Beta than the S&P 600 – June Performance

Beta than the S&P 600 – July Performance
Beta than the S&P 600 – March Performance
Beta than the S&P 600 – January Performance

It’s been almost a month since I’ve posted anything but hopefully the summer traveling slows down soon. Here’s an update on my portfolio for the month of June.

June Performance

The portfolio bounced back in June led by gains from LGI Homes and Cliffs. The portfolio returned over 4% for the month and YTD returned positive but still trails the S&P 600 by 1.43%. So with half of the year in the books, I’d have been better off just buying the index. If I had avoided Cliffs and sold Diamond, my results would look much different.

Beta than the S&P

Portfolio Holdings

Portfolio Holdings

I made a few changes to the portfolio during the month. First, I sold my LGI Homes position. The stock surpassed my price target of $39 and as measured by RSI it has become quite overbought. It was up over 25% since I wrote about the stock in May and hit an all time high above $40 on Friday. I’ll wait for the market to hate the stock again and then buy back in.

In the meantime, I found another stock the market currently hates and that’s Kroger (KR). First, Kroger lowered their earnings guidance for the year and the stock plummeted 19% on June 15th. The following day, Amazon announced they would acquire Whole Foods and Kroger fell another 9%.

The market is not wrong to have concerns over the grocery business now that Amazon is looking to disrupt yet another sector of the retail industry. I just think grocery is going to be a much more difficult one for Amazon to penetrate. First, Whole Foods only has about 450 stores. Kroger has over 3,500. The speculation is that Amazon will use the Whole Foods locations as sort of a hub to operate their grocery business out of. But even so, many cities across the country don’t even have a Whole Foods nearby at this point. The closest one to me is about 100 miles. That idea would work in densely populated metropolitan areas but there are still plenty of small, rural cities to account for across the country.

Second, I discount how fast consumers will be willing to shop online for fresh food products such as meat and produce. Dry goods, ready to eat frozen meals, and all of the junk/packaged food people will order online no problem. When it comes to buying an avocado or steak, I still want to be able to see what I’m buying. Those are just some of my initial thoughts. Kroger is not a small cap stock but this is the only account I have to trade in so it somewhat tainted my small cap portfolio. I view it more of a short-term play that the market overreacted to this news.

 

 

 

 

 

 

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