The island of misfit stocks

My father used to say the biggest difference between New Orleans, where he grew up, and Washington, D.C., was that if you meet someone in New Orleans, they ask you where you went to high school. If you meet someone in Washington, they ask you where you grew up.

In Atlanta, where I am now, the question would be, “what do you do?”

I get asked that a lot. And it is definitely the hardest of the three questions to answer. To be honest I sometimes just say “I’m unemployed,” especially if my read on the person asking is they are not someone who I’d enjoy talking markets with. And definitely that’s what I say to anyone driving a Tesla. Technically I don’t have a full-time employer, so it works.

Of course, the real answer is more complicated. I think my bio says I am a 30-year finance professional with a series of jobs working on M&A, venture capital, and equities research. But really, I’m just a markets dork. I wake up each morning to see what the markets are doing and go about my day buying or selling or researching or writing about some stock or another. My honorable mention job title is “dog walker.”

The most frequent questions I get, be it on Twitter or from readers on here, are about stocks. Either opinions on individual stocks, or questions about what stock to buy. I’ve done my best on this forum not to answer those questions. It seems like a sure path to people being angry at best, and litigation at worst. And to be clear, I don’t know you well enough to make that decision for you.

But it does create a bit of a conundrum. Here I am spending an unhealthy amount of the time looking at markets and thinking about markets and forming opinions on markets and individual stocks, with little to show for it and no real way to engage in good discussions on a level that would be interesting.

As I’ve mentioned before, I don’t often act on what I am thinking. But I do act more than I probably let on around here. I think of my portfolio as a barbell. The top dozen or so positions are in strong, established companies that I believe will stand the test of time. Barring any real black swan across multiples of those companies there should be enough there to make sure I don’t go hungry. Coupled with mutual funds it should be enough to cover getting old and what I hope to be a long, drawn-out fade.

It is the other half of the barbell that is, though less consequential (at least today), a lot more interesting. A lot of my time and energy goes towards trying to find under-the-radar or misunderstood stocks that I think at least have the potential to do great things. When the stars align and all goes right these stocks have the potential to transform themselves into creatures living in the other part of the barbell. I shared the story of XPO, a little nothing of a logistics company that returned 4,000% over just more than ten years, when I started this. Those opportunities aren’t common, and more of them fall apart than succeed, but it only takes one winner to offset a lot of blahs.

So here I am, with all sorts of ideas (likely good and bad), plenty of people asking about them, and no real way I’m comfortable with in sharing them.

All of this is just to say I’ve decided to join the Savvy Trader platform. For those unfamiliar, Savvy Trader is a subscription service with real-time portfolio tracking, narratives about the reasons behind portfolio moves, and a community chat feature.

My presence there, as “Lou Whiteman’s Island of Misfit Stocks,” is a collection of companies I either own or am watching (mostly owned) that are beaten down or dismissed. Or both. Most for good reason. But I believe they at least have the potential to rebound nicely. For reasons provided within. I’m building an initial collection of ten from a few dozen tickers that I spend a lot of time thinking about. I intend to adjust and add over time as appropriate. And hopefully chat and learn about these and other tickers with anyone who would like to talk stocks.

It is the long game. These sorts of things do not tend to happen overnight. Patience is required but only some patience. The plan is to sniff out bad ideas before they go to zero and redeploy into new ideas or winners who still have potential for more. Even if you are not there from day one, you can assume if it is still in the portfolio, I still consider the stock capable of going higher from here.

Hopefully it goes without saying, but there might not be another XPO in this bunch. These are definitely stocks that belong in the second part of a barbell portfolio, and not the bedrock. I buy into these sorts of companies fully-aware I could lose everything on any of them. Even all of them. And size my positions accordingly.

Learning is a lifelong journey without a destination. This portfolio is part of my journey. If you are interested in joining me, the link is below. I’d love to have you along for the ride.

Disclaimer: Fits and Starts DOES NOT provide financial advice. All content is for informational purposes only. Stocks mentioned are as reference only, and a mention should not be interpreted as a buy or sell recommendation. The author is not a registered advisor or a broker/dealer. DO YOUR OWN HOMEWORK. The information contained within is not and should not be construed as investment advice, and does not purport to be. The red zone has always been for loading and unloading of passengers. There’s never stopping in a white zone.

No statement or expression of opinion, or any other matter herein, directly or indirectly, is an offer or the solicitation of an offer to buy or sell the securities or financial instruments mentioned.