Portfolio 4 is 10 1/2 years old. The beneficiary contributed $5500 and the trustee $11,000 for a total of $16,500. The current value is $23,284 for a gain of $6784 or 41%, which is 5.6% / year adjusted for the timing of cash flows. See a summary here or at the links section.
We had 2 sales in 2019 for a long-term loss of ($320) and $361 of dividends.
The current portfolio is doing well. The stocks on watch are:
Box (BOX), a well run software / storage company which has been in the doldrums for a while. I thought that they could be a takeover candidate which would cause the stock price to rise. May sell not much happening
Royal Dutch Shell (RDS.B) – this oil major has a high dividend but the stock has not done much for years. Hit with recent oil price declines like the other oil majors. May sell
Nucor (NUE) – we’ve had this US metals company for many years. While well run, it hasn’t done a lot. May sell
Portfolio Four is 9 years old. The beneficiary contributed $5000 and the trustee $10,000 for a total of $15,000. The current value is $16,984 for a gain of $1,984 or 13%, which is about 2.3% / year over the life of the account. Go here or to the link on the right for details.
Given the current market, we have some stocks that we are monitoring:
Electronic Arts (EA) – this stock is at about 53% of its 52 week high, as the whole games market has been hit hard lately even though the fundamentals (revenue) aren’t that much different, possibly due to Fortnight and the potential impact of streaming. Will watch, may sell
ABB (ABB) – European industrial conglomerate which has fallen about 20% since we’ve bought it
Nvidia (NVDA) – another former high flyer, this chip maker was buoyed by crypto mining and is down about 50% off its 52 week high, although it still has strong cash flow. Will watch, may sell
Box (BOX) – this is a well-run tech company that is a possible take over target. They have gone down 25%+ with the overall tech market. Will watch
Portfolio One is our longest lived Portfolio. We opened it right after 9/11… meaning that it is almost 16 years old. This portfolio has moved from the trustee to the beneficiary’s account, but we also still set it up so that the trustee has agency (can see the portfolio, buy and sell).
The beneficiary contributed $7500 and the trustee $15,500 for a total of $23,000. The current value of the portfolio is $44,883 for a gain of $21,883 or 95%, or 7% / year adjusted for the timing of cash flows. Go here or to the link on the right for details.
The portfolio is doing well. We added some criteria and filtering for stocks “at risk” (BOX, Budweiser Inbev and Exxon) or “on watch” (Tata Motors / TTM). BOX has doubled recently and is down a bit; BUD just finished a major merger but Exxon is near 5 year lows and a bit controversial due to politics. Tata (TTM) is one we will look at closely.
Portfolio four is almost 8 years old. The beneficiary contributed $4000 and the trustee $8000 for a total of $12,000. The current value is $15,082 for a gain of $3,082 or a 5% rate of return, adjusted for the timing of cash flows. See detailed PDF here or go to the link on the right side of the page.
The portfolio has some technology stocks that are doing quite well, which include Box and Oracle (you could also call Tesla a partial technology stock, as well). The oil stocks of Devon, Shell and Statoil have generally been hit by the continued fall in oil prices. The stock prices of Shell and Statoil have held up better than Devon because they kept their high dividends; Devon cut their dividend and has continued to fall (there are other factors at play as well).
It is important in all these portfolios not to just look at the current share price when compared with the purchase price; you need to take into account dividends, as well. The oil stocks look bad on stock price alone but when cumulative dividends paid are tracked as well, the situation is much better. That does not mean that we should hold stocks just for the dividends, but it is a very important factor in long run performance. To date this portfolio has earned $1735 in dividends, which makes up more than half of the total return earned to date.
Portfolios four and five are 6 1/2 years old. The beneficiary contributed $3500 and the trustee $7000 for a total of $10,500. The current value is $10,137 for a loss of ($362) or (3.5%). Adjusted for the timing of cash flows performance is (1%) negative a year. See here for a spreadsheet with details or go to the link on the right.
We sold Seaspan (SSW) and Garmin (GRMN) this year. We purchased Box (BOX), Novartis ADR (NVS), and Tesla (TSLA).
We have a number of stocks on watch. Newly acquired Novartis (NVS) is not doing well, Coca-Cola FEMSA has been hit by exchange rates, Linked In (LKND) had a bad forward revenue guidance and their stock fell sharply on the news. For oil companies, Royal Dutch Shell (RDS.B), Statoil (STO) and Devon Energy (DVN) have all been hit by the falling oil price. Devon gave up on their dividend which hit the stock hard but Shell and Statoil are making cuts and borrowing to try to keep their dividend constant.
For taxes will send along the forms which helpfully now include a cost basis.
Portfolio One is our longest lived portfolio, starting right after 9/11 and is 14 1/2 years old. The current value is $35,158 with the beneficiary contributing $7500 and the trustee $16,500, for a total of $24,000. Thus the gain is $11,158 or 46%, which works out to about 4.5% / year over the life of the portfolio adjusted for the timing of cash flows. The detail can be found on the links on the right or you can go here to download the spreadsheet.
There are 20 stocks in the portfolio, which is about the maximum I’d want to track in a single portfolio. When we add new cash into the portfolio and / or sell existing stocks we are consolidating in order to keep at a maximum of 20 stocks.
We had three sales last year, with Garmin (GRMN), Yahoo (YHOO) and TransAlta (TAC). We had four purchases with Box (BOX), Novartis (NVS), Tesla Motors (TSLA) and Tata Motors (TTM).
We had a net long term capital loss last year, driven primarily by TransAlta. Up to $3000 in stock losses can be deducted against ordinary income so this at least should be helpful on the beneficiary’s tax form. The portfolio earned $935 in dividends and had $70 in foreign taxes withheld (this can be deducted as a benefit on the US tax return). It is important to realize the percent of total return that comes from dividends; while some companies like Tesla won’t pay dividends (because they are growing rapidly), the return on dividends from established companies is an important source of income growth for the portfolio. I will be sending the tax information to the beneficiary from the brokerage company after completing this update.
Attached is a screen shot from Google Finance of Portfolio Four after 2015 purchases and sales. New stocks include Box (BOX), Novartis (NVS), and Tata Motors (TTM). Returns are only based on stock prices and do not include dividends (the dividend payers have higher returns).
Attached is a screen shot from Google Finance for Portfolio One after the purchases and sales from Fall, 2015. New purchases are Tesla (TSLA), Tata Motors (TTM), Novartis (NVS) and Box (BOX). The remaining cash also is updated. The % return by stock does not include dividends (only “raw” stock price appreciation or depreciation), so dividend payers have a higher return than is listed.
Attached are the stock selections for 2015. We are expanding the list slightly because most of the funds not only have new cash to invest for 2015 but we also did a recent round of selling that needs to be re-invested.
Box (BOX) – $13, 52 week range $11-$24, $1.5B market cap, no dividend, little debt. Box provides a cloud-based document storage and governance capability and is growing rapidly among Fortune 500 corporations
Mastercard (MA) – $101, 52 week range $75-$101, $114B market cap, 0.7% yield, $1.5B debt. Mastercard is a global credit card brand that benefits from the long-term migration of cash and checks to credit. Their biggest competitor, Visa, recently announced a merger with Visa Europe which likely will distract that company for several years and give Mastercard an opportunity to pick up market share
ConocoPhillips (COP) – $55, 52 week range $41-$74, $68B market cap, 6% yield, $25B debt. ConocoPhillips is an oil and gas exploration company that is a major bet on future price rises for natural gas and oil with technical knowhow and efficient production. They recently made major cuts in response to the commodity price collapse
Union Pacific (UNP) – $86, 52 week range $79-$124, $73B market cap, 2.6% yield, $13B debt. Union Pacific operates a massive US rail network and has been hit recently by reductions in the industrial and commodity economies. However, they are highly efficient and represent a solid long term bet on industrial growth and recovery
Tata Motors (TTM) – $30, 52 week range $21-$51, $19B market cap, no dividend, $11B. Tata Motors is an Indian based company that benefits from low costs and growth in the Indian car market and also owns Jaguar and Land Rover. The stock will be down a bit early next week because they just released earnings and showed an unexpected loss due to a one time event
China Eastern Airlines (CEA) – $30, 52 week range $20-$50, $8B market cap, no dividend, $6B debt. China Eastern Airlines can benefit from the growth in outbound Chinese tourism and investment as well as potential government mandated consolidation in the airlines sector which could result in higher profits and reduced competition
Alibaba (BABA) – $83, 52 week range $57-$120, $207B market cap, no dividend, $8B debt. Alibaba is a major web commerce / mobile player in China. Much of Yahoo’s value was based on an ownership stake in this entity (we recently sold off Yahoo)
Novartis (NVS) – $89, 52 week range $88-$106, $214B market cap, 2.7% yield, $22B debt. Novartis is a major Swiss based drug maker
This is a new section. These are some riskier stocks either because of high prices or uncertain outcomes.
Tesla (TSLA) – $232, 52 week range $181-$286, $30B market cap, no dividend, $2.6B debt. Tesla is a maker of electric cars led by the charismatic Elon Musk. Their valuation is very high considering that they lose money, gas prices are low which reduces the savings from electricity, and they deliver a fraction of the cars that a “major” automotive giant would. On the other hand, their fan base is passionate and their design is praised
Facebook (FB) – $107, 52 week range $72-$110, $301B market cap, no dividend, little debt. Facebook is the ubiquitous social media presence with a huge and growing global and mobile footprint and messaging. Their market cap has almost tripled since their IPO and are led by the charismatic Mark Zuckerberg
Cheniere (LNG) – $46, 52 week range $43-$82, $11B market cap, no dividend, $16B debt. Cheniere is a long term bet on liquified natural gas, which takes (relatively) cheap US gas and ships it to offshore countries seeking clean energy and diversified energy sources. This is a risky but possible bet because the facilities are mostly built but yet to ship gas and prices are falling, but the long term upside is also large if they can survive and prosper