Portfolio Update 2.28.21

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February 28, 2021

A collection of cheap stocks…

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Has been a while since the last portfolio update! And things are changing.

I’ve exited a handful of positions and trimmed a few others. Trading activity is getting to the point of ridiculous in some cases (see $RCMT below). I’m cashing out as much as I can where it makes sense and building up positions that seem rational or just plain left behind in this market. I’ve added to both generics makers Teva and Viatris recently.

Just about every position below the 2% mark is either an Option bet or a starter position in something that could become larger over time. I’m also doing my best to resist the urge to sell any shares of B Riley!

Cash is running up at nearly 12% of the portfolio which seems appropriate right now.

Don’t get me wrong, I’m actually fairly bullish on the economy, consumer activity, output, etc.

I don’t have my portfolio “positioned” for an economic rebound or reopening. I simply look for cheap businesses that are doing reasonable things with the cash they generate (and nearly all of them generate plentiful cash). My hope is to find things generally uncorrelated with the market but that’s easier said than done. Mostly I’m attracted to beaten up industries or stocks that offer low low prices. This is a turn off for most folks but my focus has more than just the “quantitatively cheap” aspect to it.

  • Quest Resource Holdings ($QRHC) — Exited
  • This was a short-lived position. They announced a transformative acquisition that doubled the business. The announcement was light on financial details and execution was still a question mark. With those pieces in mind, I sized it small as an Option bet. Shares jumped 60% without much change in the outlook.

  • RCM Technologies ($RCMT) — Exited
  • Another sign of the times… On no “real” news this stock went from $1.50 to nearly $9 per share! The story was an interesting one with some break-up potential and insider buying but this was just ridiculous.

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  • Northrop ($NOC) / Lockheed ($LMT) — New Positions
  • I like inexpensive stocks and these fit the bill. They are starter positions as I dig in a bit more. I wrote about Northrop in a Quick Value post a while back. And just wrapped up a slightly more in-depth piece on both Northrop and Lockheed. Both of these stocks look good to compound at mid-teens rates or better over the next few years. They may even be solid long-term holds!