Portfolio Three Updated March, 2015 – and It’s Tax Time

Portfolio Three is our third longest portfolio, at 7 1/2 years. The beneficiary contributed $4000 and the trustee $8000 for a total of $12,000. The current value is $13,363 for a gain of $1,363 or 11% or 2.4% / year over the life of the fund. You can see the details at the link on the right or download the file here.

Portfolio Three had $213 in dividends in 2014, for a yield of approximately 1.8%. This is a reasonable return given that cash has essentially a zero return in an era of low interest rates. We sold 4 stocks in 2014 and 2 fell much further (Cliffs and CNOOC) while Splunk is mostly the same and Urban Outfitters gained about 20%.

We also sold 2 stocks in early 2015 (Weibo and Anadarko) so we have about $2200 to re-invest and will buy a couple of stocks in the spring.

Portfolio Three Updated August, 2014

Portfolio Three is our third oldest portfolio, at seven years old.  The beneficiary contributed $3,500 and the trustee $7,000 for a total of $10,500.  The current value of the portfolio is $13,472 for a gain of $2,972 or 28%, or 6.2% over the life of the fund.  Click on the link to the right or here for details.

The portfolio has 8 stocks and is doing well.  We sold Splunk for a gain and Cliffs for a small loss when they hit our stop loss mark earlier this year.  Our current portfolio is reasonably well balanced and the stocks are doing well.  We have $2713 in cash and if we add $1500 this year between the beneficiary and trustee we will have $4213 to invest in stocks, which will allow us to add three more and continue to diversify the portfolio.  Portfolios of over 10 stocks (that are all different) are considered reasonably diversified and we need to add a few more to reach that target.  We will also need to add a couple more over the upcoming years because a few of the stocks (the Canadian banks) are closely correlated.

Portfolio Two Updated August, 2014

Portfolio two is our second longest lived portfolio, at over ten years.  The beneficiary contributed $5000 and the trustee $10,000 for a total of $15,000.  The portfolio value is $25,300 for a gain of $10,300 or 68%, which works out to about 9.3% / year over the life of the portfolio.  You can see the detail of the portfolio in the link on the right or go here.

The portfolio is doing well now, and we recently sold Splunk when it hit our target price.  The portfolio did well on Facebook, buying near the post IPO nadir and riding it up to more than 3 1/2 times the purchase price.

There are 15 stocks in the portfolio and $3331 in cash; if $1500 additionally is contributed by the trustee and beneficiary there will be $4831 in cash available for stocks.  We will buy three stocks in larger amounts and try to keep the total portfolio at 20 or less stocks over the next few years.

New Stop Loss Orders

Our stop loss orders have expired.   I went through the stocks and picked out a few more per portfolio.  These expire in 60 days (6/3/14) or if they are executed.

Portfolio One

Twitter (TWTR) is at $44.  Put in a limit at $35.  The stock has dropped since we purchased it and is very volatile.  Twitter got dumped on by the market and fell quickly, hit limit and we sold

Portfolio Two

Splunk (SPLK) limit at $60.  This stock has been a great portfolio but don’t want to ride it too far down.  Hit limit and sold off.  Note the stock has continued to fall far below this number, into the 40’s. Glad we sold.  At some point may look to get back in the stock

– Facebook (FB) limit at $50.  Same as Splunk.

Portfolio Three

– Splunk (SPLK) limit at $50 per above.  Hit limit and sold off

– Baidu (BIDU) limit at $140, has been down since we’ve bought it

Portfolio Four

– Nucor (NUE) limit at $46

– Seaspan (SSW) limit at $18

Portfolio Five

– Seaspan (SSW) limit at $18

– Baidu (BIDU) limit at $140, has been down since we’ve bought it

Portfolio Three

– Seaspan (SSW) limit at $18

– Baidu (BIDU) limit at $140, has been down since we’ve bought it

 

 

Portfolio Two Updated March 2014

Portfolio Two is ten and a half years old.  The beneficiary contributed $5500 and the trustee $11,000 for a total of $16,500.  Current value is $25,427 for a gain of $8927 or 54%, which works out to about 7% / year.  You can see the detail to the links on the right or here.

The fund has 16 stocks with an average balance around $1500.  Over time we will try to move the average position size to closer to $2000 and try to keep the fund less than 20 or so stocks to keep it easier to manage.  The fund is roughly evenly split between US and overseas stocks.

About half the gains have come from two US technology stocks – Facebook which we bought at what was probably the low point of $18.75 and it is now at $68 and Splunk.  We will watch those two stocks so we don’t end up riding the gains back down.

For 2013 taxes there were no sales so no gains / losses.  There was $383 in dividends, a rate of 1.5% / year.  The rate is lower net because a higher percentage of the portfolio value consists of technology companies which don’t pay dividends.

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

 

Portfolio Three Updated November 2013

Portfolio Three is our third longest lived portfolio, at six years. The beneficiary contributed $3500, the trustee contributed $7000, for a total of $10,500. The current value is $12,673 for a gain of $2948 or 28%, which is 6.2% / year over the life of the portfolio. See details here or download the spreadsheet on the right.

There are 10 stocks in the portfolio, of which 6 are US and 4 overseas, although since WYNN has most of its’ value from China holdings, you could say that it has a 50/50 ratio.  The portfolio is almost to the point where the swing in a single stock won’t disproportionately change the total portfolio value and it is reasonably diversified.

Splunk has been a big winner, with a gain of over $1000 in less than a year.  Other winners include Siemens which is near a five-year high as well as Wal-Mart which is steadily growing with a solid and rising dividend.

We are watching WYNN and Urban Outfitters which had been way under water until the recent run-up; we are using stop loss orders that we will renew to ensure they don’t go back underwater.  Cliffs also has a stop loss because it originally started tanking after we bought it but turned around immediately.  We recently sold Bancolumbia as it neared a 20% loss (excluding dividends).

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.

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 Three Updated July 2013

Portfolio Three is our 3rd longest lived portfolio, at almost 6 years. The beneficiary contributed $3000 and the trustee $6000, for a total of $9000, vs. a current value of $10,242, for a gain of $1,242. This is a return of 14% or just under 4% / year, when adjusted for the timing of cash flows. You can see the detail in the links on the right or go here.

The portfolio components are doing reasonably well. Two stocks that were far underwater at one point, WYNN (casinos) and Urban Outfitters (clothing) have come back and / or exceeded their purchase price. Splunk has been a big gainer since being purchased this year. On the other hand, while Siemens is still a net positive position with a good dividend, it is down substantially from its highs, and we hope that getting a new CEO will be a catalyst for a price rise. BanColumbia (CIB), the ADR from Columbia, is about break even with a decent dividend but was hit by negative currency fluctuations vs. the US dollar.

Portfolio Two Updated July 2013

Portfolio Two is our second longest lived portfolio. We started this portfolio almost ten years ago. The beneficiary contributed $5000 and the trustee contributed $10,000 for a total of $15,000. The portfolio is worth $18,991 for a gain of $3991 which is 26%, or about 4% over the life of the fund (adjusted for the timing of cash flows). You can see the detail here or on the links on the right side of this page.

Currently the portfolio is doing well. We have only one stock underwater in terms of “total return” (price appreciation plus dividends) and that is WYNN, and it has come up substantially from earlier lows. Two technology stocks, SPLUNK and FACEBOOK, also have performed well recently (we bought FB near the nadir post IPO and it is getting near its IPO price of $38).

Siemens (SI) is a German engineering company that has missed earnings many times recently and they are looking to replace the CEO. That effort usually provides a good short-term catalyst for the stock and we will watch to see how it performs going forward. NIDEC (NJ) is a Japanese manufacturer that has gone down over recent years and cut its dividend; Japan has tried to rejuvenate their economy by reducing the value of their currency; in our US dollar terms gains in the stock price are often wiped out by depreciation after it is translated back into US dollars (done automatically by the ADR). Both of these stocks are now on watch.

While looking at stocks we’ve sold over the years, two have come back from substantial lows. Home Depot (HD) was sold back during the dark days falling out of 2009-10 but the stock has roughly doubled since then. USANA (the sales company) has also doubled since we sold them. A typical investment advisor wouldn’t bring up past sales that have gone against us but this is a portfolio not for profit just for our benefits and learning so we need to watch what happened. However, we have net done pretty well from the stocks we’ve sold, all things considered.