July 6, 2011
This article is part of our Rising Star Portfolios series. Follow all of Alex's trades and thoughts on Twitter.
It's been more than nine months since the Young Gun Portfolio was seeded its first funds. I'd like to offer a broad-level view of the portfolio, provide my current thinking on each of our positions, and briefly discuss what might be in the hopper.
Current portfolio positions (listed according to allocation):
- Berkshire Hathaway (NYSE: BRK-B ) : At 11.4% of the portfolio, Berkshire remains our largest position. I originally purchased shares as a place to stick some of our cash while I waited for better opportunities down the road. Today, though, Berkshire is starting to look straight-up cheap. If it weren't already such a large position for us, I would buy more. I think today's price makes a great entry point.
- Bridgepoint Education (NYSE: BPI ) : For-profit educator Bridgepoint Education has been a great winner for us so far. We bought shares twice; the first are up nearly 60% and the later bunch are up 25%. That strong performance has vaulted Bridgepoint to our second-largest position, accounting for 9.2% of the portfolio. I remain comfortable with that allocation, especially now that the new gainful-employment regulations have been released and Bridgepoint doesn't appear to face any threats from them. I probably wouldn't consider trimming our allocation below roughly the $30 range. But I continue to look for other for-profit educators to short against Bridgepoint, and at the moment, I'm not seeing any obvious choices.
- Pebblebrook Hotel Trust (NYSE: PEB ) : Pebblebrook remains my favorite idea for new money. This REIT continues to gobble up upscale hotels from distressed sellers at a breakneck pace. I expect Pebblebrook's dividend payout to increase strongly over the next two years and bring the price up with it. We've purchase two blocks of shares, and our current allocation is sitting at 6.6%. I'm looking to up that amount. Options recently started trading on Pebblebrook, so although I might buy more shares directly, I'm also thinking about writing puts on the stock.
- Ampco-Pittsburgh (NYSE: AP ) : This manufacturer of steel-production equipment continues to get no love in the market. Whether it's continuing concerns about housing demand, reports of steel oversupply in China, or simple neglect (no analysts cover Ampco-Pittsburgh, and management doesn't hold any conference calls), our shares are down between 8% and 10% since we purchased them, while the market is up about 1%. Nothing about my thesis on this company has changed, and I'm content to continue receiving our dividends (the stock is currently yielding 3.0%) while we wait for the market to catch on. I'm also content with our current 4.7% allocation, although I would recommend purchasing shares today if I didn't own them already.
- Chiquita Brands (NYSE: CQB ) : At just 1.9% of the portfolio, Chiquita is our smallest position. I wrote in the original write-up that I anticipated volatility from Chiquita, and it has already lived up to that expectation: Our shares have been both up and down 10% in the past six months. They're currently down about 9%, and I think shares are looking particularly cheap, but I'm not ready to purchase more, because I've also been researching a number of other agriculture plays.
I've come across a number of interesting new ideas recently, so after several quiet weeks, I now have more ideas in the mix. Stay tuned here, or follow me on Twitter to stay abreast of my latest trades.