Uncomfortable - Model Portfolio
This is the small to mid-cap portfolio that I always wanted to build.
30+ years wandering through “macro-wasteland” made me present the “comfortable” portfolio in the prior post.
If I could just say “f—- Jerome Powell and all his minions”, I could own the portfolio below.
The world is an unpredictable place. Who knows when a Russian lunatic, with a funny name, could gain control of nuclear weapons? Who knows when a few credit card companies and a once great political party could make an 80 year old guy our military leader. Before everything is turned to ashes, I had to present a portfolio I could be proud of.
If my 20 year old nephew came to me said, “build me a portfolio for the next 40 years'“, I would be deeply conflicted. I cannot ignore Verizon, Tyson, and other big caps that Wall Street has abandoned, However, in my “heart of hearts” I know I can add more “alpha” in the portfolio below. Trying to combine the approaches was just getting too difficult to explain.
On a relative basis, the portfolio below has seldom, if ever, been “cheaper”. However, our world, economy, and banking system, have enormous problems.
I wish I had the answer. Right now I have two solutions to the same problem. I try to write with as much honesty as possible. That is why I called this blog “Stock Picker’s Journey”, I am not really sure exactly where I am going.
Going forward my focus will be 80% small to mid-cap, and 20% large cap.
Market cap < $10 billion - which today is called small to mid-cap
Top 10 ideas:
Red Rock Resorts - RRR - dominant in the “locals” market
Kirby - KEX - barge business helped by cheap gas causing petrochemical growth
Azenta - AZTA - tech company transformed into key genomics supplier
Argan - AGX - we need more gas-fired electrical base load plants
Phibro Animal Healthcare - PAHC - animal feed with a dog “kicker”
Helmerich & Payne - HP - balance sheet to survive the bad times
Cable One - CABO - rural cable has better economics
Ashland - ASH - this corporate transformation could be a fairy tale
Scotts Miracle Gro - SMG - long-term marijuana winner
Ingredion - INGR- corn starch does amazing stuff
Economically sensitive:
Brunswick - BC - consolidating the boat builders
Williams Sonoma - WSM - an internet furniture story
Macy’s - M - maybe the department store survivor?
Steve Madden - SHOO - interesting fashion business model
Oxford Industries - OXM - a sneaky fashion story
More growth oriented ideas:
Apollo Medical - AMEH - my favorite growth stock, physician centric health care
Acadia Healthcare - ACHC - leader in mental health care
Chart Industries - GTLS - maybe the best “green energy” play
Royal Gold - RGLD - badly need financial help for small gold producers
First Watch Restaurant - FWRG - neat breakfast for lunch concept
Marginal Ideas:
Cullen/Frost Bankers - CFR - very conservative culture
Patterson - PDCO - dental supplies still growing
Middleby - MIDD - restaurant equipment leader
Allete - ALE - unusual utility, leader in non-carbon energy
Lindsay - LNN - global irrigation supplier
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Best Ideas to Consider:
FirstCash Financial - FCFS - pawn shops, someday bigger than JP Morgan?
Ziff-Davis - ZD - internet advertiser, must understand better
Viad - VVI - can I live with the balance sheet?
Daseke - DSKE - consolidating flat-bed trucks
Unifi - UFI - a true value stock, yarn from plastic bottles?
Marcus - MCS - can movie theaters come back?
Motorcar Parts - MPAA - What are the guys at 325 Capital doing?
Rocky Brands - RCKY - small cap fashion?
Bowlero - BOWL - the crazy world of SPAC’s
Lindblad - LIND - want to go to the Galapagoes?
SunOpta - STKL - they do a great presentation, can they make money?
Bloom - BE - big backlog in green energy
John Wiley - WLY - my top AI company
Foot Locker - FL new management on board
Monro - MNRO - smart guys in a tough business
Coursera - COUR - can an education stock ever work?
Elanco - ELAN - drug company spin-out
Nexstar - NXST - smart TV station consolidator
Kyndryl - KD - a weird technology spin-out
Howard Hughes - HHC - can you trust Bill Ackman?
MP Materials - MP - is this a real business? rare earth minerals
Douglas Dynamics - DOUG - snow plows in summer
Thor - THO - Airtsteam motor homes for the elderly like me
Heidrick & Struggles - HSII - need to find a board member?
Trinity Industries - TRN - railcar production leader