Portfolio Change Update
September 14, 2018
Added to Atlas Financial (AFH):
- Niche commercial vehicle insurer
- Strong belief in innovative management team
- Trading less than 5x management’s guidance for 2018 earnings (rarity for non-cyclical) at time of purchase
- Stock price drifted downward after previously raising weighting to 5%
- Took opportunity to purchase more shares and increase weighting back to 5% – largest weighting will buy
Added to ChromaDex (CDXC):
- Dietary supplement and ingredient supplier
- Additional research supporting NIAGEN, their primary ingredient
- Increasing number of active studies (over 150) by universities & institutes
- Building distribution relationships around the globe
- Anticipate new ingredient supplier relationships – possibly quite meaningful
- Share price drifted after large spike last year
- Yet, fundamentals incrementally improving
- Therefore, added to weighting
Added to Customers Bancorp (CUBI):
- Commercial bank primarily serving the Washington, D.C. to Boston corridor
- Spinning off disbursements and mobile bank business, called BankMobile
- Process taking longer than anticipated
- Investors appear to the focusing on the near-term glitches, rather than value of primary banking franchise
- Trading less than book value
- Excluding BankMobile, Customers is trading at less than 10x this year’s earnings
- Increased weighting anticipating eventual successful BankMobile monetization or shuttering business, at which point the core banking franchise value should drive share price
Trimmed Enova International (ENVA):
- Online subprime lender with operations in U.S., U.K. and Brazil
- Management masterfully executing business plan
- Surprised investors with strong income leverage in first quarter and big earnings beat
- Stock price responded quite favorably, then continued to move up into Q2 release
- Forecasted upside reduced as a result
- Trimmed to raise cash for alternatives with greater forecasted upside
Trimmed Myriad Genetics (MYGN):
- Leading provider of genetic testing
- Catalysts developing nicely
- Made strategically smart acquisitions
- Investors appear to be recognizing Myriad’s competitive strengths and opportunity
- Have held shares longer than typical value manager might due to the strong fundamentals
- Therefore, shares trading at higher valuation than normal for portfolio
- Believe more money can be made in another company
- Consequently, trimmed position