Felix Tong Profile Picture Individual Investor

Felix Tong

Mechanical Engineer,Utilities

  • Education BS Mechanical Engingeering (UCLA)

Long Term Core Holding

The model's primary goal is preservation of capital. Stocks of companies will only be purchased with a significant perceived discount to intrinsic value. Proper value investing requires discipline which will result in extended periods of the model holding a large cash position; this may cause under-performance during speculative markets. The model's goal is to outperform the S&P 500 over an entire business cycle, typically 8 years.
When deploying capital the model looks for cheap, ugly, obscure, or just plain boring companies. The model will purchase stocks of companies that have a durable competitive advantage that are temporarily suffering from headline risk. When markets are in freefall, and all companies are being sold indiscriminately, the model will buy the high quality companies, with the largest durable competitive advantages (moats), for its long term holdings.

The model does not have a particular capitalization bias or a sector bias.
The model screens databases such as Morningstar and Value Line for companies with a dramatic fall in per share price (approximately 20% in a week). If the drop is a result of a fall in short term earnings, temporary market share loss, or the company is suffering from headline risk, the model manager will perform a more in depth investigation of the company.

The manager reviews SEC filing, and participates in conference calls and web casts to determine the shareholder friendliness of management. If the model manager finds that the management is sound, the problems temporary and the valuation compelling, only then will a purchase be initiated.
This model is not diversified, and will usually only hold a handful of stocks. One stock may constitute the majority of the assets (for example, the model may allocate up to 50% of the portfolio in a single long term holding). Turnover is extremely low except in times of financial panic, where purchases may be accelerated due to a plethora of attractive opportunities. The typical holding period is 4 to 8 years (or one full economic cycle). During bull markets the portfolio may hold a large portion of its assets in cash due to unattractive valuations.

The model may own ADRs as well as ETFs (both leveraged and inverse).
As a company approaches the model manager's calculated intrinsic value, the model will begin selling the position. With regards to companies that have wide moats (durable competitive advantages) the model plans on holding the stock forever, and is unlikely to sell the position unless the company's competitive advantage is reduced, or the market values the security at several multiples over its intrinsic value.
Although the model uses fundamental analysis to select companies, if the model manager's analysis indicates a strong secular macro condition he will use ETFs to profit from the trend.

Risk rating

4
45.4%

Best 30 days

-20.9%

Worst 30 days

Performance

  • -8.3%
    30 day
  • 24.5%
    365 days
  • 25.1%
    Since Inception
    March 29, 2011
Monthly vs S&P500
Sparkbar Graph, Long Term Core Holding Investment Model Performance versus S&P500
43.3%

Last 12 months

  • $5,000 subscription min
  • 0.5% fee

Replicability

100.0%
  • Replicable

Top 5 Holdings View all

58.7%
16.1%
10.0%
9.1%
6.1%
  • USG
  • SNBC
  • WFC
  • BAC PRU
  • Cash

Model commentary

  1. Why I'm passing on Diamond Foods stock

    3 April 2012

    It seems to me that Diamond Foods must execute its strategy perfectly to pay off its long term debt obligations.

  2. I'm overweight housing and most confident in my … 19 January 2012
  3. Interesting opportunity in Olympus stock right now 15 December 2011
  4. This Bank of America trust preferred security … 22 September 2011
  5. Wells Fargo's a play on my favorite sector: h… 20 July 2011

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Performance detail

  • Manager
  • Russell 2000
  • S&P 500
30D 90D 365D SI

Performance

Inception March 29, 2011
as of May 21, 2012 Manager Russell 2000 S&P 500 Average Subscriber
Past 30 days -8.3% -4.9% -4.5% -7.8%
Past 90 days 2.6% -7.1% -3.4% 3.6%
Past 365 days 24.5% -7.8% -1.3% -
Since Inception (Annualized) 21.6% -6.8% -0.2% -
2012 (YTD) 28.1% 3.2% 4.6% -

Risk Metrics

Last 365 Days
as of May 21, 2012 Manager Russell 2000 S&P 500
Best 30 days 45.4% 20.3% 13.6%
Worst 30 days -20.9% -23.6% -16.7%
Volatility 45.8% 33.1% 23.2%
Sharpe Ratio 0.53 -0.24 -0.06
Sortino Ratio 0.80 -0.35 -0.08
Maximum Drawdown -26.5% -29.0% -18.8%
Value-at-risk (95%, 1 week) -10.6% -7.7% -5.4%
vs. Russell 2000 vs. S&P 500
Information Ratio 1.14 0.81
Alpha 35.2% 30.2%
Beta 1.10 1.52
R-Squared 0.63 0.59

Latest transactions view all

Average trades per month 0.7
Executed Symbol Security Replicable Type Price
08/18/11 USG USG CORP Yes Buy $7.50
08/15/11 BAC PRU BAC CAPITAL TRUST IV, 5 7/8% CAPITAL SECURITIES Yes Buy $20.70
08/09/11 SNBC SUN BANCORP INC-NJ Yes Buy $2.45
08/05/11 USG USG CORP Yes Buy $9.82
07/26/11 USG USG CORP Yes Buy $11.88
06/08/11 WFC Wells Fargo & Co Yes Buy $25.60
05/17/11 USG USG CORP Yes Buy $14.18
05/02/11 ATHR ATHEROS COMMUNICATIONS Yes Buy $44.82
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  • $5,000 subscription min
  • 0.5% fee

Important Information

Important Information

1. Past performance is no guarantee of future results.

2. Performance of the model 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 that fail Covestor's trading rules, do not reflect any Covestor suitability or risk score restrictions and are exclusive of Covestor fees. More

3. Average subscription returns ("Avg Sub" or "Avg Client") are calculated by Covestor and are composed of the average, daily, time weighted returns of all active subscriptions to the underlying model. These daily average returns are then linked together for the timeframe requested. In addition, these returns include cash, dividends and earnings distributions, brokerage commissions, Covestor advisory fees, and reflect individual client suitability and risk score restrictions. More

4. All graph data is as of the end of day for the referenced period, unless otherwise specified. The subscription minimum is the minimum subscription required to follow a particular model. The minimum amount is determined by Covestor, based on the characteristics of the underlying model. It should not be considered as specific investment advice for your investment situation.

5. Benchmark returns have been calculated by Covestor using a time-weighted calculation of daily index valuations and do not include cash, dividends and earnings distributions, or transaction costs. More

6. Leverage indicates the level of margin utilized and is calculated by dividing gross exposure by portfolio net liquidation value.

7. All Model Manager information including personal data, profiles, strategies, monthly investment reports, and historical results outside of Covestor has been provided by the Model Manager. Covestor makes no representation or warranty of its accuracy, completeness or relevance and it does not represent the opinions of Covestor. Transaction history is available upon request. Model classifications (Approach, Asset Class) are provided by Covestor, and are intended to serve as a general guide.

8. Top Replicable Holdings: These securities are currently held in the model manager's brokerage account. Those marked as "Replicable Holdings" currently pass Covestor's trading rules, subject to individual client constraints. Eligibility for replication may change over time. Actual client subscription holdings may vary.

9. Latest Transactions: These transactions were executed in the model manager's brokerage account. Those marked as "Replicable" () passed Covestor's trading rules and were eligible for replication at the time of execution, subject to individual client constraints. Eligibility for replication may change over time. Actual client subscription trade activity may vary.

10. S&P 500 Index is an unmanaged index compiled by Standard & Poor´s Corp. Index returns do not reflect any management fees, transaction costs or expenses. Individuals cannot invest directly in an Index. S&P 500 index data: S&P 500 Copyright © 2012.

11. Dow Jones index data: CME Group Index Services, LLC 2012


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