SCTY and FSLR

These two stocks are going to represent a larger and larger piece of BSMF moving forward.

I expect both of these companies to grow quickly and substantially in the coming months and years. This is because they are both pushing toward solar power as a main energy resource. They are not trying to supplement combustion as an energy source; they are aiming to supplant it.

Both companies are just starting to garner attention from investors. BSMF has been investing in them for over a year on a small (less than 3%) basis. BSMF will begin to transition to solar over oil going forward.

First Solar (FSLR) focuses on large scale solar plants for industrial and commercial applications, while Solar City (SCTY) is more focused on small-scale home energy supply. That’s a bit of an oversimplification, but it captures the two different business models’ essence.

Tesla (TSLA) is also a player in this market, building a home battery for solar energy collection that will allow homes to be off grid even when the sun isn’t shining. Elon Musk – the CEO of Tesla – is on the board of directors of Solar City. BSMF will also maintain a position in TSLA, as well.

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AMT

This is an easy one. AMT is American Tower. They build, own, and lease out communication towers used by cell phone providers. They’re among the largest of such companies in the world.

As cellular providers spend to increase coverage, AMT gains. The company has provided solid, if not stunning, gains since it was added to BSMF. It has gained 17%, and is just less than 3% of the fund.

TSLA

The decision to purchase Tesla and add it to BSMF was based on “it seemed like a good idea at the time.” The analysis was not what you’d call traditional.

I love the concept of electric vehicles. Ever since I was a teenager, it has seemed to me that it would be better to generate power without burning stuff if you could. Electric cars just seem so much more sensible to me than driving around with a container full of highly flammable liquids.

I’m also much enamored of things that are well made. Fit and finish is important to me. So many products manufactured in the last forty or fifty years are flimsy crap, built to be useful for a few weeks after the warranty expires. Most of the stuff I have bought from Apple over the years is still useful and functional – obsolete because computer technology keeps moving forward – but still capable of doing what it once did. Part of my research of TSLA was finding out if their product is worth my interest.

Steve, my son-in-law, and I were in a mall, where a Tesla sedan was being displayed. It was beautiful. Naturally, it was beautiful in the superficial way that a car on display always is. Nobody puts anything on display without ensuring it’s pretty to look at. The Tesla was beautiful in ways that you just can’t fix in the showroom. There were no loose threads sticking out from the upholstery. There were no uneven gaps where the dashboard met the firewall and windshield. The details you don’t even consciously notice unless you’re specifically looking for them were clean and right.

Steve asked the attendant technical questions. The attendant was an attractive young woman. I don’t think it’s at all cynical to expect that an attractive young woman at a car display will be nothing more than window dressing. She was polite, professional, confident, and knowledgeable about the product. These are details that a lot of companies don’t get right.

In further research, I have listened to and read Elon Musk talking about his view of the future. This is a guy who has already made a few billion dollars, so I assume he’ll be saying something useful. He can talk intelligently about Tesla, Solar City (another stock I’ll blather about later), Space-X, and the Hyper Loop, among other things. Elon Musk is our current leading futurist. I have sought out his writing and speaking wherever I can find it.

All of that taken together encapsulates the reason I have invested in TSLA. The products are well made in ways that seem extravagant to traditional car makers. The company takes care of details that other companies ignore. The leader of the company is looking beyond the next quarter’s profits. He’s looking to fundamentally advance transportation and energy.

Since purchasing TSLA for BSMF, it has posted total gains of over 67%. It represents about 7% of the fund.

 

AAPL

AAPL is the among the first stocks purchased for BSMF. It has always been one of the largest holdings by percentage in the BSMF portfolio. It’s also one of the first stocks I bought for my personal portfolio.

Apple Computer, Inc. was the company’s name when I bought in initially. It was 1999 when I bought it for my personal account. In 1999, you had to be an idiot to buy stock in Apple. Even on tech-geek sites where they loved the products, nobody was recommending AAPL as an investment.

I don’t remember the date, but I remember the moment I decided to invest in Apple. I had been watching the stock for months. I was just learning about the stock market. I had a few shares of various companies that are long gone and forgotten, now. Apple had been on the verge of bankruptcy. I was only really interested in the company because I’ve been using their products since 1987. I bought a Macintosh SE computer, and have never owned any other brand since then.

In 1999 the stock was sitting at 62.50 per share when the company did a quarterly conference call. Profit missed analysts predictions by one cent per share. Overnight the stock price dropped by more than half. It quickly dropped to 25.00. I started reading everything I could find to figure out why the stock dropped as much as it did.

Here’s the thing. Profit had gone up quarter to quarter and compared to the same quarter the previous year. The company was making money. The company was making more money. It was selling stuff at a good clip. It missed analysts predictions by one penny and the stock price nosedived.

I went to as many places as I could find to explain to me exactly why such a report would drive stock prices down so much. I couldn’t find anything that parsed logical reasoning to give me that result. I could only surmise that it was a purely emotional response.

I bought a few shares. I still own some of those original shares. The split-adjusted price of the shares I still hold from that initial purchase is less than a dollar a share. It was over a year later that I started BSMF. AAPL has been approximately 20% of BSMF for several years.

This is one of the first lessons I learned about investing. If the mainstream is certain that something is a bad idea, it is almost certainly a good idea. And vice versa.

AAPL is maintained between 20% and 25% of the value of BSMF. Since inception it has 165% growth.