Dirty Secrets: Eight SMIDs

Introducing the TLBS Contrarian SMID Model Portfolio

Last year, I published Trade Ideas for 2025. The best idea (PL) has returned 539%. The worst (LULU) is down 49%. Some trades worked until they didn’t (TSSI) and others rose from ashes (FLNC). A simple average of the equity trades comes out to 76% return, the median return is 29%.

Of course, every idea list has hits and misses. But without transparent accounting, it’s easy to blur the lines. In reality, whether any of these trades actually worked is a question of entry, exit, and allocation. Absent clear communication and fair ledger, there is no credible way to assess value — and as a reader it is harder to extract value.

Now, I have a solution: a transparent, real time, live model portfolio (Details below).

Introducing TLBS Model Portfolios

There is no shortage of smart folks talking about Google or NVIDIA and I’m not sure how much value I have to add. Instead, I’ve found that I have better luck uncovering lesser known ideas — especially ones that go against the grain.

Rather than a permabear, The Last Bear Standing is contrarian at heart. That can mean fading market darlings or finding diamonds in the rough. It could be the collapse of Chinese property developers or the rebound of the Hang Seng index.

Today, I’ve written up eight small and mid-size (SMID) stocks that will be the start of a dynamic TLBS Contrarian SMID model portfolio.

Here’s my selection process.

Criteria: I like off-beat companies that are on the cusp of inflection — either in fundamental performance or market sentiment. My timeframe is neither the next quarter nor 2050 — I’m looking for concrete developments that I expect to be realized (or recognized) within the next 1-2 years. These companies have largely idiosyncratic business drivers rather than hinging on macroeconomic trends. Given this horizon, the equity positions should not be expressed through weekly calls, even if some short-term bets might be sprinkled into the portfolio as opportunities arise.

Fundamentals: For better or worse, my analysis considers financial fundamentals, including both current valuation metrics and a reasonably underwritten medium-term outlook. On capital structure, I appreciate a “margin of safety”, but I’m also intrigued by leverage when it’s opportunistic and asymmetric, particularly in a positive turnaround story.

Technical: I like stocks that are showing reversals after long periods of one-way price action (i.e. coming out of multi-year troughs or coming off extreme peaks). My favorite sentiment is a stale consensus.

Allocation: Four core longs will anchor the portfolio with the balance split among four smaller allocations with shorter-term considerations. The portfolio is concentrated in fairly small and illiquid names, which prioritizes total return over volatility.

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This model portfolio shouldn’t be taken as “investment advice” but rather a quantifiable ledger. At a minimum, it should provide a transparent expression of my evolving convictions, which I hope will provide significantly more clarity and value to the reader.

This portfolio will be dynamic. My intention is to introduce any new positions with relatively detailed posts outlining the idea. Any update to the portfolio will come with a note to readers explaining the rationale. Without further ado…

What stock do you secretly like but are too ashamed to tell anyone? Here is mine…