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Why You Should Join Our SHU Growth Portfolio

December 6th, 2020 · No Comments

  • It’s up by 45.78% since its inception less than five months ago.
  • It has already quite a few positions that have nearly doubled, doubled, or even almost tripled.
  • Out of 27 stocks, there are only 3 declining stocks, a difficult thing to achieve given that a lot has to go right for high-risk, high-reward smallcaps which we select.
  • As we will explain, time is our friend with our approach.
  • We give you new ideas every week and a portfolio update in the weekend, indicating which ones can still be bought.

While we’re not even trying our public articles, (especially as most of our research is now exclusive for our marketplace subscribers), which serve as input for Tipranks’s classification, we’re nevertheless quite happy with our rank this weekend (December 6, 2020):

To be 52 out of 7780 bloggers is pretty satisfying, but what we really care about is our marketplace service, our SHU Growth Portfolio which we started on July 17.

Well, the news from that front is actually better. Since its inception on July 17, the portfolio delivered a return of 45.74%. From our SHU Growth Portfolio performance spreadsheet:

We concentrate on high-risk, high-reward smallcap companies with the idea that while individually risky, there is safety in numbers. The winners will win much more (as they can become multi-baggers over time) than the loser can lose (100% loss maximum, but can be cut short well before that happens).

Over time, this allows the portfolio to be successful even if the stock selection has a low success rate.

But that’s not what is actually happening, quite the contrary. Of our 42 positions since inception covering 27 different stocks, only three stocks are down, PaySign (PAYS), Synchronoss (SNCR), and Zynex (OTC:ZYXI). we expect even these to come back in time, they are broken stocks (at least for now, not broken companies.

On the other hand, we already have some positions that nearly tripled, or well more than doubled, and quite a few that are up well over 50%, names like Intrusion (OTC:INTZ), Digital Turbine (APPS), BioLife (BLFS), and Magnite (MGNI).

APPS Digital Turbine, Inc. daily Stock Chart

We expected a much lower success rate in the first year of our portfolio, as taking positions requires to get three things right:

  • The right stock selection
  • The right buying moment
  • Not being hit by unexpected adverse news

The high-risk, high-reward smallcap universe in which we fish is inherently risky and volatile, to get all three right with each and every selection is close to impossible, we would argue.

You should join our SHU growth portfolio: time tends to be on our side

The idea behind safety in numbers is that the high returns of the winners will make up the losses of the losing stocks to still produce an overall positive return.

This proposition should increase over time as winners tend to keep on winning, producing ever greater returns while losers can only lose so much.

In the first year of the portfolio, this is actually more difficult, as the winners don’t have had enough time to win, and the stock selection does not only have to get the selection itself right fundamentally, it also has to get the buying moment right in terms of timing, notoriously difficult in this volatile universe.

So one would expect no stocks with outsized returns after 5 months and quite a few losers as the latter can also include fundamentally sound companies but getting the timing of the buys wrong (which is really more art than science).

What we’ve done after five months is exactly the opposite!

We already have several positions with large returns (close to a double or even bigger), and somehow managed to limit the losers to just three.

The odds are in our favor that this will get better over time as the winners have more time to accumulate more returns and some of the losers might even recover (the ones where we got the timing wrong, for instance).

There is no absolute guarantee of this happening (over time more of our stocks could turn out to be losers or get hit by unexpected bad news), but time is generally our friend with this approach.

 

Tags: SHU Portfolio