Portfolio Six Updated April, 2017

Portfolio 6 is 4 1/2 years old.  The beneficiary has contributed $2500 and the trustee $5000 for a total of $7500.  The current value of the portfolio is $7806 for a gain of $306 which is about 4% or 1% / year over the life of the fund.  You can see a PDF of the details here or on the link to the right.

The portfolio is generally doing well.  The stock mix is 55% US stocks and the largest exposure area is oil, at 27% of the total.  High dividend stocks (3% yield or greater) make up 44% of the portfolio.  We sold off Coca Cola Femsa (KOF) recently.  The oil sector has generally been hit by the decline in oil prices per barrel but they have come up significantly from their lows.

Portfolio Six Updated January 2017 – Tax Time

Portfolio six has been around for about 4 1/2 years, with the beneficiary depositing $2500 and the trustee $5000, for a total of $7500.  The current value is $7917 for a gain of $417, or about 6% or 1.8% / year when adjusted for the timing of cash flows.  You can see the detail at the link on the right or download the spreadsheet here.

During the year we had about $136 in dividends for a yield of about 1.7%.  We had one sale, of Coca Cola FEMSA with a long term capital loss of ($321).  Our sales still look relatively good in hindsight.  For the portfolio as a whole, it has mostly recovered from the fall in oil prices.

Portfolio Four Updated January 2017 – Tax Time

Portfolio Four is a bit over 7 years old.  The beneficiary contributed $4000 and the trustee $8000 for a total of $12,000.  The current value is $13,932 for a gain of $1932 or 16%, which is about 3.3% / year when adjusted for the timing of cash flows.  You can see the detailed spreadsheet at the link on the right or download it here.

The portfolio is generally doing well. We sold LinkedIn (LNKD) because they were bought by Microsoft and gave up on Coca Cola FEMSA (KOF) which was hurt by the decline in the Mexican Peso and recent election results.  We did not sell many of the energy companies which (mostly) held on to their high dividends and have risen recently with the uptick in oil prices.  It is important that you look at the “total return” which includes dividends because some stocks look like they have losses just based on price bought vs. today when in fact they’ve been positive due to dividends.

The portfolio had about $240 in dividends for an average yield of about 1.7%.  This is a good rate but down a bit from last year because we sold Seaspan (SSW) and Garmin (GRMN) which had high dividends.  Most of our sales are still OK in hindsight but Garmin has gone up a bit since we sold it.  We had a long term capital loss of $474 due to sales of LNKD and KOF, above.

Portfolio Post Election

After the elections, stocks have generally gone up. Some sectors have done well, and others have fallen. The US dollar is stronger, which means that our overseas stocks have gone down on a relative basis.

We are judicious on selling off stocks here. However, since the election is past it is likely time to make a few moves in some areas.

Portfolio One:

  • Novartis (NVS)– the Swiss drug maker is down about 20% from where we bought it (but has almost a 4% dividend), and drug makers seem to be under pressure with the new administration calling for price reductions. On watch will look at the next earnings release at the end of January
  • Statoil (STO) – the Norwegian oil company is down 20% off our purchase price but has come back significantly with possible increases in oil prices.  They also didn’t cut their dividend which remains a high 6% yield which also is positive for investors.  Will watch and see if it rises further
  • Infosys (INFY) – Infosys has fallen about 25% off its peak.  The company benefits from the declining Indian currency since most of its revenues are earned overseas.  However, the offshore firms have also been hit by the new administration and potential curbs on outsourcing, which they are trying to limit by having more US based staff and less overseas contractors.  The company is on watch
  • Tesla Motors (TSLA) – this is a very speculative stock (little earnings, high valuation) and has high volatility.  We will keep it on watch
  • Anheuser Busch Inbev – the stock has dropped by over 30% recently as they attempt to purchase Miller Coors.  They also have been hit with economic volatility in Brazil.   They are a well run group but these are strong headwinds.  We will put the stock on watch

Portfolio Two:

Portfolio Two moved over to ETF’s and CD’s.  Their ETF’s have been doing well with the exception of the NASDAQ Biotech ETF (IBB) in which we have a relatively small position that is new.  We will continue to watch this sector ETF.

Portfolio Three:

  • Wynn (WYNN) – the casino stock is a major operator in China.  The stock is down over 30% and no longer delivering “special” dividends beyond the regular quarterly dividend.  We will sell the stock now
  • Infosys (INFY) – Infosys has fallen about 25% off its peak.  The company benefits from the declining Indian currency since most of its revenues are earned overseas.  However, the offshore firms have also been hit by the new administration and potential curbs on outsourcing, which they are trying to limit by having more US based staff and less overseas contractors.  The company is on watch

Portfolio Four:

  • Coca-Cola FEMSA (KOF) – the Central American distributor of Coke is 40% off from our purchase price,  been hit by various issues and negative currency fluctuations and now finally the current administration.  We will sell the stock now
  • Tesla Motors (TSLA) – this is a very speculative stock (little earnings, high valuation) and has high volatility.  We will keep it on watch
  • Novartis (NVS)– the Swiss drug maker is down about 20% from where we bought it (but has almost a 4% dividend), and drug makers seem to be under pressure with the new administration calling for price reductions. On watch will look at the next earnings release at the end of January
  • Statoil (STO) – the Norwegian oil company is down 20% off our purchase price but has come back significantly with possible increases in oil prices.  They also didn’t cut their dividend which remains a high 6% yield which also is positive for investors.  Will watch and see if it rises further
  • Royal Dutch Shell (RDS.B) – the European oil company is down almost 20% on price but has been rising and hasn’t cut the over 6% dividend.  Will watch and see if it rises further
  • Devon (DVN) – unlike Statoil and Shell, Devon did cut their dividend and is down about 20% on price.   However, the stock is up almost 2 1/2 times off its low so we will hold it as it keeps recovering.  Will watch and see if it rises further

Portfolio Five:

  • Anheuser Busch Inbev – the stock has dropped by over 30% recently as they attempt to purchase Miller Coors.  They also have been hit with economic volatility in Brazil.   They are a well run group but these are strong headwinds.  We will put the stock on watch
  • Juniper (JNPR) – Juniper had been down significantly but now is above our purchase price.  We will watch this stock as an acquisition candidate and may sell if it stops rising.  This stock is on watch

Portfolio Six:

  • Coca-Cola FEMSA (KOF) – the Central American distributor of Coke is 40% off from our purchase price,  been hit by various issues and negative currency fluctuations and now finally the current administration.  We will sell the stock now

Portfolio Seven:

  • Unilever (UNLV) – Unilever is down about 14% off peak due to the reduction in the value of the British pound and other factors.  This is a recent purchase and a well run company we will put the stock on watch

Portfolio Eight:

  • Unilever (UNLV) – Unilever is down about 14% off peak due to the reduction in the value of the British pound and other factors.  This is a recent purchase and a well run company we will put the stock on watch

 

Stocks on watch update

Generally waiting and putting these stocks on watch have gone well.  They have mostly increased in price recently.

Novartis (NVS) – did not have a good quarterly earnings release.  Still on watch may sell.

Statoil (STO) – still generally on the rise with the recent increase in oil prices

Linked In (LNKD) – up since lows.  Will see if it stalls

Wynn (WYNN) – up almost 50% off its lows.  Beat q1 earnings.

ConocoPhillips (COP) – up off lows but hurt recently by Canadian shutdown due to wildfires

Coca Cola Femsa (KOF) – generally still on the rise off lows.  OK dividend

Devon (DVN) – up significantly off lows.  Benefiting from recent rise in oil prices

Royal Dutch Shell (RDS.B) – also up on recent oil price rises.  Hit some by closing of Canadian oil sands due to wildfires

Oracle (ORCL) – still doing OK.  Will keep on long term watch due to cloud threat

Juniper (JNPR) – missed their 3/31/16 earnings.  Will watch on 6/30/16.  May be passed up by the cloud environment.  Could be an acquisition target

Current inclination… is to sell Juniper and Novartis.  Will watch.

Comments for Stocks on Watch

In general, earnings season is coming up now (mid to late April) for many of these stocks and we can hear about forward revenue projections and their views on oil prices as well as dividend policy.

Comments for Stocks on watch:

Novartis (NVS) – April 21 we will hear Q1 results and updates on strategy and EPS.

Statoil (STO) – April 27 we will hear Q1 results.  Stock price linked to dividend policy.  Their current dividend is over 7% and sustaining the stocks’ value

Linked In (LNKD) – April 28 Q1 earnings call.  Stock hit hard after forward guidance but still has significant and growing revenues (not a unicorn).

Wynn (WYNN) – Stock still in 90’s… will continue to watch (up from far lows).

ConocoPhillips (COP) – Stock already took hit from 75% dividend cut.  Now they believe they can break even on cash flow perspective at $45 oil which is attainable.  Remains on watch

Coca Cola Femsa (KOF) – Stock in 80’s… will continue to watch.

Devon (DVN) – still watching with oil prices.  Devon has a low dividend so little downside risk now of dividend cuts.

Royal Dutch Shell (RDS.B) – will watch with oil prices and their restructuring.  Still holding on to high dividend for now (almost 8%)

Oracle (ORCL) – still rising with cloud numbers.

Stocks on Watch – March 2016

The strategy of these 8 portfolios has been to purchase individual stocks, and to hold them for the medium term.  These portfolios are not the same as an individual investor who seeks to invest for their long term financial future – they should utilize low-cost ETF’s and brokerage CD’s as is described in the “basic plan” that is linked to here or at the top of the site.  Portfolio 2 (see link on the right side of the page) has now converted to a long term type of model.

The reason we employ this strategy is because 1) I want to teach the principles of investing 2) I want to encourage thrift (savings) with the “match” concept 3) I want the beneficiaries to be actively involved in selections and see the consequence of their selections (stocks go up, stocks go down).  In addition, choosing stocks teaches a lot about capitalism and is a fundamental aspect of everything that happens in the world of business – stocks move up and down due to business fundamentals, their particular industry situation, the impact of commodity prices, the impact of foreign currencies vs. the US dollar, the geopolitical situation, and due to the actions of our central bank (ZIRP).  It is my selected role to attempt to teach about all of these concepts at once through the act of stock selection and portfolio changes.  These stock portfolios are not intended to be their entire net worth – if it was, then I would recommend moving to something more similar to Portfolio 2, above.

Given that we use individual stocks, we need to “watch” these stocks, especially if they fall significantly and stay down in price.  We also look for stocks that might have hit their highs and are on their way down, although we would be more likely to “ride the winners” over the medium term.  Portfolios 2, 7 and 8 don’t have any stocks on watch.

Stocks on watch

Portfolio 1

  • Statoil (STO) – Norwegian oil company, hit by the fall in crude as well as the fall of the local currency vs. the US dollar.  Will hold – seems unlikely they will cut their dividend which supports their current price.  The company will likely raise their debt level which is sustainable.
  • Novartis (NVS) – Swiss drug company, a recent purchase.  We will see how earnings play out at the end of April and how the company presents forward guidance.

Portfolio 3

  • Linked In (LNKD) – Online business networking company that recently gave poor forward guidance and had its stock price cut in half.  We are going to continue to watch Linked In since it seems over sold but if it doesn’t move we will sell it.
  • Wynn (WYNN) – A casino operator with interests in China, hit recently by a crackdown on corruption and gambling in China.  The stock was in the 60’s and came back into the 90’s and is on the upswing.  Will look to see if it get’s into the 100’s and make a decision but don’t want to sell while it is rising.
  • ConocoPhillips (COP) – An oil and gas major, hit by the recent collapse in oil prices.  They reduced their dividend by 75% which impacted their stock price, as well.  We are going to watch the price of oil which drives many of the companies on this list.  It went from the high 20’s up crossing the 40 dollar barrier.  If it gets into the middle 40’s and stays there many of these companies will be in OK shape for holding

Portfolio 4

  • Coca Cola Femsa (KOF) – Central American Coca Cola distributor, hit by the decline in currency value against the US dollar and also turmoil in local countries.  KOF has bounced up from the 60’s and recently crossed $80 / share.  Will watch and see if it retains upward momentum after earnings.
  • Devon Energy (DVN) – US oil company hit by recent collapse in commodity prices.  We are going to watch the price of oil which drives many of the companies on this list.  It went from the high 20’s up crossing the 40 dollar barrier.  If it gets into the middle 40’s and stays there many of these companies will be in OK shape for holding
  • Royal Dutch Shell (RDS.B) – European oil company hit by the recent collapse in commodity prices and the Euro / UK Pound vs. the dollar.  We are going to watch the price of oil which drives many of the companies on this list.  It went from the high 20’s up crossing the 40 dollar barrier.  If it gets into the middle 40’s and stays there many of these companies will be in OK shape for holding
  • Statoil (STO) – Norwegian oil company, hit by the fall in crude as well as the fall of the local currency vs. the US dollar.  Will hold – seems unlikely they will cut their dividend which supports their current price.  The company will likely raise their debt level which is sustainable.
  • Oracle (ORCL) – while this stock has been doing well, Oracle faces severe competition from the cloud and resulting price pressures on their product.  Gross margins are still going up and they are claiming significant cloud earnings.  We will keep watching these trends
  • Linked In (LNKD) – Online business networking company that recently gave poor forward guidance and had its stock price cut in half.  We are going to continue to watch Linked In since it seems over sold but if it doesn’t move we will sell it.
  • Novartis (NVS) – Swiss drug company, a recent purchase.  We will see how earnings play out at the end of April and how the company presents forward guidance.

Portfolio 5

  • Linked In (LNKD) – Online business networking company that recently gave poor forward guidance and had its stock price cut in half.  We are going to continue to watch Linked In since it seems over sold but if it doesn’t move we will sell it.
  • ConocoPhillips (COP) – An oil and gas major, hit by the recent collapse in oil prices.  They reduced their dividend by 75% which impacted their stock price, as well.  We are going to watch the price of oil which drives many of the companies on this list.  It went from the high 20’s up crossing the 40 dollar barrier.  If it gets into the middle 40’s and stays there many of these companies will be in OK shape for holding

Portfolio 6

  • Coca Cola Femsa (KOF) – Central American Coca Cola distributor, hit by the decline in currency value against the US dollar and also turmoil in local countries.  KOF has bounced up from the 60’s and recently crossed $80 / share.  Will watch and see if it retains upward momentum after earnings.
  • Royal Dutch Shell (RDS.B) – European oil company hit by the recent collapse in commodity prices and the Euro / UK Pound vs. the dollar.  We are going to watch the price of oil which drives many of the companies on this list.  It went from the high 20’s up crossing the 40 dollar barrier.  If it gets into the middle 40’s and stays there many of these companies will be in OK shape for holding
  • ConocoPhillips (COP) – An oil and gas major, hit by the recent collapse in oil prices.  They reduced their dividend by 75% which impacted their stock price, as well.  We are going to watch the price of oil which drives many of the companies on this list.  It went from the high 20’s up crossing the 40 dollar barrier.  If it gets into the middle 40’s and stays there many of these companies will be in OK shape for holding