Vinod Kurup

Hospitalist/programmer in search of the meaning of life

Aug 1, 2005 - 3 minute read - Comments - investing quarterly

Quarterly Sells

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%