I try to do my portfolio cleanup every 3 months, selling any companies that don’t fit my strategy and buying new ones that do. So, I’m selling 5 stocks. I haven’t decided on my buys yet, but I’m looking at BAMM, BZ, CALM, ESP, PWX, SCX and SRT (among others).
|Stock||Purchase Date||Total Return||Reason for sell|
|Ameron (AMN)||7/7/2004||11.27%||No improvement in the financial results over the past year. I got sick of their ridiculous executive compensation. CEO took home $17 million last year, while net income for the company was only $13 million. ||
|Ashworth (ASHW)||7/7/2004||0.75%||I probably should’ve sold this back in February or May when it was in the 11’s. Instead I sold it about where I bought it at $8. Still undervalued, but its fundamentals aren’t as promising as they were a year ago. They’ve taken on an acquisition which seems a little outside their circle of competence. They’re a golf clothing company and they bought a hat company specializing in college sports and NASCAR. Doesn’t quite fit. Share count is increasing, no free cash flow, taking on more debt, return on assets decreasing, CFO left. I claim failure on this one. ||
|Building Materials Holding Corp (BMHC)||9/13/2004||246.94%||It’s hard to sell a stock that has been on such a run, but it’s even harder to watch a stock tank when you knew you should have sold. Of course, I have no way of knowing if BMHC will tank, but I do know that it doesn’t meet my criteria for a stock in my portfolio. I bought this last year because I noticed that it had a PE ratio < 10, a P/B ratio near 1, and it was paying a dividend. The P/B ratio is now over 3, so it’s no longer such a great value. It’s benefitted from the great housing market nationwide, but I don’t think that can last forever. Again, BMHC may go up from here, but that’s OK because I’m only interested in owning stocks that fit into my philosophy - small and cheap. ||
|Flagstar Bank (FBC)||11/1/2004||-8.14%||See my post about Flagstar earlier this summer. On top of that, they guided for an EPS this quarter fo $0.45 to $0.60 and got $0.44. They still have no information on why the auditor quit. They’re hiring 2 big-4 accounting firms to help with compliance, in addition to another auditor for their general financial statements. I also don’t quite understand how to evaluate financial companies, so I’m bowing out now. ||
|Merck (MRK)||9/25/2004||-2.00%||I bought this before I’d decided to focus on small caps. Merck just doesn’t fit into my philosophy (small value). I think the Vioxx concerns are overblown, but I also wish Merck would’ve been more upfront with physicians from the beginning. I think taking Vioxx off the market was the right thing to do, even though I think Vioxx probably has some value in certain uses. Bottom line is that I’m a small cap investor, so no more Merck. ||
Here are my current holdings.
|Stock||Purchase Date||Total Return (so far)|
|Deswell Industries(DSWL)||9/20/2004||17.09% ||
|Patrick Industries (PATK)||2/1/2005||-6.48% ||
|Outlook Group(OUTL)||2/1/2005||33.09% ||
|All American Semiconductor (SEMI)||2/1/2005||-2.09% ||
|Duckwall-ALCO Stores (DUCK)||2/1/2005||24.21% ||
|Cobra Electronics (COBR)||2/1/2005||15.92% ||