Portfolio Update April 2020

The markets have moved up and down since the lows hit in March, 2020. The government has taken a number of moves to shore up the market, including reducing interest rates, back-stopping some industries, and even buying some corporate debt instruments and ETF’s. After some incredible moves up and down, the markets are back to about where they were at the end of Q3 2019.

Portfolio April 12, 2020
Portfolio April 12, 2020

Our stocks mostly went down with the overall market, although some performed better. Specific sectors, like energy and airlines, were particularly hard hit. The Coronavirus is making us reconsider our core assumptions in light of how the market has been performing recently. We may sell out of some sectors to avoid potential further declines.

Portfolio One:

  • Exxon Mobil (XOM) – while well run and with a good dividend, the energy sector is facing significant challenges with reduced oil prices and this stock has been stuck and declining for a decade.  Consider selling.
  • Toronto Dominion (TD) – this is a well run Canadian Bank with trading exposure.  However, banks face unknown challenges with debt defaults and trading commissions have recently evaporated.  Consider selling

Portfolio Four:

  • Oracle (ORCL) – Oracle is famous for being ruthlessly well run and has held up well in the market turmoil.  However, they piled on debt to keep up earnings per share through stock buybacks and are generally passed by in most areas of Technology.  Consider selling
  • Nucor (NUE) – A good company with a good dividend that hasn’t risen in many years even in a favorable regulatory environment.  Consider selling
  • Royal Dutch Sell (RDS.B) – large European oil & gas producer hit hard by oil price downturn.  Consider selling
  • Westpac Banking Group (WBK) – large Australian bank hit by recent market turmoil and other issues.  Has been stagnant or falling for many years.  Consider selling

Portfolio Five:

  • Baozun (BZUN) – Chinese e-commerce enabling company has been down for some time in terms of stock price.  Poised to be successful in future growth.  May want to consider selling
  • Canadian Imperial Bank of Commerce (CM) – Canadian bank with high dividend that has been down more than the market.  Consider selling
  • General Motors (GM) – US car maker hit by reduced demand for cars and fight with the president.  Consider selling
  • Siemens (SIEGY) – German industrial company that is spinning off components and hit with market events.  Consider selling.  May look at buying pieces of the company later post restructuring

Portfolio Six:

  • Baozun (BZUN) – Chinese e-commerce enabling company has been down for some time in terms of stock price.  Poised to be successful in future growth.  May want to consider selling
  • Royal Dutch Sell (RDS.B) – large European oil & gas producer hit hard by oil price downturn.  Consider selling
  • Exxon Mobil (XOM) – while well run and with a good dividend, the energy sector is facing significant challenges with reduced oil prices and this stock has been stuck and declining for a decade.  Consider selling

Portfolio Seven:

  • Baozun (BZUN) – Chinese e-commerce enabling company has been down for some time in terms of stock price.  Poised to be successful in future growth.  May want to consider selling
  • General Motors (GM) – US car maker hit by reduced demand for cars and fight with the president.  Consider selling

Portfolio Eight:

  • Baozun (BZUN) – Chinese e-commerce enabling company has been down for some time in terms of stock price.  Poised to be successful in future growth.  May want to consider selling
  • General Motors (GM) – US car maker hit by reduced demand for cars and fight with the president.  Consider selling

 

Portfolio Six Updated February 2020

Portfolio 6 is 7 1/2 years old.  The beneficiary contributed $4000 and the trustee $8000 for a total of $12,000.  The current value is $14,858 for a gain of $2,858 or 24%, which is 4.7% / year when adjusted for timing of cash flows.  See details here or at the link.

During 2019 we had 2 sales for a long term capital loss of ($307) and dividends of $221 for tax purposes (see 1099 for exact values these are estimates).

The stocks on watch for this portfolio are

  • Exxon Mobil (XOM) – while this oil and gas company is well managed and has a high dividend, the stock price has not improved in many years and the large oil companies were hit recently with the reduction in commodity prices.  Will be painful to give up on this stock but am considering it
  • Royal Dutch Shell (RDS.B) – like Exxon Mobil, this integrated oil and gas company pays a very high dividend but has not improved in many years.  It also was hit by recent commodity price drops
  • Baozun (BZUN) – Chinese e commerce company is well run but has been hit by recent geopolitical events

Portfolio Four Updated February 2020

Portfolio 4 is 10 1/2 years old.  The beneficiary contributed $5500 and the trustee $11,000 for a total of $16,500.  The current value is $23,284 for a gain of $6784 or 41%, which is 5.6% / year adjusted for the timing of cash flows.  See a summary here or at the links section.

We had 2 sales in 2019 for a long-term loss of ($320) and $361 of dividends.

The current portfolio is doing well.  The stocks on watch are:

  • Box (BOX), a well run software / storage company which has been in the doldrums for a while.  I thought that they could be a takeover candidate which would cause the stock price to rise.  May sell not much happening
  • Royal Dutch Shell (RDS.B) – this oil major has a high dividend but the stock has not done much for years.   Hit with recent oil price declines like the other oil majors.  May sell
  • Nucor (NUE) – we’ve had this US metals company for many years.  While well run, it hasn’t done a lot.  May sell

Portfolio Four Updated December 2019

Portfolio Four is 10 years old.  The beneficiary contributed $5500 and the trustee $11,000 for a total of $16,500.  The current value is $22,566 for a gain of $6,016 or 37%, which is 5.1% / year when adjusted for the timing of cash flows.  You can see a summary here or at the link on the right.

The portfolio has 19 stocks.  Big gains have come from Appian (APPN), Elbit Systems (ESLT), Procter & Gamble (PG), Oracle (ORCL) and Wal-Mart (WMT).  It is important to factor in the impact of dividends on stocks held a long time; for example Royal Dutch Shell (RDS.B) and Westpac (WBK) look like “losers” from a stock price perspective – but when dividends are (properly) included, they move into the winning column.

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.

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

Portfolio Four 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 $10,137 for a loss of ($362) or (3.5%).  Adjusted for the timing of cash flows performance is (1%) negative a year.  See here for a spreadsheet with details or go to the link on the right.

We sold Seaspan (SSW) and Garmin (GRMN) this year.  We purchased Box (BOX), Novartis ADR (NVS), and Tesla (TSLA).

We have a number of stocks on watch.  Newly acquired Novartis (NVS) is not doing well, Coca-Cola FEMSA has been hit by exchange rates, Linked In (LKND) had a bad forward revenue guidance and their stock fell sharply on the news.  For oil companies, Royal Dutch Shell (RDS.B), Statoil (STO) and Devon Energy (DVN) have all been hit by the falling oil price.  Devon gave up on their dividend which hit the stock hard but Shell and Statoil are making cuts and borrowing to try to keep their dividend constant.

For taxes will send along the forms which helpfully now include a cost basis.

Portfolio Six Updated October 2015

Portfolio Six is four years old.  The beneficiary contributed $2000 and the trustee $4000 for a total of $6000.  The current value is $5572 for a loss of ($427) or (7.1%), or negative (2.9%) / year.  See details here or use the links on the right.

Like many of the portfolios, the commodity price collapse has impacted these stocks.  Exxon Mobil (XOM) and Royal Dutch Shell (RDS.B) are both well run companies working to cope with lower oil and natural gas prices and to protect their dividends and long term interests.  Seaspan (SSW) is a Chinese shipper with a very high dividend of 9% that it is currently maintaining.  Finally, Coca Cola Femsa (KOF) is the Mexican Coke bottler which has been negatively impacted by the fall of the Mexican Peso vs. the US dollar.

Portfolio Four Updated October 2015

Portfolios 4 and 5 are both 6 years old.  Portfolio 4 has $3500 in beneficiary contributions and $7000 in trustee contributions for a total of $10,500.  The current value is $10,892 for a gain of $392 or 3.7%, which is about 0.9% / year.  You can see the details here or go to the links on the right.

The portfolio has several stocks that are on watch.  We have been holding on to Coca Cola Femsa (KOF) which is the Mexican coke bottler but the Mexican currency (Peso) has fallen heavily vs. the US dollar.  Devon Energy (DVN) has been hit hard by the commodity crash, although it is well run and pretty well hedged.  Garmin (GRMN) has also fallen recently on reduced earnings guidance.  Wal-Mart (WMT) is still up significantly from our purchase price but recent earnings guidance was poor and that stock fell too.  Royal Dutch Shell (RDS.B) and Statoil (STO) have also been impacted by falling oil prices, although Shell’s decision to stop arctic drilling is a good one from a financial perspective (the price of oil has made those wells uneconomic).  Seaspan (SSW) has a high price buoyed by a large dividend but that may not be sustainable.

Stock Sales Summer 2015

We have been watching the markets and trends and there are some stocks that we will cull prior to the next round of investing.

Coca-Cola Femsa (KOF) – this is basically the Mexican and Latin American Coca-Cola distributor.  Per their last earnings release:

“As beverage transactions continued to outpace volumes across our operations- reinforcing our daily consumer engagement – we are encouraged by our operators’ positive performance in the midst of a challenging environment, marked by weak consumer trends in Brazil, a slowly recovering consumer landscape in Mexico, and currency volatility across our markets. On a comparable basis, we delivered high single-digit consolidated revenue growth and double-digit operating income growth during the quarter.”

What they mean by “comparable basis” is that the currencies of Mexico, Brazil and other countries such as Argentina have collapsed and they are still making a lot of sales but the sales are worth less when they are converted into the US dollar or some other index as they were in prior periods.

So what do we do?  Do we hold on and wait for the dollar to fall and / or their currencies to rise?  The company seems well run (they have growing transactions) and Coca-Cola is never going away, and these countries have a rising middle class and growing populations (unlike most of the world) to consume more goods in the future.

Royal Dutch Shell (RDS.B) – Shell has been pummeled by the commodity price slump.  They are also based in the UK / Europe so they face an additional currency overhang when translated into US dollars.  They also were “acquirers” of a natural gas company in the midst of these events which means they paid a premium price in a time of decline.  The most worrisome element, however, is that they continue their high risk plan of drilling for ice in the volatile and difficult arctic, at a time of reduced oil prices (which makes high cost investments like deep water drilling even riskier).  They also have a relatively higher chance of environmental catastrophe which will be very difficult to clean up given the paucity of local resources and the ferocious environment in the far north.  They are a sell.  If we want to “buy low” in the oil or natural gas business there are better candidates.

Trans Alta (TAC) – Trans Alta is a Canadian power generator.  They have strong exposure to coal and also the Canadian commodity boom / bust which consumes much of their electricity.  They pay a strong dividend (for now) but it has been reduced as the company struggles.  Future dividend cuts would impact the company even further.  Given the combination of the poorer Canadian economy and currency, the dire forecast for coal, and the commodity bust, this is a sell.

Wynn (WYNN) – Wynn is a gaming operator with operations in Macau, the only area of China where their gambling-mad citizens are allowed to play.  There are also many other more subtle elements to this infatuation with gambling including an ability to move currency out of the country, which is otherwise difficult to do.  Recently the new Chinese premier (dictator?) has cracked down on certain types of ostentatious corruption (generally among those who are not politically allied with him, since “corruption” is embedded into all aspects of their command economy) which has hurt gambling.  But Wynn is a shrewd operator and he is expanding capacity and likely this too, shall pass.  It is hard to sit while revenues and profits decline, however.

Exxon (XOM), Statoil (STO), and Devon (DVN) – these energy giants (Exxon is the biggest, but Statoil is unique since it is from Norway, and Devon is smaller but well run) have all been hurt badly by the reduction in oil and natural gas prices.  For now, unlike Shell above, I think it makes sense to stick with them.

Seaspan (SSW) – Seaspan owns container ships that travel between China and overseas destinations and has been investing in a new, fuel efficient fleet.  Seaspan has a very high dividend (8%) which they have been able to sustain so far.  On the one hand they seem to be a good operator but overall Chinese exports are faltering and if there is a general fall in the market they likely will still be able to rent out their newer, fuel efficient craft but the rate that they would receive would be correspondingly lower.  This one is on the edge.

Westpac Banking (WBK), Canadian Imperial Bank (CIB), Toronto-Dominion Bank (TD) – the first bank is Australian and the latter two are Canadian.  These banks are generally well run but all have been hit by the depreciation of their currencies vs. the US dollar, and the fact that they are exposed to real-estate “bubbles” in the Australian and Canadian markets.  As the commodity markets fall, the entire country can be hit with reduced services, demand and an overall high level of debt.  These are on watch.

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 Four Updated March 2015 – And It’s Tax Time

Portfolios four and five are both five and a half years old. The beneficiary has invested $3000, the trustee $600, for a total of $9000. The fund value is $11,051 for a gain of $2051 or 22%, which works out to about 5.9% / year across the life of the portfolio. You can see the details here or go to the links on the right side of the page.

The portfolio has many dividend stocks and in 2014 earned $341, or a yield of about 3.2% / year. That is a great yield and helps performance over the long term. There were no stock sales in 2014.

Currently we have a few stocks on watch:

– Nucor (NUE) – the US steel maker downgraded its profit targets since the US is being “flooded” with foreign steel from loss making state owned companies (primarily in China). It is surprising that the stock didn’t fall further with this decline in earnings guidance
– Devon (DVN), Royal Dutch Shell (RDS.B) and Statoil (STO) have all been hit by the crashing price of oil. Also Shell and Statoil are in UK Pounds and Norwegian Kroner and both of these currencies have declined vs. the US dollar, which adds to the difficulties. For now we are holding on to these although they also are on watch
– Coca Cola Femsa is the latin America (Mexico mainly) distributor of Coke. It has been hit by the declining peso like all foreign investments. We will hold but likely put a collar on this stock in case it falls much further. Would be good to have investments in Mexico since it is a rising economy