Annual Review — Technology

Part two of my annual review and "reset" of my portfolio

By Travis Johnson, Stock Gumshoe, January 17, 2017

Today I continue my annual navel-gazing for you, as I look at each position in my portfolio — though this year, as I mentioned in our kickoff last week, I’m changing the way I describe, report and follow these stocks for you, largely so that I can be clearer about my preferences and opinions and about the stocks I actually own… and as part of that, I’ll be periodically reporting on my portfolio allocations and focusing primarily on following the stocks that I actually own (with a separate watchlist of stocks that I’m considering).

And now it’s Technology’s turn. This sector has the second-largest weighting in my personal portfolio right now (second to “insurance conglomerates” because of my large holdings in Berkshire Hathaway and Markel), and it is dominated by the leading companies in what I think of as “winner take almost all” oligopolies… companies that also happen to be among the largest and most ardently followed corporations in the world, so there are few surprises here and, most likely, few unique insights that I can share.

But that won’t stop me from sharing my opinions and positions, of course… so let’s go through in order of position size:

Facebook (FB) (11% of equity portfolio)

Facebook is a little company you may be familiar with — and the YCharts ratings for the stock sum it up pretty nicely: poor value score, strong fundamental score. This is a massive, massive company with a market cap of $360 billion, and it is not cheap… but it is one of a couple core stocks that essentially own internet advertising (Alphabet being the other, no surprise), and it is growing at such a phenomenal pace that we all have a little bit of trouble taking it seriously and believing in the potential future growth.

But grow Facebook will, I expect — and there’s no particular reason why the growth should slow down to a worrisome level other than the fretting about being “too big to grow.” User engagement is still growing for Facebook, average time spent is still growing, and, phenomenally enough, actual user count is still growing despite the fact that 25% of the world’s population are active users of Facebook (that’s probably slightly off, because some people have more than one account… but the active user number keeps growing). They’re still investing aggressively in growth, largely by developing new ...

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