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.

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Portfolio Five Updated January 2017 – Tax Time

Portfolio five 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 $14,071 for a gain of $2071 or 17%, which is 3.5% / year when adjusted for the timing of cash flows.  The spreadsheet can be found on the link to the right or you can download it here.

During 2016 we had about $223 in dividends for an average yield of about 1.6%.  There was a capital loss of $134 on the sale of LinkedIn (which was bought by Microsoft).  The portfolio is doing well, with Spirit Airlines (SAVE) being a recent winner.  Our sales also seem OK in hindsight.

Portfolio Three Updated January 2017 – Tax Time

Portfolio three is our 3rd longest lived portfolio, at a bit over 9 years.  The beneficiary contributed $5000 and the trustee $10,000 for a total of $15,000.  The current value of the portfolio is $16,551 for a gain of $1551 or 10%, which works out to about 2% / 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.

During 2016 we had about $280 in dividends (for a yield of about 1.7%) and had long-term capital losses on our sale of WYNN and Linked In (LNKD) which was bought by Microsoft.  Most of our sales have held up pretty well except for Weibo (WB), typically called “China’s Twitter” which went up significantly from recent lows.

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

Portfolio Five Updated March 2016 – Tax Time

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 $10,435 for a loss of ($65) or (0.6%) or basically flat performance when adjusted for the timing of cash flows.  The spreadsheet detail can be found here or in the links on the right.

We sold Seaspan (SSW), Yahoo (YHOO) and Sasol (SSL) this year while buying Union Pacific (UNP), Tata Motors ADR (TTM) and ConocoPhillips (COP).  Right now ConocoPhillips (COP) is on watch after cutting their dividend 75%, and LinkedIn was hit hard during their recent earnings guidance, also putting the stock on watch.

We had some gains and losses this year the brokerage account makes it easy to calculate taxes since it includes the original cost basis as well as the sales information.