Portfolio Update 12.31.20

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December 31, 2020

Here’s the portfolio as of the New Year…

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As a reminder for new readers — I view my portfolio in a bucketed approach — Core, General, Option — here’s a snip from a past post covering the topic.

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One addition to the Core group — Rubicon Technology (RBCN) — I no longer feel this is an optionality-bet alone as management has done a good job of stabilizing / turning what remains of the core business.

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
  • Gilead Sciences ($GILD) — New addition
  • Have followed this company for years and it’s been a consistent market underperformer. The recent potential for COVID drug sales led to a rally in the stock earlier this year which has since flamed out. Revenue from COVID-related products isn’t significant and I’m not really worried about that. What’s interesting about the name — the Hep C products from years past drove massive upside in revenue and cash flow which is practically gone BUT they’ve replaced all/most of that revenue with new HIV related products that still have good runway for growth. They’re wrapping up a new acquisition with some late stage products too. It’s a cheap stock on current cash flows and if they can get some traction in revenue growth then the narrative could turn quickly with such low expectations. I’ve always been a huge fan of the “5-year dog” investing strategy looking for stocks with very little expectations built into them.

  • PDL Biopharma ($PDLI) — New addition
  • A liquidation play. They filed liquidation-basis financials recently and the net proceeds indicated ~30-40% upside from the current share price or so. They also announced an asset sale at carrying value so more assets are turning into cash.

  • Franchise Group ($FRG) — New addition
  • I finally caved and added a small ~1.3% position in this name… Mainly to start the process of doing some additional research. At $30/sh it’s a $1.2bn market cap and operating cash flow was $200m over the last 12 months. Even though the stock is up quite a bit, it still might be cheap here. A few other things pique my interest: consumer finances are strong and should support growth in this business for a while; the franchising effort should generate plenty of cash for further growth / acquisitions.

  • Blucora ($BCOR) — Exited
  • This stock has rallied quite a bit and while I think the core TaxACT business will recover from the difficult 2020 year, I like H&R Block quite a bit better as a cheaper / pure-play on the tax and accounting industry. Blucora has invested significant amounts in their tax-based wealth management practice which seems to be performing just fine for now. This business is a moderately levered tax software + investment manager.

  • Xperi ($XPER) — Exited
  • I first bought this stock in the fall after a flurry of insider buying. Xperi announced a big settlement with Comcast which renewed some licensing income for them and will help boost cash flow. It still looks pretty cheap based on the recurring cash flows in the business. But it has traded back to its historical average cash flow multiple and I wanted to use the proceeds for some other positions.