (AAOI), now Oclaro. I'm staying away from the fiber optical industry for now. Still watching the sector closely and would probably check if I could re-enter sometime next year as the cyclical headwinds may be turning into tailwinds. There may be a brighter future for the industry in the long-term, but now that is: NO CLARO.

Holdings Earnings Results

Earnings Released Before Last Week:

Stock Quarter EPS Revenue Date Before/After Market
PEP Q3 2017 Beat by 0.04 Miss by $70M Oct. 4 Before Market Open
BAC " Beat by 0.03 Miss by $140M Oct.13 BMO
BX " Beat by 0.14 Beat by $350M Oct.19 BMO
PYPL " Beat by 0.03 Beat by $60M " After Market Close
GE " Can't Compare Beat by $910M Oct. 20 BMO
T " Miss by 0.01 Miss by $450M Oct. 24 AMC
KO " Beat by 0.01 Beat by $240M Oct. 25 BMO
DLR " Beat by 0.03 Beat by $12.52M " AMC
BMY " Miss by 0.02 Beat by $50M Oct. 26 BMO
NEP " Miss by 0.36 Miss by $67.8M " "
MSFT Q1 2018 Beat by 0.12 Beat by $980M " AMC
INTC Q3 2017 Beat by 0.21 Beat by $420M " "

Earnings Released Last Week:

Quarter EPS/FFO Revenue Date BMO/AMC
CONE " Beat by 0.03 Miss by $1.61M Oct. 30 AMC
MDLZ " Beat by 0.03 Beat by $80M " "
PFE " Beat by 0.02 In-line Oct. 31 BMO
BEP " Miss by 0.03 Miss by $21.87M Nov. 1 BMO
HASI " Miss by 0.02 Beat by $3.52M " AMC
KHC " In-line Miss " "
(OCLR) Q1 2018 Beat by 0.02 Beat by $1.09M " "
BABA Q2 2018 Beat by 0.26 Beat by $440M Nov. 2 BMO
PWR Q3 2017 Beat by 0.02 Beat by $290M " "
BIP " Beat Beat by $160.98M Nov. 3 BMO

This is the second week a bulk of my holdings announced results for the quarter ended in September 2017. Majority are really upbeat and reinforce my theses for holding them for growth, yield, or both. Some missed or had negative share price reactions post-announcement and may temporarily make me more cautious of holding them or of increasing their position in the portfolio.

Generally, though, none this week makes me think of selling them, maybe except for Kraft Heinz (KHC). I'm really tempted to sell this holding if things don't get better for them. Hoping the backing of 3G Capital and Warren Buffett still hold sway because this stock truly needs a major M&A to boost growth and counter fears about the uncertainty of its future.

In the previous weeks, the results from NextEra Energy Partners (NEP) prompted me to sell it along with downgrades from various analysts to either neutral/hold and some to underperform. Hoping to get back in this Renewable Energy YieldCo at a price lower than 35. Still long this stock which is now only in my watchlist and not currently in my portfolio.

Earnings reports from General Electric (GE) and AT&T (T) also urge me to sell them. But due to the 0% tax bracket rate limitation of ≤$37,950 on long-term realized gains for 2017 (which includes qualified dividends as well) plus articles that keep arguing to stay long in these two troubled/risky blue-chip dividend stocks for the long-term, make me keep holding them until: [1] 2018 begins, [2] unrealized gain drops low enough that I won't exceed the 0% 2017 tax rate bracket even if I sold them before 2017 ends, or [3] if it drops to a loss below my cost basis of ~16 for GE and ~28 for T.

Upcoming Earnings Releases:

Holding Quarter Reported Date Before/After Market
XXIIT Q3 2017 Nov. 08 AMC
PEGI " Nov. 09 BMO
GDS " " "
DIS Q4 2017 " AMC
JD Q3 2017 Nov. 13 BMO
HPJ " Nov. 14 BMO
OTCPK:TCEHY Q3 2017 Nov. 15 BMO
CSCO Q1 2018 " AMC
CRM Q3 2018 Nov. 21 AMC
MOMO Q3 2017 Nov. 28 BMO
NTNXT Q1 2018 Nov. 29 AMC
BOX Q3 2018 " "
ORCLT Q2 2018 Dec. 14 AMC
MUT Q1 2018 Dec. 21 AMC

^Earnings: this week in BOLD, Italics next week, and afterwards in normal font.

TNot yet official; Tentative date gathered by Wall Street Horizon callers.


CURRENT ACTIONS Towards HOLDINGS

> Sure SWAN/Long Term Hold Action: 27 / 35

What I deem as my "Sleep Well At Night" holdings for now make up the majority of my portfolio with 16 growth yielders and 11 pure growth plays.

  • Yield and Growth: 16 / 27
DLR CONE PEP MSFT PEGI HASI INTC BIP
BX BEP BMY ORCL BAC CSCO PFE AMZA
  • Growth Only: 11 / 27
JD BABA HPJ OTCPK:TCEHY NTNX CRM
PWR MU PYPL BOX GDS

> Watchlist for Possible Reduction or Removal: 8 / 35

  • Yield and Growth: 6 / 8
KHC DIS T
KO MDLZ GE

*AMZA has been moved to the SWAN/Long Term HOLD Action positions.

  • Growth Only: 2 / 8
XXII MOMO

*OCLR: recently closed position.


UPCOMING NEW PURCHASES

Prospective New Buys in Q4 2017 and Q1 2018:

> Existing position increase and former position re-introduction:

  • Yield and Growth: 6 Candidates
BEP PEGI BX AMZA NEP UNIT

*in Bold and Italics: most likely to be re-opened or increased.

NextEra Energy Partners LP (NEP), Uniti Group (UNIT), Pattern Energy Group (PEGI), Blackstone Group LP (BX), and InfraCap MLP ETF (AMZA) are priority-level holdings in increasing their position in the portfolio as they primarily focus on yield coupled with certain growth or value potentials.

  • Growth Only: 5 Candidates
HPJ JD MOMO CARA AMD

Might consider adding more shares of Highpower International (HPJ) if good news comes out on their upcoming ER on Nov. 14. This is still my major speculative play, which is in the lithium battery industry that is poised to continue growing robustly over the next decade as the transition to cleaner power continues.

I'm also deeply considering increasing my stake on Chinese e-commerce retailer JD.com (JD), even if it is already my 2nd largest holding by cost basis. JD is still a bit down but is covered so bullishly recently that it's probably just waiting to pop up with upcoming catalysts: Singles Day on Nov. 11 and its ER on Nov. 13.

Momo (MOMO) has received mixed reviews on its decline recently: ranging from bearish views seeing Momo deserving a lower valuation, towards the more bullish takes on Momo which view Momo's continued rapid growth potential and misunderstood platform to grant it a higher valuation. I'm agreeing a bit with the latter, but I'm currently keeping a cap on this holding as minor speculative growth play for now. If news comes out that validates Momo's continued growth and appeal for years to come, I might increase my stake.

I'm also considering to re-open a position in my previous speculative star winner Cara Therapeutics (CARA) given its focus on alleviating itch and pain, but upcoming catalysts seem to be out of sight for now. I have also been thinking of re-opening semiconductor challenger Advanced Micro Devices (AMD) at a good price and probably after filling up my yield and growth positions. 

Current Position Increases: Highly Likely to be Executed

I already briefed about this distribution-yielding alternative asset manager in my first blog post.

Here is their recent 3rd Quarter Results Press Release and Presentation

Recent SA articles include Blackstone: Own Real Assets In A Growing Economy and Blackstone Enjoys The Goldilocks Scenario.

I also already briefed about this actively managed high-yielding midstream energy ETF in my previous weekly update.

Here is their latest fund fact sheet.

Latest SA coverage includes Bottom Fishing For A 20% Yield On Qualified Distributions and AMZA: Leverage Cuts Both Ways.

> New Prospective Position Initiations

  • Yield and Growth: 12 Candidates
MIC PAC ENB TEP LMRK OHI
AM MPLX PEI STOR SKT HRL
  • Growth Only: 21 Candidates
MTZ BOTZ OTCPK:SFTBY TAL
NPTN DXCM DAIO
INXN CLDR TWMJF FN AMAT
LIT SRPT
SWCH FNSR
OTCPK:BYDDY ISRG
TRXC ENPH SEDG

*Bold and Italics : most likely to be newly initiated in the coming week or quarter.

Top New Prospectives: High Probability to be Executed

MasTec is a non-dividend paying small-cap engineering & construction company. MTZ is a leading national infrastructure construction company operating mainly throughout the U.S across a range of industries. MTZ's activities include the building, installation, maintenance and upgrade of energy, communication and utility infrastructure, including but not limited to: electrical utility transmission and distribution, wind farms, solar farms, other renewable energy, natural gas and petroleum pipeline infrastructure, wireless, wireline, satellite communication, industrial infrastructure and water and sewer systems.

MasTec’s customers are in the following industries: utilities (including wind farms, solar farms and other renewable energy, natural gas gathering systems and pipeline infrastructure), communications (including wired and wireless telephony and satellite television) and government (including water, sewer and other utility and communications work on military bases).

Here's their November Corporate Presentation:

Grupo Aeroportuario del Pacífico, also known as GAP, is a dividend-yielding mid-cap Mexican airport operator. GAP holds concessions to operate, maintain and develop approximately 12 airports, which are located in the western states of Mexico (including major Mexican cities: Guadalajara & Tijuana, and two important tourist destinations: Los Cabos & Puerto Vallarta) as well as the Montego Bay airport in Jamaica.

GAP/PAC is the second largest airport services company by passenger traffic in Mexico. It serves approximately 27 million passengers annually. Its airports accounted for 25% of Mexico’s told passenger traffic in 2016 and 75% of Jamaica’s. As Mexico’s largest private airport operator, it grabbed 1.7% market share in 2016 while operating five of the ten busiest airports in the country. 85% of the its total outstanding shares are trade publicly, both domestically and international. The remaining 15% are held by a strategic partner: AMP (Aeropuertos Mexicanos del Pacífico).

The latest SA article is Grupo Aeroportuario Del Pacifico - Monopoly Business Taking Off Amid Secular Growth Tailwinds.

Here is their November 2017 Corporate Presentation:

Macquarie Infrastructure Corp is a dividend-yielding mid-cap multi-industrial holding company which owns, operates and invests in a portfolio of infrastructure businesses that provide services, such as bulk liquid terminalling & handling services, aircraft fueling, contracted power generation, and utility gas services. 

MIC's operations consist of [1] the largest network of fixed-base operations (FBOs) in the United States at 69 airports, [2] the largest bulk storage terminal business in the U.S., [3] a gas production and distribution business, and [4] a controlling interest in two district energy businesses. The corollary subsidiaries are [1] Atlantic Aviation, [2] International-Matex Tank Terminals (IMTT), [3] MIC Hawaii, and [4] Contracted Power.

The recent SA article on MIC is Macquarie Infrastructure: Investment Grade Balance Sheet, 8% Dividend Yield, Trading At 11x FCF.

Here is their recent 3rd Quarter Results Call Supplemental Materials

I already briefed about this distribution-yielding alternative asset manager in my first blog post.

Here is their recent 3rd Quarter Results Press Release and Presentation

Recent SA articles include Blackstone: Own Real Assets In A Growing Economy and Blackstone Enjoys The Goldilocks Scenario.

Earnings Results Released of High Priority Prospective Buys:

Quarter EPS/FFO Revenue Date Before/After Market
TAL Q3 2017 Miss by $0.01 Beat by $16.45M Oct. 26 BMO
PAC " No Comparison No Comparison " AMC
MIC " Miss by $0.07 Beat by $5.48M Nov. 1 AMC
ENB "  Miss by C$0.05 No Comparison Nov. 2 BMO
MTZ " Beat by $0.08 Beat by $310M " AMC
TEP " Beat by $0.24 Beat by $2.65M " "

Weekly Holdings Updates for Oct. 29 - Nov. 4, 2017

No updates found last week for PEP, HPJ, BOXGDS, MOMO, and AMZA.

>> Post-Earnings:

>> Q3 Earnings Results:

>> Post-Earnings:

>> September Quarter Results:

>> Pre-Earnings:



>> Earnings Results:

>> Pre-Earnings:

>> Post-Earnings:

>> Earnings Results:

>> Q3 Earnings Results:

Nutanix Sees 71 Percent Compound Annual Growth Rate (OTCPK:CAGR) in Customer Purchases in State, Local and Education Vertical

>> Post-Earnings:

>> Q3 Earnings:

>> Pre-Earnings:

>> Q3 Earnings Results:

>> Post-Earnings:

>> Earnings Results:

>> Post-Earnings:

>> Q3 2017 Financial Results:

>> Pre-Earnings:

>> Post-Earnings:

>> Q3 Earnings Results:

>> Pre-Earnings:

Portfolio Summary November 3, 2017

Disclosure: I am/we are long DLR, JD, CONE, BABA, PEP, MSFT, HPJ, PEGI, HASI, TCEHY, INTC, BIP, NTNX, BX, CRM, PWR, MU, PYPL, BEP, BOX, BMY, ORCL, BAC, GDS, AMZA, CSCO, PFE.

Additional disclosure: Not currently in the portfolio, but I am also LONG NEP.

I am NOT currently long with my positions in KHC, DIS, T, KO, XXII, MDLZ, MOMO, and GE.