Investment Club YenoM recently met with 7 members in attendance. Our portfolio is in pretty good shape based upon the criteria we are using to manage it. We need to add more small cap stocks that are not in either the technology or healthcare sectors.
We decided to sell all of our Linear Technology (LLTC) stock and use the proceeds of the sale and $1,000 in cash to purchase Neutral Tandem (TNDM). Neutral Tandem is a company that provides “interconnection services principally to competitive carriers, including wireless, wireline, cable, and broadband telephony companies in the United States.”
We made these decisions for the following reasons:
Sell LLTC:
1. Lowers our technology holdings which were above the amount the club set as the upper threshold
2. No one in the club has the background to properly understand and follow the products produced by LLTC
3. Eliminates the next to the lowest PAR stock in the portfolio (PAR was 8.3% vs portfolio PAR of 14.3%)
The only downside of selling LLTC was it lowered our percentage of stocks of the mid cap size - something we are trying to increase. However, the positive aspects of reducing the holding outweighed this negative.
The only downside of selling LLTC was it lowered our percentage of stocks of the mid cap size - something we are trying to increase. However, the positive aspects of reducing the holding outweighed this negative.
Buy TNDM
1. Adds exposure to a new sector (Telecom)
2. Increase our small cap holdings which were well below the targeted amount
3. Increases the overall PAR for the portfolio (PAR for stock is 19.2% vs 14.3% for the portfolio)
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