Changes coming here

Posted by Tim

April 4, 2008

I am planning to make some changes to the organization and type of posting I am doing here. First, the stock tracking will be changed. Six months ago I started a 20 Stock Portfolio here to track stocks that I was interested in or invested in or thought would be good investments. I picked 20 because I believed that is a number of companies/stock a part time investor could get a good handle on. As I built up the 20 stocks I found my interests fall into two distinct camps of stocks. Going forward I am going to divide my stock tracking on this site into 2 portfolios.

One area of interest is income stocks. To me, these are companies and stocks that pay well above average dividend payouts. I am talking about stocks that pay 8%, 12% or even higher. The challenge with these companies is that by allowing the dividend rate to be so high, the market is assuming there is a high degree of risk that the payout rate will not continue. My challenge is to attempt to determine/guess if the dividends will continue or even better increase.

The second type of stocks are those I will call growth stocks. I look at several factors that I think will give a stock market beating performance. First, I love unfollowed stocks. If they have 1-3 analysts predicting their future, the odds of them accurately predicting the future are slim. I like a classic growth stock, whose earnings and revenues are growing significantly faster than there PE would indicate. In this case the market does not believe the growth is sustainable. Gigamedia (GIGM: 11.96 +0.47 +4.09%) is a good example of this type of company. I am also interested in turn around plays where a company’s earnings have fallen on hard times and the company is taking steps to get back on track. Headwaters (HW: 15.48 -0.16 -1.02%) and Tetra Technologies (TTI: 22.26 -0.08 -0.36%) fall into this group. I also have a strong interest in smaller cap international companies, especially those based in South America as I have additional interest and knowledge about that region.

Sometime over the next few days I will start dismantling the 20 Stock Portfolio and setting up an Income Portfolio and a Growth Portfolio. Right now I will continue tracking the portfolio stocks on an equal dollar weighted basis and updating quarterly. The current components will be the ones from the old 20 Stock group minus the ill fated Thornburg Mortgage (TMA: 0.42 +0.08 +23.53%).

Last note: I am going to try to generate more commentary on topics of general investing interest. I will still try to give good analysis of the stocks that interest me, but I want to broaden what I am writing about. So if you are not a regular reader, I hope these new changes tempt you to become one.