My portfolio invests in healthcare-related stocks. It attemps to identify companies with reasonable valuations and good prospects for growth including ones that offer possible dividends to stockholders. These companies will range from drug, device, retail sales, electronic medical record, prescription services, and HMO/hospital companies. While emphasizing mid cap stocks, large cap and smaller capitalization companies may be included as well as emerging medical treatments/technologies.
Companies selected for this portfolio are closely monitoried. Stocks are typically acquired slowly. I attempt to limit losses by selling losing positions quickly. In the same way, I will attempt to preserve capital by moving towards a cash position during weak market environments and towards equities during periods of market strength. The market environment will be assessed by observing the price behavior of the individual holdings within the portfolio itself.
Using publicly available sources including Yahoo Finance, Morningstar.com, and Google Finance, this fund will try to identify companies with longer-term records of growing revenue, earnings, and free cash flow. Consideration will be given to companies demonstrating improving fundamentals as well as reasonable valuation in terms of commonly available ratios including p/e, PEG, and price/sales ratios. Dividend payments will also be considered in a favorable light for investment decisions.
Initial allocation will be less than ten stocks, slowly working up to a maximum of twenty holdings. These holdings will be of equal weight and represent 50% of the cash available for investing. Subsequent purchases on buy signals. An attempt will be made to provide a diverse group of holdings across the healthcare field. Portions of appreciating stocks will be sold and these sales will be used as "buy signals “until 20 positions reached. This portfolio will hold at least a minimum of 5 positions.
Positions are closed out only if they decline to preset levels as determined after an initial purchase or after gains in which case sale points are increased to trail the appreciation targets by pre-determined amounts. With each closure of a position on a sale after a decline, this is viewed as a negative signal resulting in a shift to cash unless at minimum portfolio size of 5 positions in which case holding is replaced.
As much as possible, no exceptions to the above strategy will be acted upon. However, I reserve the right to replace any individual position with another position of similar value if fundamental information is identified suggesting prospects different than anticipated for the investment. This may include evidence of accounting misrepresentations, legal challenges, or unexpected announcement or news.