Persistence pays off in April

Author: Bob Freedland

Covestor model: Buy and Hold Value


The Buy and Hold model managed to do well relative to the S&P index during the month of April.

I continue to examine each holding and new possibilities on a regular basis trying to identify those stocks that may be able to continue with their persistence of earnings growth coupled with persistence of price appreciation.

I also am relatively quick to dispense with those holdings that disappoint or announce news that is inconsistent with the above goals. During the month of April, 2012, I dipped my toes into the Apple (AAPL) phenomenon, only to once again get caught on a downward swoon in the stock price. I sold shares to limit a developing loss but remain intrigued with Apple as I sit here writing on my MacBook Air, with my iPhone in its holder on my belt. I love the products but will refrain from allowing love to fog my attention on my portfolio where I seek to limit losses and maximize gains.

Similarly, I sold my Amazon (AMZN) shares that I had revisited when the stock also dipped on news. This is another great company but I shall keep it on my own horizon, like Apple, looking for another re-entry in the future.

I do not know if suds are an adequate replacement for Apple iPhones but I found that Anheuser Busch InBev (BUD) was a reasonable holding. Doesn’t seem like beer goes out of style. Certainly not here in Wisconsin.

Later in the month I sold my ever-favorite growth stock Fastenal (FAST) when news suggested that Amazon might challenge even stocks like Fastenal in the parts distribution business. I also sold my shares in NU Skin (NUS) late in April as that stock came under pressure when a similar multi-level marketing firm, Herbalife (HLF) came under intense pressure after questions of actual sales versus purchases by distributors themselves came to light by a prominent short-seller.

Late April I added Polaris (PII) to the mix after observing continued technical strength. Similarly I purchased shares of Perrigo (PRGO) the generic drug producer.

Starbucks (SBUX) was sold, another favorite of mine both in real life and as an investor, when the stock experienced technical weakness on the back of European sales that disappointed believed to be the result of the ongoing economic problems on the continent. Like my Apple and Amazon shares, I love Starbucks. OK maybe love is a bit strong but I feel very emotionally attached to the product, the stores, the management philosophy — you get the picture.

But with weakness, I had no choice but to cut my ownership and look forward to a future re-entry point when technically and fundamentally things look a bit brighter.

I purchased shares of Ubiquity (UBNT) during the month. This turned out to be a short-term holding as the stock was hit by rumors of counterfeit sales. I generally don’t stick around with plunges of stock holdings whether or not the factors are substantially true or not.

Finally my shares of Westport (WPRT) were sold on sheerly technical reasons of weak stock price performance. I like the idea behind this company, but could not stand to watch the stock price slide.

I cannot tell you exactly what distinguishes this model from any other model or fund you might examine. I cannot guarantee that the model will continue to outperform the S&P next month or next year. But I can tell you that I am all over these holdings. I continue to search for new ideas that can generate long-term price appreciation for the portfolio. I am quick to pull a plug on stock price weakness even if it means parting with a stock I am definitely infatuated with.

I have now completed three years with Covestor with this model. Thank you Covestor friends who have given me the trust and confidence and the opportunity to participate in this innovative and forward-looking platform.