Pennybags

The Author:

I’m a long-term, value-oriented investor that is looking to build strong risk-adjusted returns by investing in quality businesses that produce healthy cash flows at a reasonable margin of safety, as well as special situations that present low-downside, high-upside potential with expected price catalysts. I believe that building a successful investment portfolio is not a black and white process – it is a constantly evolving balance of quantitative fundamental analysis and behavioral finance. Having analyzed my willingness and ability to take risk, I look to make strategic investments by following both a top-down and bottom-up approach to investment analysis.

I have spent many hours attempting to delve into the minds and techniques of some of the most successful investors. This includes guys like Benjamin Graham, Warren Buffet, Jeremy Grantham, Joel Greenblatt, Seth Klarmin, Peter Lynch, Monish Pabrai and Howard Marks, among many others. I am using this site as a means to put my ideas on paper and track my efforts of applying what I have learned in developing an investment strategy that fits my specific needs. Furthermore, with the intentions of becoming an increasingly well-rounded investment professional, I successfully passed the CFA (Chartered Financial Analyst) exams- receiving my charter in 2017. I am on a continuous journey to improve my craft in the extremely unforgiving field of investing- one that is a mix of both art and science.

The Portfolio:

I understand that the market is very unpredictable, thus my investment ideas vary depending on what discounts I perceive to be available. From a financial planning perspective, I take a holistic approach to building wealth and managing risk. My strategic asset allocation includes a reasonable cash balance, exposure to domestic and foreign markets, equities, fixed income, real-estate and commodities. I’m building out both passive and active investment holdings, as well as an allocation to both taxable and tax-exempt investment vehicles. I follow a “core-satellite” strategy in which a majority of my “wealth”, will be held in tax-exempt, passively invested index funds (core). I will look to build out-sized returns and robust cash flow in my actively managed equity portfolio (satellite).

From time to time I will discuss my observations of the current macro-environment that drive my strategic asset-allocation decisions. However, a majority of my writing will be about the actively managed equity allocation, aka the satellite portfolio. With investing, I recognize that time is key to success and given my current age and ability to spend decades invested in the stock market I am willing to take more risk by being heavily overweight in riskier equity assets. The satellite portfolio is structured to provide diversification, minimize volatility and create ample liquidity through dividend cash flow that can be reinvested to create an ever growing income stream. I don’t limit my investment options and my equity holdings will vary from established large-caps purchased as reasonable prices to misunderstood or undiscovered small caps and special-situation securities that have attractive profiles and potential catalysts. The goal? To create a recession-proof portfolio that provides adequate risk-adjusted returns with a passive income stream that outpaces Inflation and the growth of my mandatory expenses (mortgage, healthcare, consumer debt, etc.).

Core – Satellite Portfolio (April 2019):

Cash% of Total
Money Market Funds13.1%

Active Satellite
Ticker% of Total% of Active 
AAPL2.6%8.4%
BAC2.4%7.7%
BBL2.3%7.5%
CLX2.2%7.3%
JNJ2.2%7.2%
WPC2.1%7.0%
DEO2.1%7.0%
CVS1.7%5.7%
SJM1.7%5.6%
ORI1.5%5.0%
SU1.5%5.0%
CSCO1.5%5.0%
SBUX1.4%4.7%
UNP1.3%4.4%
SVIN1.2%4.0%
CAH1.0%3.2%
KR0.9%2.9%
BNS0.7%2.2%
SOUHY0.1%0.3%
Total30.4%100.0%

Passive Core

% of Total
Index Funds56.6%

Total Invested

100.0%

Be sure to check back for portfolio updates and the details behind my decision making. Feel free to leave me questions/comments and I will do my best to respond to all. Thanks.