If you’re an investment manager and you tout he stocks you own, it’s called “talking your book.” I try not to do too much of it in this column. But once a year I write about the stocks I own personally and for most of my clients.
Here we go with the 2024 version. To begin with, I’m naked in two of the 11 industry sectors recognized by Standard & Poor’s — real estate and utilities. I believe that the problems in commercial real estate will take at least another year to work out, and I can’t find any utilities I like.
Here are my holdings in the remaining nine sectors.
Communications
I have only one holding here: Alphabet Inc. It falls into this sector because it owns Google and You Tube. In addition it owns Waymo, a leader in self-driving cars, and Deep Mind, a firm specializing in artificial intelligence.
Consumer Discretionary
I own Meritage Homes Inc. (MTH). I believe that the demand for single family houses is at least a million units higher than the supply, which will become clear if and when mortgage rates come down a peg.
Consumer Staples
Two holdings here: Cal-Maine Foods Inc. (CALM) and Costco Wholesale Corp. (COST). The former is the largest U.S. egg producer. The latter was the pioneer in big-box retailing with a membership structure.
Cal-Maine is debt free and pays a rich dividend in good years. Costco has grown profits at better than a 12% annual clip over the past decade.
Energy
Energy was the star sector in 2022. It also roared in the early 2000s, and I did so well in the sector then that I’m probably more emotionally attached to it than I should be. I own Diamondback Energy Inc. (FANGJ) and Total Energies SE. Total is based in France, and is active in solar and wind as well as oil.
Financials
On the large end, I own shares in Berkshire Hathaway Inc. (BRK.B), Warren Buffett’s redoubt. I agree with the consensus opinion that Warren is a genius. In addition, I think he’s assembled a good succession team.
On the small end, I hold International Money Express Inc. (IMXI), which helps Latin Americans working in the U.S. to send money to their relatives back home.
Industrials
Over the years, I’ve often been partial to industrial stocks, and right now I have seven in my model portfolio. General Dynamics Corp. (GD), a leading defense contractor, appeals to me because of the palpable threats from China, Russia, North Korea and Iran.
Sterling infrastructure Inc. (STRL) has been my biggest success in recent years. It has quintupled. I don’t expect such dramatic gains from here on, but I do think some further advance is likely, since the U.S. needs better bridges and tunnels.
Matson Inc. (MATX), an ocean shipper based in Hawaii, is up 61% in the 12 months through June 14. Again, I expect future gains to be more moderate.
Snap On Inc. (SNA) provides tools to car-repair shops. I bought it a little over two years ago. I still like it, but am considering a possible sale, since electric cars require less maintenance than traditional gasoline-fueled cars.
I’ve made small allocations to a trio of agricultural stocks. Agco Corp. (AGCO) make tractors and sells all sorts of farming supplies. FMC Corp. (FMC) produces fungicides, herbicides and insecticides. Lindsay Corp. (LNN) does irrigation systems).
Materials
Primarily because of high international tensions, I own a little gold, in the form of SPDR Gold Shares ETF (GLD), an exchange traded fund that represents ownership of the physical metal.
Technology
The tech sector has led the market for most of the past five years. Here my clients and I carry six stocks: Apple Inc. (AAPL), Arista Networks Inc. (ANET), Jabil Inc. (JBL), KLA Corp. (KLAC), Lam Research (LRCX) and Taiwan Semiconductor Manufacturing Co. (TSM).
As a value investor, it’s always been hard for me to find cheap stocks among the tech names. But I am willing to pay a little extra for good companies in this sector.
Disclosure: I own each of the stocks discussed above, personally and for most of my clients.
Correction
In my 2023-2024 stock picking contest, Dorfman’s Three-Stock Derby, I overlooked one entry. Richard La Chapelle, a retired English teacher from Escanaba, Michigan, should have placed second with an 81.6% return.
He picked Nvidia Corp. (NVDA), up 144%, Palantir Technologies Inc. (PLTR), up 75%, and Microsoft Corp. (MSFT), up 26%. Currently he says he is “lighter than usual” in stocks, partly because the market often struggles during Presidential election years.
Disclosure: Katharine Davidge, my wife and a portfolio manager at my firm, owns Nvidia and Microsoft personally and for her clients.
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