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Cheng Yuan is a software development manager for a publicly traded company. He reads voraciously on investment related subjects.
Cheng is continuously searching for great companies from 52-week lows, stocks trading below NCAV, 13D filings, activist investments, ideas from other researchers, and lots of reading. Once an opinion is formed about the company, the company is placed on a watch list with a buy target. It may take a very long time for the price to drop to the buy target, but as more companies are added to the list, the likelihood of a company reaching the buy target increases. Sometimes, with some luck, the company being researched may already be trading below the buy target.
He typically holds between 5 and 12 stocks. Positions are concentrated on the best idea, which may make up to 25% of the portfolio if the risk-reward profile is extremely attractive. In most cases, positions start at 2% and may go up to 10% depending on the attractiveness of the company. He does not sell a stock just because the stock has outgrown its allocated weighting unless the funds could be put to better use in a better opportunity.
A position is closed when the stock has approximated its intrinsic value or when a better opportunity is available. A change for the worse in fundamentals (with no correction in sight) or in management’s policy will also trigger immediate selling.
He may participate in special situations such as liquidations, spin-offs, re-capitalization, going private transactions, and so on if the risk-reward profile is promising.
Reads voraciously on investment related subjects
1. Performance of the portfolio manager's account is calculated by Covestor on a daily time-weighted basis, including cash, dividends and earnings distributions and broker commissions. Manager returns include trades and positions that fail Covestor's trading rules, as a result, actual client returns will differ. Covestor advisory fees are simulated and applied retro-actively to present the portfolio return "net-of-fees".
2. Past performance is no guarantee of future results. Periodic and since inception performance returns are calculated daily. Monthly vs. S&P 500 return and the corresponding spark chart is calculated to the most recent month end date.
3. The investment minimum is the minimum investment required to follow a particular portfolio. The minimum amount is determined by Covestor, based on the characteristics of the underlying portfolio. It should not be considered as specific investment advice for your investment situation.