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September 2014 How to Invest HQ Portfolio Update

September 2014 How to Invest HQ Portfolio Update

The How to Invest HQ Portfolio is a free public stock portfolio that can be viewed in full here. Each month, I add approximately $1,000 to real positions in the stock market and publish the results in this column.

August was a blowout month for the How to Invest HQ portfolio, with several stocks posting huge gains thanks to strong summer earnings and shifting momentum. The YTD return for the portfolio now significantly exceeds the S&P 500, while the weighted return now more than triples the YTD return of the S&P 500.

August 2014 Portfolio Performance

Stock7/31/14 Close Price8/29/14 Close PriceShares HeldGainPercent Change
NYSE: LNKD$180.64$225.7516$721.7624.97%
NASDAQ: PBPB$11.59$12.1044$22.444.40%
NASDAQ: AMZN$312.19$339.028$214.648.59%
NASDAQ: GOOGL$579.55$582.362$5.620.48%
NYSE: YELP$67.16$82.4214$213.6422.72%
Total Value 7/31/14Total Value 8/29/14Total Gain (August)Total Percent Change
$7,997.06$9,175.16$1,178.1014.73%

The portfolio crushed it this month, bringing in a 14.73% return compared to the approximate 3.7% gain posted by the S&P 500 during the same time period. The time frame used to evaluate gains and losses for the table above was the close price for each stock (as well as the S&P 500) on July 31st compared to the price at close on August 29th (last day of trading in August was the 29th).

Why did the portfolio perform so well this month? Here is a quick overview of each holding and why each performed the way it did:

  • LNKD beat earnings estimates and raised guidance, something I noted was likely to happen time and time again in portfolio posts. For whatever reason, LinkedIn management likes to low-ball earnings, revenue, and guidance. This caused LNKD to drop precipitously early in the year, falling from a high of $230 in January to recent low in the $140s. I averaged down as the price of the stock dropped, assuming that eventually guidance would have to be raised. It was raised with this earnings report, and the stock shot up as a result.
  • New addition YELP posted a solid earnings report and benefited from an influx of investing dollars into the S&P 500 along with being well off its recent high of around $100 per share. Many revenue-based tech stocks surged this month, including YELP.
  • AMZN recovered from the massive overreaction from its recent earnings report. I expect a similar trend throughout the year; poor Amazon Fire phone sales will likely depress the stock following the next earning call, but the stock’s price will rise as revenue growth from the core business is still growing too fast to ignore. Amazon’s revenue growth is still fantastic and their core business is getting stronger all the time. I could care less about the various side venture flops (Kindle Fire HD, the Fire phone, and likely soon to be their new advertising venture).
  • PBPB floated upwards with the good performance of the S&P 500. I am still looking to sell this stock in the near future to use for another purchase.
  • GOOGL was the only stock which lagged this quarter. Online advertising has had a soft summer, but that is a typical trend. Online ad spending is strong September through January, so Google is poised to post two strong quarters in a row.

How to Invest HQ Portfolio YTD Return

Last Updated Stocks Held (in shares)Price Paid Per ShareTotal Price PaidCurrent Price Per ShareTotal Value
August 31st 2014LinkedIn Corp (LNKD): 16$183.56$2,936.96$225.75$3,612.00
August 31st 2014Potbelly Corp (PBPB): 44$22.50$990.00$12.10$532.40
August 31st 2014Amazon (AMZN): 8$316.12$2,528.96$339.02$2,712.16
August 31st 2014Google (GOOGLE): 4$573.61$2,294.44$582.36$2,329.44
August 31st 2014Yelp (YELP): 14$69.10$967.40$82.42$1,153.88
Total Invested:$9,062.08Total Current Valuation:$10,259.39Total Gain:$1,197.31 (13.21%)
Weighted Total Investment:$4,459.09Total Gain:$1,197.31Total Gain vs Weighted Investment:26.85%
S&P 500 YTD Return:8.39%

With this month’s strong performance, the How to Invest HQ Portfolio has leapfrogged the S&P 500 index and is significantly outpacing the S&P’s returns. The S&P has posted an 8.38% return year to date (YTD) to the portfolio’s YTD weighted return of 26.85%. The weighted return indicates the average amount of money in the portfolio since the beginning of the year; each month I add $1,000 to the portfolio, meaning that only around $1,000 has been in the portfolio since the beginning of the year. The average amount of money held by the portfolio since the beginning of the year is $4,459.09 (calculated by sum of the (monthly contribution * months held) / total months in the year).

September 2014 Portfolio Purchase

August Purchase:SharesPrice Paid8/29/14 Closing Price Per ShareGain/LossPercent Change
NASDAQ: GOOGL2$579.21 (Purchased 8/29/14)$582.36$15.750.54%

For the September purchase for the How to Invest HQ Portfolio, I added two additional shares of GOOGL. GOOGL was the only option this month for adding to current positions, given how well every other stock held by the portfolio did this month. I wish YELP would not have had such a breakout month, as I wanted to add more shares of that in the near future.

I decided not to sell PBPB as well as not to take a new fifth position this month, as too many stocks that I am interested in owning ran up big in August. Google was the only stock which was relatively flat (and still down off recent highs), making it the only logical choice for this month’s contribution.

Plans for September and October 2014

I have no current plans to make any trades this month; no stock is near a point where I would want to sell it and take profits despite the large gains the portfolio saw in the last month. I would like to see LNKD and YELP (which both gained over 20% in August) run up much higher before pulling the trigger on a sell. For next month’s purchase, ideally either Zillow or Yelp will pull back and allow me to enter at a reasonable price. If either one of these scenarios comes to pass, I will likely sell PBPB and use that money to increase the amount of stock I purchase next month.

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