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This FFJ Portfolio – May 2025 report is a high-level recap of my activity during the month. Several buying opportunities presented themselves in April. May, however, was a very different story with the return of irrational exuberance.<\/p>\n
Looking at the Financial Industry Regulatory Authority, Inc. (FINRA) monthly margin statistics<\/a>, I suspect some investors experienced a margin call when the broad North American equity markets experienced turmoil in April! The May data is not yet available but I suspect that the debt balances will reflect an uptick from April.<\/p>\n How is it possible that the the underlying fundamentals of Veeva (VEEV), HEICO (HEI and HEI-a), Microsoft (MSFT), Carrier Global (CARR), and Paycom (PAYC) justify a 13%+ increase in their respective share price in one month? At the other end of the spectrum, Becton Dickinson (BDX) and Copart (CPRT) experienced a 16%+ decline in their respective share price. Nothing about any of these companies justifies such wild share price swings in such a short time frame.<\/p>\n Share price behavior may be important to very short-term ‘investors’. I do not, however, have the intestinal fortitude (nor the aptitude and desire) to try and predict short-term share price behavior. The less activity on my part, the better. This is why I focus on investing in high quality companies that have a strong probability of being able to weather challenging business conditions.<\/p>\n Nevertheless, I do look at what is happening with companies in which I would never remotely consider investing. Winnebago Industries, Inc. (WGO) is such a company.<\/p>\n WGO is, in my opinion, a good proxy of the state of consumers.<\/p>\n Purely from a Net Revenue perspective, WGO generated ~$4.958B, ~$3.491B, and ~$2.974B in FY2022 – FY2024 and ~$1.246B in the first half of FY2025.<\/p>\n Looking at the company’s Consolidated Statement of Cash Flows in its Form 10-K and Form 10-Q (SEC Filings<\/a>), we see a horrible trend.<\/p>\n In all fairness, the first 6 months of WGO’s fiscal year (the beginning of September and the end of February) is a time frame in which not many people are likely looking to purchase boats or motor homes. Nevertheless, it is pathetic when:<\/p>\n
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\n<\/ul>\n In the first half of FY2024, WGO generated ~$1.467B of Net Revenue meaning it generated Net Revenue of ~$1.507B (~$2.974B – ~$1.467B) in the second half of FY2024. On ~$1.507B of Net Revenue in the second half of FY2024, WGO added nothing to its bottom line and it generated less than $80 million in FCF!<\/p>\n Moody’s is equally unimpressed. It downgraded WGO’s long-term Corporate Family Rating from Ba3 to B1 (4 tiers below the lowest investment grade rating) on May 27, 2025.<\/p>\n S&P Global assigns a BB- rating (3 tiers below the lowest investment grade rating) with a stable outlook. I think a downgrade by S&P Global is in the cards.<\/p>\n WGO shareholders need to recognize that their investment is highly speculative.<\/strong><\/p>\n WGO’s performance should not be viewed in isolation to gauge the state of the overall economy but it is a ‘red flag’. Other ‘red flags’ (rise in car repos, credit card delinquencies, mortgage defaults, loan delinquencies, an increasing percentage of monthly household income being allocated to the necessities in life (food\/shelter), etc.), however, suggest all is not well.<\/p>\n WGO has several brands<\/a> and the price points for their products are wide-ranging.<\/p>\n One of the most popular Winnebago models is the Class A motorhome. These luxurious vehicles are designed for long-term travel and can cost anywhere from several hundred thousand dollars to over $2 million depending on the motor homes features. The Class B motorhomes, also known as campervans, are smaller and more affordable. The price range is generally in the low 6 figures. The travel trailers\u00a0 (Micro Minnie) price range can be in the low 5 figures and the Minnie can be in the mid to high 5 figures (all prices are in USD and these prices are for new and not resale products).<\/p>\n In addition, to motor homes and campers, WGO’s Chris-Craft brand caters to buyers looking for boats. Once again, there are various price points and depending on your preferences and budget, the price range can be in the mid to high 6 figures.<\/p>\n The cost of purchasing a WGO product is just the beginning as there are ongoing costs (ie. fuel, insurance, maintenance, etc.).<\/p>\n WGO also has to compete with the ‘resale’ market where the price points are typically much lower than for new products\/models. Looking at RV Liquidators’ website<\/a> in Canada, we see used models priced well below new models.<\/strong><\/p>\n Interestingly, at the time I compose this post on May 31, RV Liquidators reflects 14 NEW 2023 RVs, 138 NEW 2024 RVs, and 410 NEW 2025 RVs for sale<\/a>. There are also 14 USED 2023 RVs, 16 USED 2024 RVs, and 10 USED 2025 RVs for sale<\/a>. The 2026 models are already being sold yet there are still unsold 2023 models and this is the inventory for JUST 1 Canadian liquidator with 7 locations!<\/p>\n The \u00fcber rich will continue to acquire ‘luxury items’ regardless of economic conditions and are probably inclined to travel by private jet and to own yachts.<\/p>\n A good percentage of WGO’s customer base likely resorts to some component of financing. Since WGO’s products are not ‘essential’, a component of WGO’s potential customers will likely nix a purchase if their financial situation takes a sudden turn for the worse.<\/p>\n Whether you disagree or not with my assessment of WGO, I still suggest avoiding ‘train wrecks’.<\/p>\n Market conditions in April provided me with the opportunity to deploy ‘dry powder’. In May, however, I made no outright purchases in the FFJ Portfolio<\/a>. <\/strong>I did, however, make the following purchases for a couple of young investors who are on their journey to financial freedom. Because these shares are not part of the FFJ Portfolio, I do not disclose how many shares were acquired.<\/p>\n None.<\/p>\n Dividend metrics are of little relevance in my investment decision making process. My interest lies in an investment’s TOTAL potential investment return. In many cases, the preferred means by which a company can allocate its capital is to:<\/p>\n
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\n<\/ul>\n Nevertheless, I track dividend income and make this information accessible here<\/strong><\/a>.<\/p>\n Through the automatic reinvestment of dividend income, I increased my exposure to the following holdings held in the FFJ Portfolio.<\/p>\n
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\n<\/ol>\n The May dividend income was:<\/p>\n
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\n<\/ul>\n YTD2025 dividend income is:<\/p>\n
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\n<\/ul>\n In prior FFJ Portfolio monthly posts<\/strong><\/a> I explain why the value of the ‘Side’ accounts component of the portfolio experienced a dramatic reduction in value in June 2024.<\/p>\n Core Accounts:\u00a0 ~$ 739,787 CDN and ~$ 3,540,445 USD<\/p>\n Side Accounts:\u00a0 ~$ 606,667 CDN and ~$ 1,696,869 USD<\/p>\n Total:\u00a0 ~$ 1,346,454 CDN and\u00a0 ~$ 5,237,314 USD<\/strong><\/em><\/p>\n Core Accounts:\u00a0 ~$ 569,237 CDN and ~$ 3,642,078 USD<\/p>\n Side Accounts:\u00a0 ~$ 299,732 CDN and ~$ 1,784,750 USD<\/p>\n Total:\u00a0 ~$ 868,969 CDN and\u00a0 ~$ 5,426,828 USD<\/strong><\/em><\/p>\n Core Accounts:\u00a0 ~$ 553,777 CDN and ~$ 3,965,820 USD<\/p>\n Side Accounts:\u00a0 ~$ 0 CDN and ~$ 630,943 USD<\/p>\n Total:\u00a0 ~$ 553,777 CDN and\u00a0 ~$ 4,596,763 USD<\/strong><\/em><\/p>\n Core Accounts:\u00a0 ~$ 598,271 CDN and ~$ 4,218,120 USD<\/p>\n Side Accounts:\u00a0 ~$ 0 CDN and ~$ 881,679 USD<\/p>\n Total:\u00a0 ~$ 598,271 CDN and\u00a0 ~$ 5,099,799 USD<\/strong><\/em><\/p>\n Core Accounts:\u00a0 ~$ 598,631 CDN and ~$ 4,368,140 USD<\/p>\n Side Accounts:\u00a0 ~$ 27,470 CDN and ~$ 931,443 USD<\/p>\n Total:\u00a0 ~$ 626,101 CDN and\u00a0 ~$ 5,299,583 USD<\/strong><\/em><\/p>\n Core Accounts:\u00a0 ~$ 620,426 CDN and ~$ 4,428,345 USD<\/p>\n Side Accounts:\u00a0 ~$ 32,226 CDN and ~$ 953,814 USD<\/p>\n Total:\u00a0 ~$ 652,652 CDN and\u00a0 ~$ 5,382,159 USD<\/strong><\/em><\/p>\n Core Accounts:\u00a0 ~$ 617,739 CDN and ~$ 4,411,985 USD<\/p>\n Side Accounts:\u00a0 ~$ 37,230 CDN and ~$ 960,683 USD<\/p>\n Total:\u00a0 ~$ 654,969 CDN and\u00a0 ~$ 5,372,668 USD<\/strong><\/em><\/p>\n Core Accounts:\u00a0 ~$ 649,920 CDN and ~$ 4,786,925 USD<\/p>\n Side Accounts:\u00a0 ~$ 40,476 CDN and ~$ 1,026,183 USD<\/p>\n Total:\u00a0 ~$ 690,396 CDN and\u00a0 ~$ 5,813,108 USD<\/strong><\/em><\/p>\n Core Accounts:\u00a0 ~$ 628,504 CDN and ~$ 4,670,202 USD<\/p>\n Side Accounts:\u00a0 ~$ 39,292 CDN and ~$ 1,066,098 USD<\/p>\n Total:\u00a0 ~$ 667,796 CDN and\u00a0 ~$ 5,736,300 USD<\/strong><\/em><\/p>\n Core Accounts:\u00a0 ~$ 660,263 CDN and ~$ 4,950,735 USD<\/p>\n Side Accounts:\u00a0 ~$ 44,099 CDN and ~$ 1,126,663 USD<\/p>\n Total:\u00a0 ~$ 704,362 CDN and\u00a0 ~$ 6,077,398 USD<\/strong><\/em><\/p>\n Core Accounts:\u00a0 ~$ 653,051 CDN and ~$ 4,970,834 USD<\/p>\n Side Accounts:\u00a0 ~$ 41,447 CDN and ~$ 1,190,729 USD<\/p>\n Total:\u00a0 ~$ 694,498 CDN and\u00a0 ~$ 6,161,563 USD<\/strong><\/em><\/p>\n Core Accounts:\u00a0 ~$ 617,286 CDN and ~$ 4,829,134 USD<\/p>\n Side Accounts:\u00a0 ~$ 35,596 CDN and ~$ 1,265,103 USD<\/p>\n Total:\u00a0 ~$ 652,882 CDN and\u00a0 ~$ 6,094,237 USD<\/strong><\/em><\/p>\n Core Accounts:\u00a0 ~$ 620,799 CDN and ~$ 4,708,988\u00a0 USD<\/p>\n Side Accounts:\u00a0 ~$ 74,619 CDN and ~$ 1,352,923 USD<\/p>\n Total:\u00a0 ~$ 695,418 CDN and\u00a0 ~$ 6,061,911 USD<\/strong><\/em><\/p>\n Core Accounts:\u00a0 ~$ 660,717 CDN and ~$ 4,863,614\u00a0 USD<\/p>\n Side Accounts:\u00a0 ~$ 78,367 CDN and ~$ 1,402,636 USD<\/p>\n Total:\u00a0 ~$ 739,084 CDN and\u00a0 ~$ 6,266,250 USD<\/strong><\/em><\/p>\n NOTE: The above values exclude investments in several tax-efficient accounts for which I do not disclose details.<\/p>\n I wish you much success on your journey to financial freedom.<\/p>\n Note:<\/strong><\/em> Please send any feedback, corrections, or questions to [email\u00a0protected]<\/span><\/a>.<\/em><\/p>\n Disclaimer<\/strong>: I do not know your circumstances and am not providing individualized advice or recommendations. I encourage you to make all investment decisions through research and due diligence. You should also consult your financial advisor where appropriate.<\/em><\/p>\n I wrote this article myself and it expresses my own opinions. I am not receiving compensation for it and have no business relationship with any company whose stock is mentioned in this article.<\/em><\/p>\n<\/p><\/div>\nThe Return Of Irrational Exuberance<\/strong><\/span><\/h3>\n
Avoid Train Wrecks<\/strong><\/span><\/h3>\n
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Recent Activity<\/strong><\/span><\/h2>\n
Purchases<\/strong><\/span><\/h3>\n
Copart (CPRT)<\/strong><\/span><\/h4>\n
Zoom Communications (ZM)<\/strong><\/span><\/h4>\n
Sales<\/strong><\/span><\/h3>\n
Dividend Income<\/strong><\/span><\/h2>\n
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Holdings<\/strong><\/span><\/h2>\n
April 2024<\/strong><\/span><\/h3>\n
May 2024<\/strong><\/span><\/h3>\n
June 2024<\/strong><\/span><\/h3>\n
July 2024<\/strong><\/span><\/h3>\n
August 2024<\/strong><\/span><\/h3>\n
September 2024<\/strong><\/span><\/h3>\n
October 2024<\/strong><\/span><\/h3>\n
November 2024<\/strong><\/span><\/h3>\n
December 2024<\/strong><\/span><\/h3>\n
January 2025<\/strong><\/span><\/h3>\n
February 2025<\/strong><\/span><\/h3>\n
March 2025<\/strong><\/span><\/h3>\n
April 2025<\/strong><\/span><\/h3>\n
May 2025<\/strong><\/span><\/h3>\n