My model portfolio is an equally-weighted version of my personal portfolio, the ideas behind which I publish on this website, and on the buy-side investment community, SumZero. Although I have started writing articles for Seeking Alpha, those are largely recent IPOs and are typically short ideas and are generally intellectual exercises rather than ideas I am personally invested in. The rules governing my portfolio simple:
- The security must be publicly listed and, if a stock, have a market capitalisation of at least $100 million.
- For stocks and corporate bonds, after making the appropriate accounting adjustments to the financial statements, I use my stock rating or credit rating methodology to determine if the security is very attractive or attractive. If so, it goes into the model portfolio.
- The model portfolio is equal-weighted to make it easier for the reader to follow the success of each idea.
- If the stock or corporate bond reaches a neutral rating, I assess the economics of the business against that of its peers and the rest of the market, to see if I can find a better risk/reward proposition, otherwise, I close the position.
- The performance of the portfolio is measured against that of the S&P 500, depending on which is the greater.
The portfolio at present is extremely concentrated, as the pie chart below shows.
Performance is assessed at the end of every quarter using SumZero's algorithm. Readers who are members of SumZero can assess the current returns there.