Investment Club - July 2010

Only four members in attendance at this meeting - attendance always goes down in the summer. We did not present any new stocks at this meeting.  We didn't have an updated spreadsheet so our portfolio review was just cursory.  Regardless I think we made good decisions.

Number of Stocks:  14 (goal is 16 plus or minus 4)

Company Size:  We assume this is still the same as last month.  Large, Mid and Small are all out of tolerance.  Our intent was to lower large cap and increase small or mid cap.
Sectors:  We assumed this is still the same as last month.  All in tolerance except for Technology.  We decided that whatever we did we would try to lower our exposure in Technology and at a minimum we would not increase it.
Individual Stock Percentage:  Neutral Tandem (TNDM) is  too low as a percentage of our portfolio.  Our methodology says that we need to sell or add more. 
Percent Annual Return: in the sweet spot but on the low side
Quality: Good
Growth: in tolerance but on the low side

Individual Stocks analysis:  Two stocks are of concern.
Neutral Tandem (TNDM) due to being a small percentage of the portfolio and the news on Apollo (APOL)is not good.  Irene sent out before the meeting some analyst notes about Apollo.  Most telling was the comment by one analyst that an investor should "forget about it".  Also, the PAR for Apollo is 28 which is well above the sweet spot and just too good to be true.


Our intent this month is to maintain PAR and Growth while improving Mid and Small company size while addressing the stock that is a small portion of the portfolio.

DECISION:  Sell all of Apollo based upon the negative news and our poor expectation about the future of the company given the government take over of college funding (for profits will most likely be squeezed by the government).  With the proceeds from the sale and our available cash we voted to purchase $3,000 worth of US Ecology (ECOL) and about $1800 of Neutral Tandem (TNDM).  Both stocks are small cap and have PAR's in the sweet spot.  The purchase of additional TNDM also raises its percentage of the portfolio into the acceptable range.

Investment Club - June 2010

Five members in attendance at this meeting.  Terry presented a new stock to the club, American Science Engineering (ASEI).  The company engages in the development, manufacture, marketing, and sale of X-ray inspection and other detection solutions primarily for homeland security markets in the US and internationally.

Number of Stocks:  14 (goal is 16 plus or minus 4)

Company Size:  Large, Mid and Small are all out of tolerance.  We need less large and more mid and small.
Sectors:  All in tolerance except for Technology.  We need less technology but are getting close to our goal of no more than 25% (now at 28.1%)
Individual Stock Percentage:  Two stocks Hornbeck (HOS) and Neutral Tandem (TNDM) are too low as a percentage of our portfolio.  Our methodology says that we need to sell or add more.  This is the first time since we've adopted this methodology we have TWO individual stocks out of tolerance.  Last month Sun Power (SPWRA) was too low and we decided to sell.
Percent Annual Return: in the sweet spot but on the low side
Quality: Good
Growth: in tolerance but on the low side

Individual Stocks analysis:  Two stocks are of concern.
Hornbeck Offshore Services (HOS) not only is too small a percentage of the portfolio but its PAR is just north of zero (was negative last month) and Neutral Tandem (TNDM) due to being a small percentage of the portfolio.


Our intent this month is to increase PAR and Growth while improving Mid and Small company size while addressing the stocks that are a small portion of the portfolio.

DECISION:  Sell all of Hornbeck (HOS).  The current long term outlook for the oil related stock is not positive and the club does not have enough information to determine if the market has over reacted to depress the price or if there is a fundamental long term down draft for the oil industry.  Removing HOS from the portfolio improved PAR if we use the funds to purchase a higher PAR stock.  The overall quality of the portfolio is improved as HOS quality is only 32 with 65 or higher being quality on this 1 to 100 scale.

Buy American Science Engineering (ASEI) with the proceeds from the sale of HOS and available cash.  ASEI has a PAR of 15, quality of 70.6, and a 16% growth rate improve all three of these factors.

Continue to hold Neutral Tandem (TNDM) although it is a small holding.  Our belief is that the price has been driven down unfairly by a recent lawsuit that has not been ruled in its favor.  TNDM is a well managed company so we plan to hold on and to add to the holding in the future.

Apollo (APOL) is on the hot seat for next month.  We don't like the fact that the government has taken of the college loan programs.  The government will most likely tighten down lending at the for-profit colleges like Apollo which will hurt profitability.  On-going lawsuits are another concern.

Investment Club - Jan 2010

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.

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)