Snapshot
My Implied Share Price: $34.44
Situation
I’m always looking for ways to make my holding company stronger.
Response
I adjusted my holdings by taking a tax loss, raising cash, buying Egain, Weight Watchers, and Heritage Global. I reduced Medifast.
PETS
For PETS, I still believe it is extremely undervalued. I made the decision to strengthen my cash position and accept the loss on the shares I bought at a higher price. So, I tax loss harvested. But, I’m continuing to hold the remaining shares at a new reduced cost basis.
EGAN
eGain Corporation is currently undervalued. I have the belief that AI will be more individualized in the future, company by company, rather than one huge AI that does everything. With that in mind, I think eGain is in a good place. It can essentially become a knowledge base for individualized companies and eventually their AI home for knowledge.
WW and MED
I viewed Weight Watchers in conjunction with my position in Medifast. They are basically in the same business, except Medifast seems to be smaller and rely more on individual service providers. But, overall I believe Weight Watchers is the better brand, particularly with name recognition. I still like Medifast so I am holding on to it but with a reduced allocation.
Both companies are being impacted by GLP-1 advances, but both have incorporated them as a tool in their programs as well. The main industry is weight loss. I think both will do well moving forward and both are currently undervalued.
HGBL
Heritage Global, Inc. This company has a long history and has evolved over the years. It continues to evolve. But, even at its current status, I find it to be undervalued. It loss almost half its value over the last year. I don’t think that was justified.
Reflections
Overall I’m happy with my current positions and my cash reserves. My Implied Share Price is at an all-time high and I’m prepared for anything that may come. There is still overwhelming potential for gains based on my positions and cost basis I have in all of the subsidiaries.
I have also established a new rule of thumb. I have decided to cap my holding company at 60 companies MAX. No minimum, but I have to be mindful of my attention bandwidth and my ability to monitor positions. So, up to 60 diversified holdings, I believe, is sufficient.
Although I want diversity, I continue to make sure my holdings are in the categories within my “Circle of Confidence.” I’ve set limits to keep from having random and miscellaneous holdings. Basically, any holdings that are random and not within a specified sector segment of my portfolio, I’m considering it 3 to 1. In other words, one random stock would be equivalent to 3 specified stocks. The thought is to manage my time. If I have to learn an additional area of competence, then 3 times the efforts is justified, so I reduce the holding by a third for my attention bandwidth.
In addition, moving forward my goal is to only check the market prices of my subsidiaries, not focus on them. I don’t want to focus on the market news. Rather, I want to focus on continuing to research, but in more detail, my current subsidiaries. On weekends and opportunistically during sporadic weekdays, if needed, I may review and look at other opportunities. But, moving forward, looking at possible new opportunities will only be a small portion of what I do. 90% of what I do will be focused on my current holdings and only 10% of time will be focused on new opportunities (which is essentially R&D).