Investment Club-Nov 2009

My investment club, Club YenoM, decided to sell all of our Oracle (ORCL) stock.  Factors that led us to this decision are:

1.      We had more stock in the Technology sector than we wanted (32% vs 25% desired)

2.      We already own Microsoft and the group felt better about the future of Microsoft and, at a minimum, we understand how they make money better

3.      We are attempting to lessen our exposure to large cap stocks

4.      The projected annual return (PAR) is 12.6% while the overall porfolio’s is 15% so selling ORCL and replacing it with higher PAR stocks will improve the expected return of the portfolio

We decided to hold on to $200 of the proceeds from the sale to invest next month.  The remaining money from the sale will be equally divided between FTI Consulting (FCN) and NVE Corp (NVEC).  Here’s the reasoning.

1.      FCN is a mid cap and NVE is a small cap thus improving our position in those sectors

2.      Both companies had PAR’s in excess of 16% which is better than ORCL’s

3.      FCN is in the financial sector

4.      NVEC is in the technology sector so we didn’t reduce tech as much as the sale of ORCL might indicate.  Our desire to improve PAR overrode the technology sector diversification needs

Next month we will be on the hunt to add an additional stock to the portfolio with almost $2000 in cash.  We decided that the stock should be a small or mid cap and NOT technology.