As investors, many of us end up with one or two stocks that become larger positions in our portfolio for a variety of reasons. I’m curious to hear what some of the community’s largest holdings are and the investment thesis behind them.
Please note this is meant for general discussion and education only. I am not recommending anyone buy or sell any specific stocks mentioned. The goal is to learn about different analysis frameworks and approaches.
Thanks for sharing.
My Disclaimer before any stock specific post
This is not investment advice. Please do your own research. I have positions in the securities below. All investments carry risk.
Before I jump into the largest positions. A very quick overview of my Portfolio approach. I follow the Peter Lynch Portfolio template wherein the Portfolio is diversified not only by number of companies/industries but also types of companies, maturity, risk and return levels.
The Portfolio contains (1) Fast growers (2) Stalwarts (3) Cyclicals (4) Asset plays (5) Slow growers (6) Turnarounds.
Fast growers are companies that are experiencing fast earnings growth say 15-20%. The faster
rate of earnings growth should eventually lead to an increasing share price (all other things same).
My largest positions are FB and Google which are very good examples of Fast Growers. Phenomenal businesses with solid competitive position, market leading products, growing 15-20% revenues and earnings. They generate solid free cash flow (which is the cash available to a business after all expenses and capital investments), high returns on capital and keep re-investing in the business.
FB is still founder led (touching on @saad’s point). Google till recently was founder led but now they have an outside Management team.
Worth mentioning that diversification beyond 15 or 20 different equities does not yield any additional diversification or benefit… ie over diversification… i am guilty of this behavior as well.
Fair point. Position sizing and level of concentration is another big topic for discussion. I have seen expert investors be successful with 5 stocks, 15 stocks as well as hundreds of stocks (Peter Lynch). What I have learnt is one has to invest with an approach that one can be comfortable with.
I am in the 20-30 stock portfolio camp. That is concentrated enough and still diversified such that one or two stocks will not kill my portfolio. I have larger positions and then some medium sized positions. I do not have a lot of tiny positions. My typical position is 3%-5%.
Good topic.
As has been mentioned on this thread, allocation comes down to an individuals knowledge base and comfort level with equities/market etc.
I would like to echo Br Huseins post, that maximizing returns is more fruitful with concentration.
Investing significantly into companies that solve a need, and have shown solid performance in an industry that has a large addressable market is key.
Which is why Crowdstrike is a great choice. Inshallah they have a long runway ahead.
Another player that comes to mind is Nvidia (NVDA). They address so many needs and are multifaceted on top of it. Very solid track record of growth
Concentration below 15 stocks can get quite difficult. You have to know yourself and your skills , tolerance for volatility etc.
8-12% returns over a long period of time (30+) can go a long way to build wealth and preserve it as well. Often we think we need 15-20-25% kind of returns…
Anyone else wants to chime in on their largest position / current best idea ?
My largest holding is Intel and constitutes a sixth of my portfolio.
Intel is behind its peers technologically. In fact, its been lagging its peers from about 2014 onwards. For this reason it is currently very cheap and trades around an EV/EBIT 10-11. There are a number of reasons why I think this may turnaround:
I think capitalism is law of the jungle. No.1 rule is to adapt to the environment. But the best placed to adapt is the biggest, strongest.
Capitalism is also about survival.
Intel has been competing in the semiconductor industry since the 70s with AMD. Neither has ever been completely wiped out (though it has been close). AMD ascended to new highs in the mid noughties when they competed with Intel in terms of tech but never took a greater market share than Intel.
I think I’ve purchased at a valuation that if Intel simply exists (i.e not even market leader) in 10 years time, I will probably have made a decent return.
The new CEO of Intel, Pat Gelsinger, is probably THE guy to turn Intel around. He started his career at Intel, under the mentorship of Andy Grove but left to join VMware when his upward path through the ladder at Intel was blocked. He has now rejoined as CEO. So far, I think he has organised the right people to take Intel forward and made a plan that continues and expands chip fabrication to compete with TSMC. I think this is the right approach in the long term.
He talks about his job in missionary terms and is very inspiring. I recommend you watch him on youtube.
I don’t think the American semciconductor industry will be allowed to fail. Intel’s biggest competitor is TSMC, and effectively a proxy for Chinese soft power. Biden has made it clear the importance of semiconductors to America. In short, even if Intel gets into trouble I don’t think it will be allowed to fail, because America wants to assert its power through its tech giants.
Risk of loss
In tech it seems to be that the dominant player takes the majority of the market whilst competitiors take scraps only. It’s conceviable that Intel’s market share could be decimated in which case I could suffer a significant loss in this position. But I could probably hold unless Intel’s financial resources dwindle and I lose confidence in management, in which case, this might be the final straw and I should probably sell.
But if i lose 66% on this position, because I’m early on in my investing career this is still recoverable with approx 1/3 year savings. I don’t think I would take this level of risk on close to retirement.
If anyone interested in IT Cyber Security technology ETF’s in these you are getting the best exposure to all good performing companies. Below are the Cyber Security ETF:
CIBR / HACK / BUG / IHAK
My stock investment is big & small I follow the trail where I see opportunities some time I am happy with 5% or I will hold it until I make 20% depends on the stock and market re-search
Below are some ticker I am holding in my portfolio:
C3 AI / PTON / PLTR / NIO / Quidel / TMO / QLYS / SRNE / VRTX / DQ / LGND
I am making profit / Loss in some @ present. No one is expert in stock market it’s up / down
Stock Market Rule: Buy @ low / Sell @ high (We all try our best even expert Analyst make loss)
This is a well laid out investment case. @Umer_Hakeem
Could you comment on the main segments, PC and Data Center among others. % of revenues, margins in each. and where each has been trending. With intel falling behind 1-2 generations TSM, will they outsource to TSM more or do you think they can catch up?
This is an interesting situation for sure. Intel typically has not traded at high multiples given hardware tag and a bit of cyclicality and capital intensity. Checking valueline, the avg PE has been 10-12. However, if they are able to impove eps at a better rate, fix the technology challenges, market could reward them with a better multiple. Combination of higher EPS and better PE, could result in a decent appreciation. the 2.5% yield adds to the appeal. In a market where bargains are rare, not the worst idea. Congrats!
I will be following this one! No position at the moment.
Revenue breakdown ins roughly 60% PC-centric, has been mid-high single digit growth recently, 30% Data- centric, declining rapidly mid-teens percentage sie YoY because of stiff competition from AMD. 10% other investments, the only think to really note is Mobileye, the autonomous driving segment which could be an interesting spinoff in the future. The revenues are good and growing but hide the fact that operationally they are way behind TSMC in fabrication.
Intel will have to outsource a portion to TSMC in order not to lose market share in the short to midterm. However, it is building capacity in order to compete in the long term.
PE, EPS are all lagging outcomes of how the company is doing operationally.
Operationally, the only thing that has been fixed so far is the human capital side - they got rid of the old CEO who let Intel slide further behind and replaced him with Gelsinger. Gelsinger has recruited old heads back into the company that lost faith in the old CEO’s leadership. Everything else needs to be fixed, but they have the money to do so. Without Intel’s strong branding; I think it would be dead in the water having been so behind for so long. Despite this I’m amazed Intel continued to grow revenues in its PC centric business for many years. My thesis isn’t so much that intel becomes no.1 again in competing to create the smallest node per se, but that it can keep up enough so that its brand remains intact.
Some might tag this a cyclical, but how many cyclicals grow revenues, or indeed create entire new revenue streams (see datacentric) in their down years? For me cyclicals are commodity price dependent and this doesn’t seem to be the case for semiconductors currently.
Old tech often lumbers along for a decade due to many of the strengths you point out. MSFT, INTEL, HP, CISCO as examples. They can come back as MSFT has shown.
As to Intel specifically, I would point out that Apple is now a competitor and thus a massive part of the market has vanished for Intel, and as I understand it Google is doing the same on the server side.
In the Zoya app Google and FB are both listed at Questionable, I’m just wondering why made you decide to incorporate them in your portfolio. Still new at understanding the Halal/haram aspects of stocks.
Thanks
I think it’s just that Facebook and Google both generate most of their revenue from advertising, so Zoya is probably careful because you can’t monitor if those ads are halal/haram.
More than 80% of Alphabet’s revenue comes from Google ads, which generated $147 billion in revenue last year.
Ad sales are the primary source of Facebook’s revenue.
Facebook prohibits advertising of any kind for e.g. alcohol, tobacco and weapons.
It is not without reason that companies like Apple, Facebook, Google, Microsoft etc. are listed in the S&P 500 Shariah or in the Dow Jones Islamic Market.
I think they are halal.
Hi Umer, just to confirm are these ETFs are halal ? Regards,
Are these ETFs are halal ? CIBR / HACK / BUG / IHAK. Thanks
If you are not earning 15% plus returns why are you investing…just by the index.