Portfolio Four Updated July, 2017

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.

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Portfolio Four Updated April 2017

Portfolio Four is 7 1/2 years old.  The beneficiary contributed $4000 and the trustee $8000 for a total of $12,000.  The current fund value is $14,444 for a gain of $2444 or 20%, which is 4% / year when adjusted for the timing of cash flows.  You can see the detail here or go to the links on the right.

We have a couple of stocks on watch.  Devon Energy (DVN) got waxed with the downturn of the oil industry a couple of years ago and has recovered a lot of its losses but cut its dividend significantly in the interim.  DVN seems to be plateauing and is thus on watch.  Oracle (ORCL), the technology company famous for its database software (although they own many other products, including cloud software) is in a long term price and technology war with AWS and other cloud providers (including Microsoft’s Azure).  They have been performing well but are on watch as a result.

There are analytics on the “analytics” sheet.  A few worth paying attention to is the price as a % of its 52 week high, which shows its relative strength over the last year (obviously anything near 100% means that the stock is moving up and hitting highs regularly).  The portfolio is 68% US stocks and 44% of them are “high dividend” (meaning a dividend around 3% and higher).

 

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 Four Updated November 2013

Portfolios Four and Five are both four years old.  The beneficiary contributed $2500 and the trustee contributed $5000 for a total of $7500.  The value is $9284, for a gain of $1784 or a 24% gain, which is 7.2% / year.  The portfolio can be viewed here or in the links on the right.

There are ten stocks in the portfolio, with 4 overseas stocks and 6 US stocks.  The portfolio is getting to the point where changes in one stock won’t significantly impact the total value overall.

The portfolio is doing well, with Nucor on a stop loss to not go below the original purchase price (it was underwater for several years) and for Oracle because it is near a multi-year high and facing cloud competition.  The positions are generally doing well, with Westpac (Australian bank) and Wal-Mart the best performers.

 

Portfolio Two Updated November 2013

Portfolio Two is our second longest lived portfolio, at nine years. The beneficiary contributed $5500 and the trustee $11,000 for a total of $16,500. The current value is $23,245, for a gain of $6745 or 41%, which works out to annual performance of 5.6% / year over the life of the portfolio. There are 18 stocks in the portfolio, of which 9 are US and 9 are overseas. As we noted with Portfolio One, a rough guide is that when you have beyond ten or so “different” stocks you have a diversified portfolio. Most of the stocks are around $1100 / each, with a few around $2000. You can see the detailed portfolio here or at the list on the right.

The portfolio recently has had a couple of big winners with Facebook and Splunk. These two combined for about 1/3 of the total gain in the portfolio. Many of the stocks are near all time or 5 year highs, including Oracle, China Petroleum, Siemens, Diageo, Exxon-Mobil, Toyota and NIDEC. These stocks had been hit hard just a couple of years’ ago and we will watch them closely to make sure they don’t fall back too far.

Oracle, WYNN and Urban Outfitters currently have stop loss orders in that we will need to review in early December. We are going to keep them on Urban Outfitters and WYNN because we don’t want to fall below original purchase prices and Oracle we will review along with many of the other stocks that have soared over the last couple of years.