Monthly Portfolio Update #2 (Feb. 2024)

Dear subscribers,

Welcome to my Monthly Portfolio Update!

In this month's edition, I will cover the long-term investments I managed through fundamental and technical indicators. More than just revealing what's currently in my portfolio, I aim to share the process that guided these investment decisions.

If you appreciate my approach and find the insights valuable, I encourage you to share my newsletter with your contacts!

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THIS MONTH’S HIGHLIGHTS

My 2 portfolios for long-term investing are based on 3 common principles: entry/exit based on the weekly chart, diversification, and compounding. Here are the key highlights for February 2024:

• Performance: Since their inception in October 2023, the stock and ETF portfolios have returned 16% and 6%, respectively.

• Portfolio composition: I still have a sizeable amount of cash (20-30%) available to deploy as opportunities arise. I currently own 16 stocks and 8 ETFs.

• Activity: I have been slightly deploying more cash in the past month as momentum remained supportive. I have initiated 2 new positions, while made 1 sales.

• My outlook: for the month ahead, my priority will be to deploy more cash whenever I find an attractive setup.

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LONG-TERM STOCK PORTFOLIO

My Approach

I start the stock selection process by filtering S&P 500 stocks through fundamental criteria. This method usually narrows my focus to approximately 20-30 stocks. To ensure these stocks continually meet my investment criteria and to adapt to evolving market conditions, I update my watchlist every 3 to 6 months. This disciplined approach helps maintain a relevant and high-performing portfolio.

My investment approach is anchored in 3 fundamental screening criteria:

1. Growth: I target companies exhibiting over 10% Earnings Per Share (EPS) growth and more than 5% revenue growth. This criterion helps pinpoint businesses on a profitable growth trajectory.

2. Margin: I focus on companies with a Return on Invested Capital (ROIC), Operating Margins, and Free Cash Flow (FCF) margins above 10%. These indicators reflect management's efficiency and the company's profitability.

3. Balance Sheet: I look for companies with a Debt-to-Equity ratio below 1 and a Current Ratio above 1, which suggests financial health and stability.

The essence of my portfolio strategy is to invest in growing, profitable companies with solid financial foundations. I believe these traits closely align with the potential for long-term stock price appreciation.

Identifying such companies is crucial, but the timing of investments is equally important. To this end, I use the Exponential Moving Average (9 and 30) on weekly charts. The process helps me time my entries and exits and ultimately find setups with attractive risk-reward profiles.

I allocate around 5% of my portfolio to each investment, balancing risk management and potential returns. The holding period for these positions can extend from several months to years, contingent on sustaining positive momentum. This approach ensures that each investment has ample time to achieve its full value.

My Performance

I'm confident that my hybrid approach can produce substantial returns over time, and my back-testing has suggested so. Since its inception in November 2023, my portfolio has achieved a cumulative return of +16%. In the last month, the portfolio has grown by 5%.

My Current Holdings

Here's an overview of my current stock portfolio: 81% is actively invested, with the remaining 19% kept in cash. The portfolio has 16 positions, and the best performers are PHM (+40%), NFLX (+35%), and BKNG (+30%).