Beta than the S&P 600 – January Performance

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

Beta than the S&P 600Beta than the S&P 600 is the name of my portfolio I am building to try to beat the returns of the S&P 600 index. I am investing my own money in a Roth IRA account held at Interactive Brokers. I’m not going to post the amount of money in the account in order to spare myself some embarrassment.

I intend to post monthly updates on changes to the portfolio and will post articles on stocks I choose to buy or sell.

I originally intended to use the Russell 2000 as the benchmark but ultimately decided to change to the S&P 600 after reading this article that explains some of the differences in the index methodology.

January Performance

For the month of January the portfolio returned 2.59% versus the S&P 600 return of -.40%.

I spent some time looking for new stocks to add to the portfolio but ended up exiting a few positions that were leftover from last year. Most importantly, Coach, Gamestop, Gilead, and lowering exposure to the iShares Gold Miner Fund (RING).

I did make one new purchase for Nautilus (NLS) which I recently posted about on Seeking Alpha here.

I bought the Nautilus shares at $15.90 on January 11th and the stock closed the month at $17.35.  A 9% in less than a month is not bad but it was a small portion of the portfolio.

Since I did not find any other new stocks to purchase I put the excess cash into the iShares S&P 600 Index fund (IJR). My goal is to hold less than 10% of the portfolio in cash and to stay fully invested as much as possible. IJR will be a placeholder until I find new stocks to buy. I ended the month at 18.8% cash but have since invested some of that back into the IJR fund.

I am going to take my time with adding new names to do as much due diligence as possible. In the past, I have rushed into a trade without spending the time necessary to complete a proper investment analysis. That’s part of the reason I am documenting this process – to hopefully learn from past mistakes.

Portfolio Holdings
Beta than the S&P 600 January

 

 

 

 

I continue to hold Diamond Offshore, LGI Homes, and the Gold Miners fund from last year.

Diamond reports earnings tomorrow. I am hopeful the worst of the oil woes are behind us but since Trump is pro-energy, I am concerned this will be a negative on oil prices. I’m staying invested in Diamond because I view their balance sheet as strong and think they should continue to weather the downturn in offshore drilling. I continue to view this as a long-term holding.

LGI Homes is continuing to grow although their January home closings fell from the prior year. Their target market is the first time home buyer so rising interest rates could be a major risk to their growth story.

The Gold Miners Fund rallied with gold as the dollar weakened to begin the year. I exited a good portion of the position over the month and it turned out I should have held on to it. I’m still holding on to the position since it has proven to be a winner so far and was a large part of why the portfolio outperformed in January. I will eventually sell out of the fund since it is not really a fit for a small-cap portfolio.

Conclusion

Overall I can’t complain about a 2.5% return for the month but I can’t get too excited since I started strong last year and ended up losing money for the year. I hope to find some new names to add in February but it all depends on how much time I have to shop around.

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