Less Holdings, More Focus
Atha is moving the club to sell some of its smaller holdings, the 10 or so stocks with a position value of $5,000 or less.
"We would like to reduce the number of holdings to 30 or 35 positions to increase the average position size, currently $8,000, to $10,000. Having fewer stocks would make the portfolio easier to manage. Our long-term goal is to manage the portfolio more actively than
we have in the past
. Also, with a larger position size, we can take better advantage of price movements. Finally, we want to make the portfolio more growth-oriented, by selling the stocks that trade in a narrow
. We have some stocks with only a few shares that were bought early in the life of the portfolio. During this semester we will reevaluate whether or not to sell these positions."
Along the lines of Atha's last thought, the club recently debated selling
, Caterpillar, and Microsoft -- all bought more than 10 years ago. Atha said, "We voted to sell Anheuser-Busch and Caterpillar, in keeping with the club's move into growth stocks, while keeping Microsoft because its growth potential fits into our goal of creating a growth-oriented portfolio."
Stock-Picking and Beyond
: In addition to learning about how to select stocks, the BC Investment Club is a way for students to get a better understanding of broader market events and economic signals. As an example, the club's co-director of research, Steve DeMarco, recently gave a detailed report that covered the
latest rate cut
, the rise of
, and the potential effect that the
by the financial companies might have on the club's position in Goldman Sachs.
Other Investment Vehicles:
The club currently only invests in stocks, so to broaden the group's investment horizons, co-director of research Anthony Weldon recently presented the pros and cons of investing in exchange-traded funds (
). As the chief advantages, Weldon cited
, flexibility to buy and sell during open market hours, tax efficiency and low cost compared to
Will the B.C. Investment Club expand into ETFs and which "old" stock will they sell next? And why? Stick with the Investment Club Watch and find out.