Recent Stock Activity – Updated as of the end of March

Earlier in the year we had a mini-correction of sorts. Since then, many of the stocks in the portfolio have recovered, but some haven’t. I went through the recent stock performance of all the stocks in the portfolio and here are a few that were highlighted.  Recently updated again…

  • Appian (APPN) – Appian creates low-code software for corporations.  They went IPO in 2017 and had a big run up; since then their shares have been volatile.  Our portfolios bought in at about $23-24 / share and now it is at $25, although it briefly hit over $40 / share (which is why the current price is about 60% of its 52 week high).  Watching for now
  • Comcast (CMCSA) – Comcast has been on a 5 year + run but recently hasn’t bounced back from the recent dip and is about 20% below its’ peak.  Comcast lives in a very complex regulatory and technological environment that is difficult to summarize without being an expert in that field (which I’m not).  Watching for now
  • Dow Dupont (DWDP) – Complicated chemical company about to split into multiple units.  Had some senior resignations and is down about 20%.  Watching for now
  • Elbit (ESLT) – Israeli defense contractor recently picked up Uzi machine gun maker from Israeli government.  Down about 20% recently.  Watching for now
  • Facebook (FB) – a whole series of publicity gaffes and issues with privacy have damaged the stock recently
  • General Motors (GM) – GM had been on a good run lately and has a 4% dividend which is also helpful.  They recently took a 20% hit and haven’t bounced back. On watch
  • Juniper (JNPR) – Juniper is a networking company that was a potential takeover candidate (there was talk of this in the market and the stock went up).  In general I feel that this company will either be bought out or be damaged by the move to the cloud and the rise of players like AWS.  It is down about 15% from its peak and may be time to sell (although it could also shoot back up if it became a serious takeover candidate)
  • Procter and Gamble (PG) – Procter and Gamble is a storied company with a reputation for being well run.  They are down almost 20% from their peak and haven’t come back.  Like GM they have a nice dividend of 3.5%.  The question is – is P&G going to be hurt badly by companies like AMZN or do they have enough brand firepower to thrive long term (they definitely will survive in some form).  Will watch this but hate to give up on what seems to be a well run company
  • Tesla (TSLA) – Tesla is a wild-card company whose valuation is dependent on Elon Musk’s awesome salesmanship.  Recently it has taken a 30%+ hit for a number of reasons including delays in their newest car lines.  May want to sell
  • Wal-Mart (WMT) – Wal-Mart is also down about 20% from its peak, for various reasons, including never-ending competition from Amazon.  They also are now looking to buy Humana which is interesting

Portfolio Six Updated March 2015 – And It’s Tax Time

Portfolio Six is our newest portfolio, at 3 1/2 years. The beneficiary contributed $1500, the trustee contributed $3000, for a total of $4500. The current value is $4530, for a gain of $30, or 0.7% or 0.3% / year across the life of the fund. You can go here for details or download the spreadsheet at the links on the right.

In 2014 we earned $122 in dividends, for a yield of over 3%. In an era of no interest on deposits, that is very good. We sold one stock in 2014, Yandex, the Russian search engine, for a slight loss at $35. The stock subsequently tumbled down to $14 with the impact of Russian sanctions and the crash of the Russian ruble.

Two of the stocks are oil stocks – Exxon Mobil and Royal Dutch Shell. When oil prices fell from over $100 / barrel to under $50 / barrel (which no one saw coming, at least not the formal analysts) these stocks fell. However, they are both well run companies and pay solid dividends and we plan to hold them for the longer term, unless new adverse events occur.

Two of the other stocks remain under pressure – Coca Cola Femsa, which sells Coca Cola and other beverages in Mexico and Central America, has fallen with the decline in the Mexican Peso vs. the US dollar. Mexico is a good long term growth market but this is on watch. Seaspan, the Chinese shipper, also fell but their very high dividend (7.3%) is still holding up.

Baidu (the Chinese internet company) and Procter and Gamble are both doing well.

Portfolio Six Updated November, 2014

Portfolio Six is our newest portfolio, it is two years old going on year 3 now.  The beneficiary contributed $1500, the trustee contributed $300 fora total of $4500.  The current value is $5022 for a gain of $522 or 12%, which is about 6% / year.  See the detail here or go to the link on the right.

The portfolio is doing well.  P&G and Baidu are doing well.

Follow up on 2012 Stock Picks

Every year we select six stocks for each portfolio to choose from, and they generally each buy two stocks (sometimes three if cash has piled up from previous sales or dividends). We picked six stocks and then we added one more as a mid-year replacement for stocks that were sold. The selections were:

1. PCS Wireless (no ticker, sold) – had a good run up when it was bought up by T Mobile. This is what we were hoping for
2. Facebook (FB) – recommended at its nadir, now nearly back up to its IPO price (almost a 100% gain)
3. Procter & Gamble (PG) – had a 20%+ run up, plus pays a good dividend
4. Sasol (SSL) – went up over 10% with a good dividend, was also hurt by the relative strength of the US currency vs. the South African Rand
5. Toronto-Dominion Bank (TD) – a small gain and good dividend
6. Royal Dutch Shell B Shares (RDS.B) – a small loss, decent dividend, also hurt by UK currency vs. strong dollar

Our replacement stocks (mid year) to add to portfolios after sales were:

7. SPLUNK (SPLK), a technology stock, that went up over 50%, in about half a year
8. Garmin (GRMN), the GPS company, that went up over 10% in half a year (with a good dividend)
9. Wipro (WIT), an Indian outsourcing company, that went up a couple percent and has an OK dividend – it was hurt earlier by currency changes and a general hit to Indian outsourcing firms caused by a perceived decline in Western business contracts.

The Dow and S&P 500 both went up about 20% plus dividends over the same time frame. The non-US benchmark VEU (a Vanguard ETF) was up about 10% plus dividends over the same time frame (usually about half of our stock picks are non US companies, buying through ADR’s).

Thus those picks did well for 2012, probably a bit higher than the benchmarks when adjusted for the time value of money (half a year of SPLUNK helps). We hope to do as well as this with our 2013 picks.

Portfolio Six Updated July 2013

Portfolio Six is our newest portfolio. It has been in existence almost one year. The beneficiary contributed $500 and the trusted contributed $1000, for a total of $1500. The current portfolio is valued at $1651, for a gain of $151. This gain is about 10%. Of the two stocks one is flat and P&G provided all of the gains.

It’s Stock Picking Time (for 2012)

We traditionally select stocks at the end of the summer, before the beneficiaries go back to school or off to college (or even graduate school). This allows the a chance to earn money over the summer because the equation is 1) trustee contributes $500 2) beneficiary contributes up to $500 3) trustee matches up to $500. The matching concept has worked well at aligning interest in these investments because it is “their” money, too.

SIX STOCKS FOR 2012

1. Facebook (FB) – oversold, still has enormous momentum long term

2. Royal Dutch Shell (RDS.B) strong dividend (5.4%), good cost control, focus on liquid to oil. No foreign withholding on “B” ADR shares because they are out of the UK which has zero withholding (this is a UK ADR)

3. Metro PCS (PCS) – plays on no prepaid plan smartphones, buyout candidate (right size)

4. P&G (PG) – great consumer products company, being shaken up, good dividend (3.3%)

5. Toronto Dominion Bank (TD) – top North American (US and Canada) bank in terms of safety, dividend of (3.4%), good financial performance (this is a Canadian ADR)

6. Sasol (SSL) 4.51% – can play Africa growth and also gas to fuel synthetic gap to leverage low gas prices (this is a South African ADR)

Portfolio One Updated August 2012

Portfolio One is our longest portfolio, going on 11 years soon. Here is the latest update or it is on the links on the right side of the dashboard.

Portfolio one is worth $24,609 on a beneficiary investment of $5000 and a trustee investment of $11,500, for a total of $16,500. Thus gains are $8,109 or 49% over that 11 year period, an average of approximately 7.1% / year when the investment pattern is taken into account (we have been adding to the portfolio annually since 2001).

Due to the fact that our brokerage company no longer charges an annual fee for an account and commissions are often waived (due to the trustee having a certain number of “free” trades each year), total expenses across from the life average about 0.3% / year and trending down. Since a large element of total return consists of minimizing fees, this is a positive statistic.

Current Portfolio Update

The main purpose of updating the portfolio now is to prepare for our annual process of stock selections. At this time we review the stocks in the portfolio to see if there are any that we should consider selling.

On the “down” side, we have three – 1) Exelon, the big utility, which I want to hold onto as a long term play because there will be a coming lack of baseload generation 2) Urban Outfitters, which lost almost 30% of its value due to a quarterly earnings miss but has since gained about 1/2 of that loss back, and 3) Canon (ADR), a Japanese company that recently has hit an uncharacteristic spell of bad performance.

Another stock which still has big gains from long term dividends (and share buybacks, which should have the same net effect) but has had poor performance relative to its peers is P&G. The CEO is now cutting costs at headquarters (including moving some elements out of Cincinnati, which makes sense given that it is a global company and that is a regional location) and is under pressure to improve results, which I view as a positive potential element for the stock price.

Ebay was down for a significant period of time but recently had a big run up and is net positive. Ebay pays no dividends so it is exclusively a bet on share price appreciation. We will monitor eBay going forward.

Sold Stocks

In order to “learn” from past decisions, I update the CURRENT prices of all stocks that we’ve sold in the past.

In general, with 20/20 hindsight (something the “real world” lacks), our sales were generally the right thing to do, with the exception of Amazon (AMZN) which continues to defy gravity and is now near $235 / share despite earning little in real earnings. It’s price / earnings ratio is over 200, which is generally a sign of a “bubble” stock that is overvalued (although, like everything else, there are always exceptions to the rule, such as when a write-off occurs).

Stock Concentration

There are 16 stocks in the portfolio. Assuming that the stocks are from different industries and / or countries without high correlation, when you get beyond 10 or so you can generally consider yourself “diversified”. There will be a couple of new picks this year, and we may consider buying more of an existing stock that we want to keep long term.

Cash

Given the size of the portfolio, we do try to keep some money in “cash” in case some liquidity is needed. We have about $2000 in cash now, and will draw down at least $750 of that as part of the 2012 investments.