LTP Portfolio Manifest
The rules I follow for my portfolio. Last updated: 10 August 2026.
In one paragraph: I invest in quality businesses with a real moat, expected EPS growth of 10% or more, high margins, and a strong balance sheet. I only buy when the market undervalues them compared to their history. I keep at least 10% of the portfolio in SGOV for emergencies and only use it when prices drop. I sell when the reasons I bought a company are no longer valid, not just because the price has fallen.
What I buy
A company must pass all my tests, not just some:
A real moat. There must be switching costs, network effects, a strong brand, or unique assets - something I can name and explain clearly. If I can’t explain why customers will stay for the next decade, I move on.
Expected EPS growth over the next 3-5 years must be 10% or more. I rely on consensus earnings projections, not my hopes. Below 10%, compounding is too slow to beat the index.
High and stable profitability. I look for a net margin in double digits that is at or above its 5-year average. A cheap stock with declining margins isn’t really cheap - it indicates a deteriorating business.
Returns on capital must exceed the cost of capital. I want ROIC of 15% or higher. This is the best indicator that a moat exists. A company that can reinvest at 15-20% or more for years does the compounding for me.
A balance sheet that can withstand a tough decade. I prefer net cash, while net debt is acceptable only if it is small compared to free cash flow, roughly under two years of FCF. No bets on the balance sheet and no refinancing issues.
What I pay
Quality alone isn’t enough to buy. The price tests include:
Forward P/E below the company’s own 5-year average. I buy businesses when the market is fearful, not when everyone is celebrating them. Every position in my portfolio was entered below its historical multiple.
PEG around 1.5 or lower. The lower, the better. Paying one unit of valuation per unit of growth is fair. Waiting for a situation like NVDA at 0.47 when I bought is what I aim for.
A fair-price model with a margin of safety. I forecast EPS five years out with growth capped at 20% per year, regardless of what consensus says. I apply bear, base, and bull exit multiples, and discount back at 12%. I start buying at a 30% discount to my base case. This cap and discount protect me from my own optimism.
How I size
10-15 positions. This number is sufficient to withstand mistakes while being few enough that success matters.
Core positions make up 8-16% of the portfolio - these have the highest conviction and widest moats. Satellites constitute 2-5% - these are contrarian bets, catalysts, or higher-risk investments.
Volatility determines the size, not just my conviction. A stock with a beta above 2, like NVDA, gets a smaller position even if I believe in it. I size for the 30-40% drawdowns typical for such stocks, preventing market swings from forcing me to sell.
The top 5 positions stay at or below 70% of the portfolio. When winning stocks grow too large, I trim back, which is a good problem to have.
The cash rule: SGOV
SGOV, consisting of 0-3 month T-bills, is my dry powder with a hard floor.
SGOV never falls below 10% of the portfolio in normal markets. Whatever I want to buy, that floor comes first.
The only exception is in a declining market. When the overall market drops significantly (around 10% or more off its highs), that’s exactly when I want to use my dry powder, so SGOV might go below 10% while I buy into the fear.
After the downturn, I rebuild the floor with new savings, dividends, and trims from oversized winners.
SGOV isn’t an investment, and I never treat it as one. It’s a way to be patient while earning a yield. It removes the pressure to be fully invested at prices I don’t like, changing crashes from threats into moments my strategy is designed for.
When I sell
This section is crucial, so let me state the principle clearly: I sell when the criteria change, not when the price changes. Every company enters my portfolio after passing the tests above, and it leaves when it stops passing them:
Expected growth declines. Forward EPS growth falls below my 10% threshold - not just one weak quarter but a changed trajectory the company confirms.
The moat weakens. This includes losing pricing power, losing market share to a competitor, or customers easily switching away. The reason I identified when I bought has ceased to be true.
Profitability drops. Margins or ROIC fall below their historical averages and my minimum values and remain there - the business is getting worse, regardless of how the story is spun.
The balance sheet worsens. Debt increases to a level that creates refinancing risks, or cash burn occurs where free cash flow used to exist.
A thesis-specific trigger activates. In every analysis, I share my investment thesis. For Nvidia, for example, gross margin must remain over 65%, or both major buyers must cut AI spending at the same time.
Outgrowth. Removing a winner that has outgrown its size range, and switching to a clearly better discount.
And the mirror rule is important: a falling price with the same criteria is a buying opportunity, not a selling signal. If the numbers still pass and the stock is 25% cheaper, the right feeling is gratitude.
What I do not do
No leverage, no margin, no options. It only works if nothing can pressure me.
No market timing beyond the cash rule. I do not predict peaks; the SGOV floor is the whole “macro strategy.”
No selling based on headlines, downgrades, or market drops. Only the criteria matter.
No averaging down on a broken thesis. If a kill switch was triggered, a lower price does not reverse that.
The watchlist
Most companies that pass my quality tests fail the price test. Great businesses are rarely cheap, which is why they go on the watchlist. They aren’t forgotten - they wait for their price.
Entry: a company gets on the list only if it passes all five quality tests from “What I buy.” The watchlist isn’t just interesting tickers - it’s a list of approved businesses waiting for their price.
Each name comes with its homework: a fair price based on my bear, base, and bull model, a buy zone (30% below the base case), and a note on what I’m waiting for. Analysis is done in advance when I’m calm, so when the price is right, I only decide on the position size.
The trigger is the price, not the news. When a stock hits its buy zone, I use the dry powder from SGOV to purchase it. The cash rule and watchlist work together: the watchlist specifies what to buy and at what price, while SGOV shows what money to use.
To exit the list, a name either moves up (bought - it goes into the portfolio) or down (a quality test fails or a thesis trigger occurs). A stock that rises in price stays on the list - being expensive is temporary, while being broken is not.
The list remains short (around 10-15 names). Each name’s earnings are tracked and fair price updated. A watchlist I can’t actively manage is just a wish list.
Where the names come from. I use two screeners that run monthly over the entire market:
Quality compounders. Market cap over $2B, gross margin of at least 40%, net margin of at least 5%, FCF margin of at least 8%, ROIC of at least 15%, revenue growth of at least 10%, and expected EPS growth of at least 15% for the next two years, with PEG below 1.5. The entire US market usually gives me around a dozen matches, and that shortlist gets a full analysis. The screen requires 15% growth while my ownership limit is 10% intentionally - new names must clear a higher bar to enter than older names need to remain.
Emerging growth. Market cap of $1-50B, gross margin of at least 50% (showing pricing power), revenue growth of at least 15%, expected EPS growth of 20-25% or more, debt/equity below 60%, and PEG under 1.75. Here, I intentionally relax the profitability tests (net margin above zero, ROIC above 5%) since these are younger premium brands and platforms still converting growth into mature margins. The names can only be satellites, making up 2-3% positions, never core, with stricter balance-sheet rules.
A screener finds numbers, not moats. Passing a screen puts a company on my desk, but only the full analysis results in it making the watchlist.
The current watchlist (names, fair prices, and buy zones) is included in every monthly portfolio update.
This is not a financial or investing recommendation. It is for educational purposes only.