Portfolio Update 12.15.20

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December 15, 2020

Here’s the portfolio as it stands today…

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As a reminder, I view my portfolio in a bucketed approach — Core, General, Option.

  • Core positions are the ones I look to hold for years as capital allocation / growth play out.
  • Generals are either plain old cheap stocks, special situations, or some other random value play.
  • Option positions are not actual option contracts (most of the time), these are a slew of small bets with optionality — highly levered businesses, turnarounds, negative EVs, cash shells, etc.
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My core holdings are unchanged — Bebe Stores, Viatris (Mylan), B Riley, Meredith, Deluxe, Berry Global, and BMW.

Check out the website for recently added content.

Commentary on the portfolio…

  • Have rotated out of a few names and into a few names so Cash has dropped a bit on the whole
  • PNC — Exited this position after the BBVA announcement. I think PNC is a well-run bank but I was a bit disappointed by this deal. Not because the price was high(ish) at roughly 1.3x tangible book value and 19x 2019 earnings but because it was small relative to the PNC asset base. They were much more aggressive in ‘08-09 by nearly doubling assets via the National City deal. The balance sheet was much stronger today and they could have had a larger / cheaper bank deal if they so chose.
  • QRHC — Recently wrote about this one. It’s a smalls take for now at < 2% but I want to see how this recent acquisition plays out before allocating more cash to it. This has a chance at being a cash-flowing growth machine with more potential for deals. Seeing as this is management’s first acquisition, it’s fair to want to see how they do with it out of the gate.
  • SBH — This is also new and I’ll plan on writing about it soon. Sally Beauty is a beaten-up retailer / wholesaler in the cosmetics industry serving consumers and salons. It was once considered a “compounder” but has essentially been left for dead after SSS started declining. I think they’re turning the corner in getting back to growth, they have a bright future in serving the solo stylist in a morphing hair care industry, they generate a ton of cash, and have a fledgling e-commerce business that is shining.
  • VTRS — Mylan is now officially Viatris. Cheap, solid balance sheet, returning capital to shareholders.
  • RBCN — I’ve been adding to this as it morphs from an Option bet to more of a General (maybe someday even a Core!). It still trades below net cash on the balance sheet yet they are actually turning the operating business into a net income generator. They’ve started to buy back stock well below book value and have held book value steady after shuddering their loss-making businesses. Good management and a good board here as well.
  • HRB — This stock has drifted lower again and I’ve scooped up some additional shares. I like it as somewhat of a trade on the 2021 tax season (along with Blucora). Management likes it so much they just repurchased 5% of outstanding shares in the last quarter at depressed prices.