New Stop Loss Orders Entered

Back in October we set up some stop-loss orders.  None of these orders were executed because the market has been up since then (for my stocks, at least).  Since the orders didn’t occur they were free to set up and it is free when they expire (or I cancel them).  We did “pull the trigger” on some stocks that have been on watch (Riverbed, Bancolumbia).

Stop loss trades are good for 60 days, and then they expire.  Given that the market has been on a tear, it makes sense to set up some more stop loss trades in case we move into an extended downward phase – I don’t want to watch the run-up and then watch them go back down.

While there isn’t a “rule” on stop losses, I am going to make some now.  In general:

– I don’t want more than 1/3 of a particular portfolio in “stop loss” mode (this may not apply if you have only a few stocks, like 4 or 6).  These are long term investment vehicles, and I don’t want to deal with re-buying an entire portfolio after a 10% small market correction

– If a stock needs to be sold, then sell it, don’t use stop losses as a wimpy sales mechanism.  We did clean up a couple of stocks that were on watch recently

– Remember that while stop loss orders can prevent you from taking a big loss, they also take you “out of the market” if it goes right back up

– Sales near year end will generate gains that may generate additional taxes for the government.  In general these portfolios are not as tax sensitive because they are owned by individuals who don’t pay much in taxes but if we had a big selloff it could cause them to pay some additional amounts to Uncle Sam

– Finally, remember that money sold off needs to be re-invested.  Back in 2007 I sold off some stocks that made big runs, and we did well and many of the stocks haven’t reached their pre-crash peaks.  However, that money has to be re-invested, and often the stock you pick is as over-valued as the one that you are selling.  This isn’t a free lunch…

Portfolio 1 – 20 stocks

  • Urban Outfitters – URBN – at $35 (don’t want to ride this back down)
  • PM – recently dropped from $92 to $85… Stop loss at $80
  • SNP – went from 70 in July to 90 then down to $84.  Stop loss at $78
  • TSM – was down to $12 then up to $20 now at $17.  Stop loss at $15
  • CMCSA – from $37 to $50… a big run… At $44
  • EBAY – big rise and then recently from $58 to $52…  at $47

Portfolio 2 – 18 stocks

  • Urban Outfitters – URBN – at $35 (don’t want to ride this back down)
  • SI – from $82 to $131…  At $123
  • SNP – went from 70 in July to 90 then down to $84.  Stop loss at $78
  • WYNN – from $94 to $164… at $150
  • FB – $20 to $51, now $47… at 43
  • SPLK – $26 to $75, now $72… at $65

Portfolio 3 – 10 stocks

  • Urban Outfitters – URBN – at $35 (don’t want to ride this back down)
  • SI – from $82 to $131…  At $123
  • WYNN – from 94 to 164… at $150
  • SPLK – $26 to $75, now $72… at $65

Portfolio 4 – 10 stocks

  • NUE – from $41 to $55, now $51.  At $46
  • SSW – from $15 to $25, now $21… At $18

Portfolio 5 – 9 stocks

  • SI – from $82 to $131…  At $123
  • SNP – went from 70 in July to 90 then down to $84.  Stop loss at $78
  • SSW – from $15 to $25, now $21… At $18

Portfolio 6 – 4 stocks

  • SSW – from $15 to $25, now $21… At $18

 

Stock Portfolio Review

In any portfolio it is good to keep and eye out for stocks that have had a big run up and might be at a point to sell as well as stocks that have dropped and don’t seem to have a chance to come back in the near term. We also watch for stocks that are just stagnant.

While we don’t rapid-trade in these funds we do rebalance occasionally. I am looking to re-balance before we buy stocks again as part of the annual purchase process (I contribute $500, they contribute $500, and then I “match” $500 for a total of $1500 every year) which happens at the end of the summer. Since many stocks are held in more than 1 portfolio I only describe them one time.

Portfolio One

– Urban Outfitters – low debt, seemingly well run, has recently had departure of top executives. Holding on a bit to see if they can turn things around since drop already priced in. if they don’t turn around by end of summer will drop

– Procter and Gamble – has been a core of the portfolio for a long time with a strong dividend. The CEO recently had a bad conference call and the company hasn’t been growing much when compared to rivals

– Canon – has been a good long term performer but Japan still refuses to have a stock market rally. Need to look at this more but want to have some Japan exposure

– Comcast – held on for a long time when the stock did nothing or tanked because believed in broadband growth and they also added and boosted their dividend over the years. Will watch to see if now it is over valued after the run up

– Ebay – another stock that did nothing for years and went down but finally came back. No dividend but basically a bet on pay pal since they sold Skype. Will look into this some more may want to take profits

– Exelon – the nations’ biggest nuclear utility. Now getting beat because of the low price of natural gas. This hurts coal much more than nuclear because nuclear always runs but it limits its profits, as well. They just took over a big Eastern utility. Will keep holding but watch

– Wal-Mart – recently ensnared in a bribery case. Given their massive size it didn’t move their stock price that much. They have been buying back shares aggressively and boosting the dividend which increases profits per share. On watch

– Philip Morris – had an immediate, great run up. Also a good dividend. May want to see for gains

Portfolio Two

– Also Urban outfitters, Wal-Mart

– Wynn – took almost a 20% hit out of the gate with the share holder dispute issue. Has regained half that loss. Still a great play on China gambling. Will watch

– Siemens – had a big run up but now back to break even. OK run but subject to Euro issues and overseas expropriation and potential corruption issues. Will watch

– Diageo – had big run up and fall, much of which was caused by gyration of UK currency vs. US dollar. Up now at some point may take profits

Portfolio Three

– Also Urban Outfitters, Siemens, Wal-Mart, Wynn

Portfolio Four

– Also Wal-Mart, Exelon

– Nucor – a well run metals company in the US that is subject to vagaries of US economy as well as foreign price competition. Will watch but hate to part with it because it is well run but may not be able to sustain high valuation (see Southwest Airlines)

Portfolio Five

– Also Seimens

– Alcoa is a company like Nucor, well run but hit hard by foreign competition and international prices and demand. Like Nucor would benefit from US rally post “great recession” but that never really materialized. Will continue to watch

– Riverbed – a company with high growth prospects that lost 30% of its value in a single day when they slightly missed their earnings. Held on and since they have hung on at about the same price. Will hold through an earnings release or two seems transient not permanent

2011 Stock Picks Updated

I gave an earlier update on the 2011 stock selections.  Since then the entire market has swooned a bit, with global markets having their worst quarter since the 2008 Lehman collapse.  Fund one is now about to invest and will have (once the incremental $1500 is added) $4350 for investments, which would be 3 stocks for this fund.

  1. Bancolombia S.A. (ADR: CIB) – $61, down from 52 week high of $69, 2.2% dividend yield.  Colombian company, $12B market cap, banking.  This Colombian bank provides a window into a growing Latin America market.  Now $56, a loss of $6 or 10%
  2. Anadarko (APC) – $69, down from 52 week high of $85, 0.5% dividend yield (low).  US company, $34B market cap, oil & gas exploration.  Anadarko is riding the wave of US oil and gas as well as making many overseas discoveries in markets such as Ghana.  A play on the growing natural gas solution.  Now $63, a loss of $6 or 9%
  3. Statoil (ADR: STO) – $23, down from 52 week high of $29, 4.9% dividend.  Norwegian company, $74B market cap, oil & gas.  Norwegian oil and gas company recently found new fields and is well run and not as subject to Geo-political risk as the other oil “majors”.  At $22, about the same.
  4. Philip Morris International (PM) – $69, not far from 52 week high of $72, 3.7% dividend.  International (non-US) company, $121B market cap, cigarettes.  This company does not cell cigarettes in the US (that is Altria) but sells them overseas (Marlboro) where it is very strong in many markets and growing in China.  At $62, a loss of $7 or 10%
  5. Westpac Banking Corporation (ADR: WBK) – $107, down from 52 week high of $138, 7.2% dividend (very high).  Australian company, $64B market cap, banking.  Westpac is poised to boom along with the Australian economy based on their strong currency, relatively improved financial position (compared to US and Europe), and of course their huge mineral resources which they can sell to all the Asian economies.  At $96, a loss of $11 or 10%
  6. Riverbed Technology (RVBD) – $22, down from 52 week high of $44, no dividend.  US company, $3B market cap, technology.  This company makes products for security and switching for data centers and cloud computing.  Companies of this size are potential acquisition candidates given the large amounts of cash held in Silicon Valley.  At $20, a loss of $2 or 9%

Also others selected Wynn Resorts (WYNN) which funds 2 and 3 bought around $149 which is now around $115, a loss of $34 or 23%.

Final Stock Selection List for 2011

Here are the six stock selections for 2011.

  1. Bancolombia S.A. (ADR: CIB) – $61, down from 52 week high of $69, 2.2% dividend yield.  Colombian company, $12B market cap, banking.  This Colombian bank provides a window into a growing Latin America market.
  2. Anadarko (APC) – $69, down from 52 week high of $85, 0.5% dividend yield (low).  US company, $34B market cap, oil & gas exploration.  Anadarko is riding the wave of US oil and gas as well as making many overseas discoveries in markets such as Ghana.  A play on the growing natural gas solution.
  3. Statoil (ADR: STO) – $23, down from 52 week high of $29, 4.9% dividend.  Norwegian company, $74B market cap, oil & gas.  Norwegian oil and gas company recently found new fields and is well run and not as subject to Geo-political risk as the other oil “majors”.
  4. Philip Morris International (PM) – $69, not far from 52 week high of $72, 3.7% dividend.  International (non-US) company, $121B market cap, cigarettes.  This company does not cell cigarettes in the US (that is Altria) but sells them overseas (Marlboro) where it is very strong in many markets and growing in China
  5. Westpac Banking Corporation (ADR: WBK) – $107, down from 52 week high of $138, 7.2% dividend (very high).  Australian company, $64B market cap, banking.  Westpac is poised to boom along with the Australian economy based on their strong currency, relatively improved financial position (compared to US and Europe), and of course their huge mineral resources which they can sell to all the Asian economies
  6. Riverbed Technology (RVBD) – $22, down from 52 week high of $44, no dividend.  US company, $3B market cap, technology.  This company makes products for security and switching for data centers and cloud computing.  Companies of this size are potential acquisition candidates given the large amounts of cash held in Silicon Valley