I don’t trade often because I am a disciplined long-term investor. However, I have just completed 3 new buys, and 1 complete sell (plus a variety of normal rebalancing trades) within the Blue Harbinger Disciplined Growth portfolio. I have also updated the “Buy Under” prices (and thereby ratings) of a variety of existing positions within the Blue Harbinger Income Equity portfolio and the Disciplined Growth portfolio. This report reviews all of the latest updates, as well as why I believe these two portfolios are positioned for continuing long-term success, in a big way!
Overview:
Before I get into the details of all the latest updates, here is a link to my existing Top Idea Portfolios (the Disciplined Growth portfolio and the Income Equity portfolio). You can see the names of the three new buys (U, FUBO and NET) in the Disciplined Growth Portfolio highlighted in green, and the one complete sale (SWKS) highlighted in red. Additionally, you can see the “Buy Under” prices that have been increased highlighted in green, and those that have been decreased highlighted in red (this includes both the Income Equity and Disciplined Growth portfolios). Also, when the “Buy Under” prices are adjusted (as many of them just have been) it impacts the ratings (recall the holdings are rated as one of the following: “Top Buy, Strong Buy, Buy, Hold, Review.”
And the above ratings are updated in real time as the market prices move. As a reminder, I provide these portfolio updates once per month, and this is the April update.
The new Purchases:
1. Unity Software (U)
Unity is a software development company that provides technology solutions to video game publishers. You can access my full report on the company from within the portfolio tracker tool. I purchased shares of this company for a combination of reasons, including its very high revenue grow rate, its large total addressable market (it has a lot of room to keep growing for a long-time), its valuation (valuation has become more attractive as the shares have sold off dramatically this year, thereby making for a very attractive entry point), and simply because I like the business.
Arguably, this one has sold off way too far this year, as it got caught up in the “healthy sell off” for growth stocks this year, but the sell off went too far as investors have been punishing any names that Cathie Wood’s Ark investments is big on (she likes Unity). Regardless, the combination of growth and valuation made this one too hard to pass up, and I added shares. I expect to be a long-term owner, and I expect the shares to eventually go dramatically higher (although it will likely be a bumpy ride). Hang on because this one has a lot of long-term room to run. I have a healthy 2% position size of Unity within the Disciplined Growth portfolio.
2. FuboTV (FUBO)
FuboTV is a “sports first” streaming platform, and it is also an extremely polarizing stock. Many investors love the extraordinarily high sales growth rate (which is expected to remain high for years), while other investors decry the lack of profitability (yet) and very low margins. I am taking the long view here (it’s got a ton of upside), and the recent sell off has been so overly violent that this one was just too good to pass up. I am starting with a 1% position size. You can access my full report on Fubo within my portfolio tracker tool.
3. Cloudflare (NET)
Cloudflare (NET) is one of the leading cloud-based platforms that provides network services and internet security solutions. Admittedly, I should have researched this name in depth a year ago when the growth was becoming increasingly apparent. The shares are still not cheap, but the continuing growth potential is massive and the business is sticky (high customer retention rates). The shares have sold off this year as high-growth stocks in general have sold off across the board. I wish they’d have sold off more, but the best opportunities are never going to be “cheap.” I have initiated a 0.5% position in Cloudflare.
The Complete Sale:
Skyworks (SWKS)
I sold 100% of my position in chipmaker Skyworks (semiconductors) for a large profit. I still like the name, and the ongoing long-term growth potential remains high, however I wanted to make room for new investments (such as the ones described above). Plus, I still own semiconductor stock Nvidia (NVDA). Skyworks is less innovative and more of a bulk outsourced chip producer, whereas Nvidia is a high-end innovator at the forefront of the ongoing chip-enabled global digital revolution.
The Rebalancing Trades:
In addition to the 3 new buys and 1 complete sale (as described above), I completed a variety of normal rebalancing trades to bring position sizes back towards their target weights, and to help raise a little cash for the buys listed above. Briefly:
Reduced Position Sizes:
Nvidia (NVDA): I sold half my position. Chipmakers (such as NVDA) have performed extremely well. And even though they are great businesses, I wanted to make room for other opportunities.
Fortinet (FTNT): I sold half of my position in this internet security stock. The shares have soared dramatically higher since I purchased them (thanks only in part to the need created by work-from-home during the pandemic), and they have a lot more upside ahead. But the valuation is not cheap, and I wanted to make room for other opportunities.
Salesforce (CRM): I reduced my position here. Salesforce is a very healthy long-term growth stock, but I am simply making room for other opportunities, particularly as many top growth stocks have gotten cheaper so far this year.
Increased Position Sizes:
Snowflake (SNOW): I added to my very small position in this cloud-based data platform company. It’s still a small position, but this is a highly attractive growth business (it’s actually astounding how quickly and how long this one can grow), and the valuation has come down a bit (it’s still expensive, but not compared to the long-term growth potential).
Enphase (ENPH): I added to my small position here, and it is still a small position in the portfolio, but the growth trajectory and leadership position of this company are impressive. Enphase makes equipment that is used in the conversion, as well as storage, of solar energy. Impressive business.
Teladoc (TDOC): Based on the name you might recognize this business is about tele-health. It has a truly enormous long-term growth opportunity, and it is the leader in the space, especially after its merger with Livongo. The shares have sold of quite a bit recently. I’d recommend buying a few shares, and don’t let go! Long-term—this one can go much higher. I now have a 3% position in TDOC within the Disciplined Growth portfolio.
Notable Updates:
Oaktree Specialty Lending (OCSL): My Income Equity portfolio position in the Oaktree Strategic Income Fund (OCSI) merged with Oaktree Specialty Lending, and now trades under the name and ticker of the latter (OCSL). OCSL continues to provide very high income, plus the potential for price appreciation, as this well managed investment firm (Oaktree) continues to take advantage of dislocation created by the pandemic (i.e. the pandemic continues to create attractive “buy low” opportunities that will also produce high income.
The Geo Group (GEO): I sold my position in this big-dividend REIT a few months ago, and the new White House has really twisted the screws on this so called “for profit prison.” Specifically, government contracts are drying up, and it appears GEO will relinquish its REIT status as it goes into survival/reinvention mode. Dodged a bullet here.
The Bottom Line:
Both the Income Equity portfolio and the Disciplined Growth portfolio remain well-positioned for continuing and powerful long-term success, in their own unique ways. Specifically, the Disciplined Growth portfolio continues to own top growth stocks with extremely powerful upside potential, and I believe it will continue to significantly outperform the S&P 500 by a wide margin in the years ahead. And the Income Equity portfolio remains laser-focused on its primary goal of providing high income, plus providing gains that outpace inflation.
You can view the growing long-term track records of top performance and success for both strategies above. And depending on your goals, both strategies provide top ideas for you to consider as you customize your own portfolio. Just remember, disciplined, long-term, goal-focused investing it a winning strategy. Always keep your eye on the prize (i.e. your investment goals), and don’t chase opportunities that are not right for you. Be smart.