Stocks to Review – December 2014

In order to decide what we should sell or keep, we need to review the stocks that have been hit across the six portfolios.  There are 12 stocks listed and grouped across the various industries and regions.

We will look by group to determine what we recommend to do next based on the specific circumstances of that stock and the factors that caused their valuation to change.  If it is a dividend related stock, we will also start to think if their dividend is “at risk”, because that would likely trigger another price drop.

US Energy

  • Exxon Mobil (XOM)
  • Devon (DVN)
  • Anadarko (APC)

Of the 3 US energy companies, Exxon Mobil is a long term keeper because it is so well and ruthlessly run.  They have a reasonable dividend of about 3% that doesn’t seem to be at risk.  XOM may even be a candidate for further purchases if it keeps declining in the short term.

Devon is much smaller than XOM.  Their dividend is not as good, under 2%, but that also means that they aren’t being forced to support an unmanageable dividend burden.  They are now at a 52 week low.  From what I’ve read they seem to have hedged against falling oil prices which should insulate them a bit in the short term.  Devon also could be an acquisition candidate at some point although their market cap is over $20B so only a giant like XOM could take them out.

Anadarko (APC) is also at a 52 week low.  Their dividend at 1.4% is low and doesn’t seem to be at risk.  The company also has financial flexibility.  We are on the edge with APC if the oil rout is extended this may not be a stock to hold.  On the other hand, in any sort of “bounce” in prices, would expect the stock price to rebound as well.

Global Energy (ADR)

  • Royal Dutch Shell (RDS.B)
  • Sasol (SSL)
  • Statoil (STO)

These global energy companies not only are hit by the drop in crude (see above), but also the decline in foreign currencies vs. the rising US dollar.

Statoil (STO) is denominated in Norwegian Kroner.  Over the last year the Kroner has declined 20% vs. the US dollar.  This means that our ADR has fallen 20% additional beyond the impact of other (negative) factors on the STO stock.  On the other hand, in the past the rising Kroner has boosted returns compared against US equivalent stocks, and provides diversification should the US dollar fall.  Statoil is likely going to defer some major deep water projects since those are not economical at the current oil price.  The dividend is now over 6% with the stock price decline; in general when dividends go much beyond 5% they often turn out to be unsustainable, or in any case should be watched closely.

Shell (RDS.B) are denominated in UK pounds, which has fallen 5% this year vs. the US dollar.  Shell seems to be in relatively good shape, but the stock (like virtually all energy stocks) is at a 52 week low.  Their dividend is at almost 6% which seems sustainable for now but may not be in the long term.

Sasol (SSL) is denominated in South African Rand, which has fallen 11% vs. the US dollar.  SSL is a large energy company for Africa, but is much smaller than the other global majors.  The dividend is near 6%, a level to watch closely.  The stock has lost almost 50% of its value and may be a buy at this point or for consideration.

Canadian Energy (ADR)

  • TransAlta (TAC)

Chinese Internet (ADR)

  • Weibo (WB)

US Technology

  • Amazon (AMZN)

Chinese Shipping (ADR)

  • Seaspan (SSW)

Casino / China

  • Wynn (WYNN)

Mexico / Consumer Staples (ADR)

  • Coca Cola FEMSA (KOF)

Portfolio Six Quick Update December 2014

Portfolio six has Coca Cola Mexico, which was hit by the falling peso and general Mexican business conditions.  Exxon Mobil fell due to the oil price crash and Shell too, although Shell was also impacted by the rising dollar.  Finally this portfolio has Seaspan which has fallen due to a narrow earnings miss, the threat of slowdown in China, and currency changes.


Portfolio Five Quick Update December 2014

Portfolio Five has Sasol, which was hit by oil prices as well as the rising US dollar.  Seaspan was hit by a recent narrow earnings miss, a threat of economic slowdown in China, and currency issues.


Portfolio Four Quick Update December 2014

Coca Cola Mexico was hit by the poor performance of the Mexican dollar vs. the US Dollar.  Shell and Statoil were hit by the oil rout and the rising US dollar.  Seaspan is impacted by the US currency changes but mainly is tied to the perceived strength of the Chinese economy which seems to be at risk of slowing down and a narrow earnings miss.  Devon energy was hit by the oil rout.


Portfolio Three Quick Update December 2014

Portfolio Three has Anadarko, the US gas / oil company, which has been hit by the crude rout, and also Exxon Mobil the energy giant.  Weibo Corp, one of the two Chinese internet companies we own (the other being Baidu) also has done poorly recently. Finally while Wynn has a positive return it has fallen as the Chinese government cracks down on corruption and gambling.


Portfolio Two Quick Update December 2014

Portfolio Two is listed below. We were hit in Statoil due to the crude collapse and the falling Norwegian currency. TransAlta, the Canadian energy company, was also hit by these forces.

The portfolio also has Amazon, which is falling a bit relative to other tech companies. They are a well run, long term player, but the street was looking for (marginally) higher profits.

Wynn casinos are also on watch because of a crack down on corruption in China, which limits gambling revenues.

Many other companies are doing well, particularly Facebook and Nidec (Japan) which have half the portfolio’s current unrealized gains.


Portfolio One Quick Update December, 2014

Here is a quick update on Portfolio One for December, 2014.

Some of our oil companies have taken a beating with the tumbling price of crude. We own Exxon Mobil (a “double” position in terms of weighting, Sasol (a South African Oil company which also is impacted by the rising US dollar), Statoil (a Norwegian oil company also impacted by the rising dollar), and TransAlta (a Canadian energy / electric company which also is impacted by the rising dollar). We will look at all of these companies and develop thoughts on what to do next.

The rest of the portfolio seems to be doing well and mostly offsetting these issues up above.



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