Having come into 2015 several of our portfolios needing rebalancing. Several positions had become over-weight and prudence required re-allocation. All portfolios have a long bias, with differentiated objectives such as timeframe, income versus growth, risk tolerance and passive versus active.
The first portfolio requiring re-allocation is primarily geared towards income production that will be a primary source of retirement income within the next 3-5 years. Preservation of capital is paramount.
The second portfolio needing adjustment has a primary tilt to growth with a timeframe of twenty years or more. Limiting permanent loss of capital is paramount in our search for compounding.
Price trend UP was of the utmost importance. During the last year several of our core holdings had been dragged through the mud. With many of them the story changed, and with some the narrative did not. Ultimately, price pays and even in the Income portfolio price behavior will be used to adjust position size and holding timeframe.
Before I conduct any individual screens I like to look at the broad market. For that I use a proxy of SPX.
Long Term tend is up. Over the past few weeks we have seen an increase in volatility, and as you can see on the Renko style chart we have a new downtrend that has formed. Over the past three years the majority of these have lasted 3-4 weeks. I am not a Stat guy, so feel free to annotate my post with the specifics. i view the long-term trend as up as long as we to not get a sell signal from the Chandelier exits and/or a weekly close below the 50 period moving average.
Now lets get to what popped up on the scans.
For ease, I have included a link to Finviz with the stocks here –>goo.gl/5ktdct .
PEP has shown remarkable strength in the previous 3 years. With only two tests of the 50 period MA. Of note is what appears to be stiff resistance at $100.
MKT CAP: 141.3B
Concerns: Mature, Low growth Business.
MACK is a Pharma Company specializing in Cancer and Oncology drugs. The trend has been up since a low in November of 2013.
Concerns: You have to manage risk with any investment, and pharma is the poster child for risk management. In three years you might have ridden this from $10 to $2.50 back up to $11.43. Define your risk and timeframe.
SAIA is a trucking company. Transports as a whole have trended higher in previous periods.
Concerns: General Market risk. Transports will be a leading indicator to the market and the economy.
FRGI is a fast casual restaurant operating in restaurants in the United States, Puerto Rico, the Bahamas, Ecuador, Guatemala, Honduras, Panama, Trinidad & Tobago, Venezuela, and the Dominican Republic.
Concerns: Fast Casual is a Hot sector. The American eater is hungry, so there is that.
NATH is a Restaurant operator operating in the United States and internationally.
MKT CAP:358.9 M
Concerns: Stock Liquidity. See comments for Fiesta…Feed me.
WWAV is Food and Beverage Company specializing in Natural and Organic foods.
Concerns: Organics are very different that Nathan’s and Fiesta. Anyone who doubts how sensitive to recessions the organic Sector is needs to take a look at WFM on a LONG time frame.
RSG is a Waste Disposal Company.
MKT CAP: 14.42B
Concerns: The fundamentals are hot, but this Company has my attention.
PLOW is engaged in the design, manufacture and distribution of snow plow equipment.
MKT CAP: 475.4M
VDSI develops and markets systems to secure digital assets on a global scale.
MKT CAP: 1.1B
Concerns: This has been a sector on fire of late. Valuation.
IBN is a Money Center bank operating primarily in India.
MKT CAP: 33.85B
Concerns: Ummm, It is India. While this Country may grow at a high rate, fraud and crime are a concern. Testing resistance from 2007/2008.
GEO in an REIT that operates detention facilities in United States, Australia, South Africa, the United Kingdom, and Canada.
Concerns:Market and Geopolitical Risk.
UGI is a diversified Utility Operating Primarily in Pennsylvania.
Concerns:Regulated Utility. Interest Rates. Sector has been hot. Valuation versus safety.
I may enter or exit positions in one or all of the above Companies at any time in the future. Positions will be likely be hedged. Trade and invest at your own risk.
I am on Twitter and Stocktwits @Bucky_36 . Feel free to harass me there.