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I'm Booting This Company From the World's Greatest Retirement Portfolio

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For well over a year now, I've been publishing the thoughts and actions I take in designing the World's Greatest Retirement Portfolio, which I've put more than $40,000 of my own money behind. The portfolio is performing exceptionally well, roughly tripling the returns of the S&P 500 since inception. This has been, is, and will continue to be my way of helping the world to invest better.

When I started, I picked out 10 stocks and stated that my goal was to hold them all for at least three years. It's been 15 months since I made the first selection, but I'm sad to say that one of my 10 stocks will soon be exiting the portfolio. Read below to find out why, and what I plan on doing moving forward.

An investing mission is important
During a recent sabbatical from all things investing, I was able to clarify why it is that I invest: "to allow my family to live the lives we desire without having financial anxiety impinge on our ability to appreciate our varied experiences."

I was also able to clarify why I invest in certain companies: I prefer to buy and hold companies that I'm proud to own, regardless of how they perform as investments. After that, I hope to buy at a fair price.

I highlighted the "proud to own" part here, because it's in that vein of thinking that I'm booting Activision Blizzard (Nasdaq: ATVI  ) out of my portfolio.

Before going further, let's be clear: There's a lot to like about Activision Blizzard from a financial standpoint. The company owns some of the most valuable franchises in the video game business. It has $3.2 billion on hand and absolutely zero debt. It is trading for just 13 times free cash flow.

There could easily be a bright future for the company and its shareholders. It's just that I won't be counting myself as one of those shareholders bound to benefit from the company's future.

Why I'm parting ways
Over my recent sabbatical, I got to spend a considerable portion of time with family, including some who are just in middle school. While visiting, I saw them playing Activision's latest iteration of Call of Duty, and was somewhat disturbed by the violence and social detachment it fostered.

Of course, no company or product will be perfect, but for whatever reason, the glazed-over look my cousins' eyes displayed kept coming back to haunt me. I'd like to believe that investing should be free from emotion, but the truth is, investing is whatever we make of it. For some, it's only about profit -- but there's no reason it has to be that way if it doesn't work for you.

That's why I would never try to talk someone out of investing in Activision; I'm just offering up my primary reason for selling: I'm simply not proud to own a company that fosters violence and detachment from the living world around us.

Looking for a replacement
Since Activision will be leaving, I'm actively looking for what company will replace it. Below are my four candidates, and a quick run-down of why I'm considering adding them.

  • Westport Innovations (Nasdaq: WPRT  ) is a small Canadian company that designs engines that can run on natural gas. The engines produce far less carbon emissions, and with a potential mass conversion to natural gas vehicles, there is enormous potential here.
  • SodaStream (Nasdaq: SODA  ) makes at-home carbonated beverage makers. Not only are the contraptions popular, with the company sporting net income growth of 169% between 2009 and 2011, but I'm also a very happy user of a SodaStream carbonator. The company's product also helps cut down drastically on waste associated with bottled beverages.
  • Baidu (Nasdaq: BIDU  ) is China's leading search engine. Some might argue that the company's technology focus makes it much like Activision, but I would argue that a search engine could have endless uses. I recently bought shares of the company because of its solid business model and cheap price.
  • Solazyme (Nasdaq: SZYM  ) is able to produce oil from patented micro-algae. The oils are sustainably produced, and used as fuel, nutritional additives, and even as a beauty product ingredient.

Tune in next week to see which company I end up putting $4,000 into. I also pledged to donate $100 to charity if I sold any of my companies. Feel free to offer suggestions below.

In the meantime, you can read up on all you need to know about Baidu in the special premium report our top technology analyst, Andrew Tonner, has written. By getting the report, you'll also have exclusive access to ongoing, real-time updates Andrew will be providing. Get your copy today!

Fool contributor Brian Stoffel owns shares in all of the companies mentioned, though he will be selling his shares of Activision Blizzard once Fool rules allow for it. The Motley Fool owns shares of Westport Innovations, Sodastream, Baidu.com, and Solazyme. Motley Fool newsletter services have recommended buying shares of Sodastream, Activision Blizzard, Westport Innovations, and Baidu.com, as well as creating a synthetic long position in Activision Blizzard. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


Read/Post Comments (18) | Recommend This Article (22)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On September 07, 2012, at 3:06 PM, GregKS wrote:

    Brian,

    While I can understand your reason for selling Activision Blizzard, your purchase of Baidu as its replacement seems counter intuitive.

    "Some might argue that the company's technology focus makes it much like Activision, but I would argue that a search engine could have endless uses."

    Using that logic, "Call of Duty" is not the only game made by ATVI.

    "I recently bought shares of the company because of its solid business model and cheap price."

    Doesn't China track down dissidents by using the internet, and censor search content? Isn't it difficult to obtain accurate financial information from Chinese businesses? How can you be relatively sure that Baidu does in fact have a solid business model? How can you tell it has a cheap price? Baidu looks like a strange replacement for Activision Blizzard.

    As an aside, I recall reading a study several years ago that indicated game playing may actually increase Navy weapons operators' efficiency.

    Greg

  • Report this Comment On September 07, 2012, at 3:32 PM, TMFCheesehead wrote:

    Greg,

    Very fair points. I certainly don't like that the Chinese gov't cracks down and could track info through BIDU.

    As for the company being legit, I'm putting a heavy onus on a visit our international team paid to BIDU HQ and came away with a generally positive experience.

    Brian Stoffel

  • Report this Comment On September 07, 2012, at 5:23 PM, advanzio wrote:

    Brian - I can understand your personal reasoning for booting a video game from your portfolio. As a former military man, I more than understand. I'm really enamored with WPRT. However I did my research a while ago and did not find Westport with any interest in developing an engine. What they have developed is a fuel injection valve for engines that can use natural gas. We have gobs of natural gas and I don't dee any way to decrease usage of oil from Canada or the Mideast unless we develop a way to use natural gas. I believe that Westport has the necessary patents locked up to fend off any foreign patent pillaging and some of the larger trucking companies are starting to use their valve in natural gas engines.

    While I do not see WPRT like an Apple, it could be a real 10 or 20 bagger in a few years. Another factor I enjoy, for now, not too many ANALysts are following it. Reminds me of Netflix before the world woke up to its rocket trip. POut a small amount into WPRT and watch it for a few months. There is more growth here. If it doubles, go all in the rest of your $4,000. Fool on.

  • Report this Comment On September 07, 2012, at 7:05 PM, ewaldave wrote:

    "proud to own, regardless of how it performs as an investment" ?? what B.S. !! I've got some worthless stock in a failed company whose founders were all honest, upright citizens but utter idiots at running a business. I'll let you have a few thousand shares at a good price. It was a 'green' company that was going to save the world. You should be "proud" to own this stock. Interested??

  • Report this Comment On September 07, 2012, at 7:16 PM, militauro wrote:

    Activision Blizzard is an entertainment company, and the Call of Duty franchise is meant to be a cinematic and thrilling experience. I've seen some of these disturbing scenes in Call of Duty games along w/ other franchises, but I find it difficult to differentiate these experiences from watching a movie. Is the viewer of a movie any less engaged when the thrilling, violent moments appear on screen? Is the violence any less brutal? These games have big stories to tell and carry the Mature rating to show this. The big budgets being put into these titles are the reason they have become as big as they are with these stories and action. Although not many agree with me on this, to me this is an art form that continues to be under-appreciated. Let's not forget that Disney now owns Marvel, which is the owner of the Punisher franchise that is very heavy on violence...but the franchise has a history and faithful following based on the storytelling of the main character. Is this a reason to stop investing in Disney?

    I'm not here to say your stance on this subject is wrong - I'm simply providing a different perspective.

    One more thing - I also disagree w/ leaving an investment behind due to causing a "social detachment". There are several great companies out there that create products (Apple?) that cause this very detachment. As a regular video game player, I've also bonded with co-workers over playing games like Call of Duty during late-night marathons. A fraction of these co-workers I ended up getting to know simply because we had this hobby in common and we bonded during these late-night sessions.

    IMO, Activision Blizzard is a solid investment, and I hope you reconsider one day.

    Long ATVI.

  • Report this Comment On September 08, 2012, at 3:50 PM, charlesst wrote:

    VERY VERY SMART MOVE.

  • Report this Comment On September 08, 2012, at 6:32 PM, craigvega wrote:

    Donation suggestion: Team in Training. They fit perfectly into your theme of this article. They train regular people like me to run marathons, triathlons, century rides and hiking excursions to raise money for the Leukemia & Lymphoma Society.

    LLS has funded the research that has led to numerous breakthroughs medications that is extending the lives of people diagnosed with these diseases, along with helping families to cover expenses while getting treatment.

    Your donation will accomplish 2 things - helping save lives and helping those participating in events to live healthier and more satisfying lives.

    Thanks for considering...

  • Report this Comment On September 08, 2012, at 6:39 PM, SackDiesel wrote:

    SODA is a gift at these levels. A retirement portfolio's future star performer. Good luck.

  • Report this Comment On September 08, 2012, at 7:03 PM, SuntanIronMan wrote:

    @TyrantBone

    Given what has been revealed (which, granted, has not been much) about the planned Punisher TV-series, I do not think you will have to worry much about a super-violent Disney-owned Punisher anytime soon, haha.

  • Report this Comment On September 08, 2012, at 9:45 PM, TMFCheesehead wrote:

    @craigvega-

    Noted. Thanks for the suggestion!

    Brian Stoffel

  • Report this Comment On September 08, 2012, at 11:24 PM, daodell33 wrote:

    Get off your soap box. Give me a break. Let's get rid of the Beatles, Elvis Presley, Movies, Records while we're at it, the internet, smart phones . . .before we get ahead of ourselves there are very positive affects of video games too, even but especially the one you are describing. There are real studies that show serious development of life skills . . most games require solving problems or social, team based behavior to accomplish goals especially the one you are talking about . . .

    According a study conducted by the EU:

    "video games can stimulate learning of facts and skills such as strategic thinking, creativity, cooperation and innovative thinking, which are important skills in the information society."

    Why don't you use that brain of yours so focused on finding good stocks through research (I bet your eyes get glazed over a juice CF statement) to research the effects of video games on children before making an irrational, uninformed decision about the so called "effects," of video games.

    http://www.guardian.co.uk/technology/2009/feb/12/computer-ga...

    That is not to say parents should not intervene and set limits as with anything your child uses . . . video games are not an excuse to reject normal parenting behavior.

  • Report this Comment On September 09, 2012, at 11:57 AM, JuliaMan wrote:

    The Fools have always said you should like your investments though you should also do your homework to assure they are good investments. I for one dropped ATVI for the same reason a while ago. There are plenty of good companies to choice from.

  • Report this Comment On September 09, 2012, at 2:48 PM, rustycapps wrote:

    DWSN ! DWSN ! DWSN !

  • Report this Comment On September 10, 2012, at 11:19 AM, koieske wrote:

    Way to go Brian...........there's a limit to how we should make money.

  • Report this Comment On September 10, 2012, at 2:12 PM, 49cent wrote:

    You may want to add Soda Stream to your don't buy list unless you are happy with the fact that this product is manufactured on illegally confiscated land in the West Bank.

  • Report this Comment On September 10, 2012, at 4:35 PM, txboy70 wrote:

    If you have a daughter she has a one in 3chance

    of having breast cancer!!! Please consider the American Society.

    SZmn is a very good choice,and cheap right now.

  • Report this Comment On September 17, 2012, at 9:31 PM, QualityofLife wrote:

    It appears a if you were caught in the middle of investing in a company with a solid financial base, but on the other hand, you don't 'feel' comfortable with their corporate message via their product offerings. My take is that your decision was much more of an emotional 'reaction' than an objective investment choice. Bottom line here is that you are comfortable with your decision and that counts in ways that can't be measured in dollars. Congratulations for sticking with your personal values!

    As a father with Multiple Sclerosis with two great daughters, I hope you consider making your donation to the National MS Society. My daughters are 2-4 more likely to develop MS than the population at large. Thank you.

  • Report this Comment On September 17, 2012, at 9:38 PM, TMFBlacknGold wrote:

    I have written about why Solazyme is overvalued at current prices on the Blogging Network. Not many people agree with me, but I am a bioprocess engineer and they disagreed with me when it was trading at $16.

    Great (!!!) long-term pick, but I believe you can get a much better entry point with the same long-term mindset.

    Just my 2 cents.

    BlacknGold

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