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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!