Miley Portfolios

My commentary for this week will be relatively brief.  But I need to say something about Facebook (FB).  There have been a lot of comparisons to FB to being the “big tobacco” stock of 2021 because of the threat of legal actions.  Personally, I think that is fallacious as FB is a vital part of small business and I doubt that any legislation will stop it from collecting ad dollars.  I regard any weakness as a buying opportunity – not a reason to sell.  But let’s suppose that FB is like Altria ( née Phillip Morris).   Many years ago I bought 1,000 shares of Phillip Morris at about $18/share.  That 18,000 dollar investment netted me thousands of dollars thru growth, dividends and spin-offs.  Of course FB doesn’t pay a dividend but it makes it up in growth.  My point here is that hated stocks which fulfill a want like tobacco in the case of Altria or advertising in the case of FB, they often overcome adversity, thrive and grow.  read more

The above quote from the “ole Blue Eyes” song sums up my thoughts on the Miley Growth Fund and the Miley Income Fund.  On the Growth Fund, I have regretted recommending BABA and VIPS – the performance of the fund would have been a lot better without them.  But as I mentioned, I think that the Chinese government will eventually come to its senses (and the stocks are improving a bit today).  It also illustrates the fact that diversification lessens the impact of bad choices like BABA and VIPS.  As for the other stocks in the growth fund, notice that my confidence in NFLX has been rewarded – the stock is rebounding today.  I may make some adjustments to the fund in January on the fund’s year anniversary, but for now stay the course with all of the stocks in the fund. read more

The Senate has passed the 1.9 Trillion-dollar bill.   I cannot fathom how a married couple making $150,000 per year is “struggling”.  And if they have 2 children, they will be getting $5,600!  As Margaret Thatcher said: “The problem with socialism is that you eventually run out of other peoples’ money.”  I believe that will be extraordinarily inflationary.

So, how should this affect the affect the “Miley Growth Fund” and the “Miley Income Fund”?

As for the “Growth Fund”, be prepared for more volatility and the fund may turn negative for a period.  But the fund is intended for medium to long term investors, so I believe that the fund will still outperform the S&P for 5-10 years.  And if you have been lucky enough to buy VIP Shop Holdings (VIPS), I would recommend that you take some profits, since the stock has exceeded my expectations by growing at over 50% in the short period since I picked it.

On the “Income Fund”, it has outperformed the “Growth Fund”, mainly because of the presence of several financial stocks like Jefferies Financial Group (JEF).  Financials have been going up lately because of the rise in interest rates.   As for the poor performers like Pfizer and Merck, I am disappointed, but the stocks pay a healthy dividend, so sit back and collect your dividends and don’t worry.

As for asset allocation today, the traditional 60-40 mix of stocks-bonds is in trouble since interest rates are on the rise.  If you are using aggregate bond fund like AGG, I would recommend investigating some actively managed bond funds or perhaps a real estate investment trust like Reality Income Corp (O).  Another alternative would be to lighten your bond index fund allocation to 30% and move the remaining 10% into Treasury Inflation Protected Securities (TIPS) and/or into mortgage-backed securities with a fund like GNMA.  Moves like this should smooth out your returns.  And if you have a 401k, I recommend that you utilize a Stable Value Fund for the 10% allocation – these funds are backed by insurance companies and pay a much higher return than money market funds.

So there you have my current commentary, please feel free to comment or write to me directly.

Dan

Dear Friends,

Again, I apologize for not updating this portfolio more often.  I promise to do better.  I have dumped nearly all of the former stocks (for example, I dropped DST at 112 a few months ago).  But I am retaining AAPL, CELG, ORLY, and SKWS and adding 5 new picks.  Here is a round up of my thoughts:

Apple – I am maintaining my position in this one.  I believe that Apple is still a great pick, even if earnings only grow at an anemic rate of 6%, the stock is still undervalued and should be at least 128.

Celgene – Even with the recent bad news, I still think Celgene is undervalued and should sell for 116, a significant upturn from its current price.  Don’t expect instant gratification but I advise staying with them.

O’Reilly Automotive – I am maintaining my position in this one.  It is fairly valued at these levels so I wouldn’t buy more.

Skyworks Solutions – This stock has been pummeled along with Apple.  But I think it is still undervalued and should be accumulated.

United Therapeutics Corp (UTHR) – United Therapeutics Corp is a biotechnology company.   The company is engaged in the development and commercialization of products to address the unmet medical needs of patients with chronic and life-threatening conditions.  This stock is my top pick.  With an ROE of 49% and expected growth north of 22%, I think that this one will be 200 by this time next year.

Avago Technologies (AVGO) – Avago Technologies Ltd is a designer, developer and supplier of semiconductor devices with a focus on analog III-V based products and complex digital and mixed signal complementary metal oxide semiconductor, or CMOS, based devices.  With an ROE of 35% and expected growth of 26%, I see this stock reaching 141  (it currently sells for about 126).

Taiwan Semiconductor (TSM) – Taiwan Semiconductor Manufacturing Co Ltd engages in the manufacturing, selling, packaging, testing and computer-aided design of integrated circuits and other semiconductor devices; it also manufactures masks.  With an ROE of 30% and expected growth of 15% I see this stock reaching 41 from its current level of 21.

Gentherm, Inc. (THRM) – Gentherm, Inc. is engaged in the design, development, and manufacturing of thermal management technologies. The Company has two reportable segments for financial reporting purposes: Automotive and Industrial.  With an ROE of 27% and expected growth of 25%, I see this stock reaching 100 from its current level of about 39.

Maximus, Inc. (MMS) – Maximus Inc provides business process services to government health and human services agencies in the United States and to foreign governments.  With an ROE of 27% and expected growth of 19%, I see this stock reaching 64 in a year from its current level of about 52.

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