By the end of June, 2014, I will have completed 4 years as manager for the Innovative Companies Portfolio. Here’s an update on the strategy’s holdings.

As of June 6th, 2014, the portfolio held 13 stocks. They include Cypress Semiconductor (CY), VMWare (VMW), Intel (INTC), (EMC), Oracle (ORCL), Charles Schwab (SCHW), Cisco (CSCO), SunPower (SPWR), Calix (CALX), Qualcomm (QCOM), Microsoft ( MSFT), NVIDIA (NVDA) and Limelight (LLNW).

Nine of the thirteen stocks pay dividends. As a result, the portfolio receives at least some dividend payments every month of the calendar year.  Unless I can find a new stock with these kinds of dividend characteristics, I will usually add to my existing positions in the portfolio.

The timing of most purchases depends on how much cash is available and the technical market condition of the particular stock. At this time, Cypress is the highest yielding stock at about 4.1% (dividend initiated in July 2011); it is also the largest position in the portfolio at nearly 32% and has been in the strategy since inception.

The top five stocks account for 77.5% of current market value. This allocation is within the parameters stated in the strategy allocation description. Of course dividends are not guaranteed, but aside from that the current investment capital of the portfolio is producing a yield of around 2.6% annualized.  Although not an original goal of the strategy, the receipt of a monthly dividend is proving to be beneficial.

The portfolio’s statistics for the average number of trades per month clearly shows that I do not trade very often. In fact, I have bought instead have sold far more stocks in the past 4 years.

Six of the transactions were short-term capital gains, and the other two transactions were long-term capital gains.  Also, two of the short-term sales involved companies that were acquired and I sold shortly after the announcement near the takeover price. One such deal involved Sourcefire (FIRE), which was acquired by Cisco (CSCO). To date, there have been no realized losses in the portfolio, though there is no guarantee that will continue.

The fact that I have not made many transactions seems to imply a ‘Buy and Hold’ strategy for the portfolio, though that isn’t my primary intent. I do prefer to recognize long-term tax gains, and that is the major reason for limiting trading. The portfolio is currently technology-focused concentrated. However, I am always open to new ideas in any sector of the economy.

DISCLAIMER: The investments discussed are held in client accounts as of May 31, 2013. These investments may or may not be currently held in client accounts. The reader should not assume that any investments identified were or will be profitable or that any investment recommendations or investment decisions we make in the future will be profitable. Past performance is no guarantee of future results.