Start - December 2023
Passive Income Portfolio
Patreon Exclusive Update
Portfolio Strategy Portfolio Allocation
I look for exceedingly high-quality companies and purchase
them as large concentrated positions. I define the best
businesses as ones that have dominant market positions,
high barriers to entry, deeply entrenched brand names and
distribution, cash-rich balance sheets, scalability and
operating leverage, organic revenue growth through
volume and pricing, and predictably high returns on R&D
and CAPEX. These businesses are typically gatekeepers,
monopolies, or toll booths. They are typically the largest or
second largest in their industry. And their returns are highly
predictable and repeatable.
Portfolio Comments
We just closed out a great month with November. The
Passive Income portfolio outperformed SPY during the
month by a decent margin, rising 12% over SPY’s 9%.
This performance was led by S&P Global rising 18%, Intuit
rising 17%, Chipotle and Texas Roadhouse rising 15% and
Portfolio Performance
14% in the month.
Period Passive Income S&P 500
The biggest “loser” of the month was again Canadian
2022 -16.22% -18.14%
Pacific which rose only 1.43%. No company I own had a
negative performance for the month. 2023 YTD 24.00% 20.34%
Jan 7.56% 6.18%
Buffett has said “In bull markets people look for price
movements as validation”. He warns to not let the price Feb -4.19% -2.61%
movement of stocks validate your investment thesis. I
Mar 4.05% 3.71%
agree with this advice, and although it’s okay to celebrate a
good month, we should avoid translating that into Apr 1.92% 1.60%
complacency. This is especially difficult to avoid during bull May 0.80% 0.48%
markets.
Jun 6.48% 5.09%
Stocks are businesses. I view the stocks I’m buying as no Jul 1.77% 3.11%
different than buying a farm. I will continue to measure the
success of my portfolio by the business performance of Aug -1.19% -1.46%
retained earnings, growth in earnings per share, free cash Sep -4.71% -4.87%
flow per share, the strength of the balance sheet, the
Oct -0.87% -2.1%
amount of buybacks, and the overall future outlook and
return profile of the company. I want to only own companies Nov 12.26% 8.8%
that I believe will be significantly bigger and have far
Dec
greater earnings power in 10 years.
In November valuations rapidly expanded, free cash flow Key Facts
yields fell. The same companies became relatively less
Current value: $566,500
attractive as they rose in price. My plan is to hold onto
companies so long as their fundamentals remain solid and Current gain: $127,000
only deploy cash into situations where I see immense
Holdings: 11
value.
Avg. holding period (months): 30
The next month may be a month of doing the difficult
thing… Waiting. Free cash flow yield (ttm): 2.90%
Disclaimer: The opinions expressed here are for transparency purposes only and should not be used as investment advice. Past
performance is not an indication of future returns. Any of the information shown may be incorrect and can change at any time.
