Potential Stock Sales for August 2018

Here are the potential stock sales by portfolio:

Portfolio 8K

  • GM – consider selling
  • BZUN

Portfolio 7G

  • GM – consider selling
  • BZUN

Portfolio 6

  • ESLT
  • BZUN
  • BIDU

Portfolio 5D

  • BZUN
  • GM – consider selling 
  • BUD – recommend selling (not growing) (SOLD)
  • BIDU

Portfolio 4M

  • TSLA – recommend selling (a media circus) (SOLD)
  • ABB
  • ESLT

Portfolio 3

  • ABB
  • DWDP – recommend selling (will split into multiple companies) (SOLD)
  • BIDU
  • ESLT
  • WMT (SOLD)

Portfolio 1 and 2 – None

 

Portfolio Four Updated August, 2018

Portfolio four is nine years old.  The beneficiary contributed $4500 and the trustee $9000 for a total of $13,500.  Current value is $18,063 for a gain of $4,563 which is 34%, or 5.8% / year when adjusted for the timing of cash flows.  Go here for details or click the link on the right.

There are 3 stocks that we have on watch right now:

  • Tesla (TSLA) – the volatile car maker stock led by Elon Musk is in the news almost every day it seems
  • ABB (ABB) – the large European conglomerate we bought about a year ago
  • Elbit Systems (ESLT) – Israeli defense contractor which recently acquired Uzi from their government

We are likely to sell TSLA and the other two we will likely continue watching.

 

Portfolio One Updated July, 2018

Portfolio One is almost 17 years old.  The beneficiary contributed $2000 net (of withdrawals) and the trustee $16,000 for a total of $18,000.  The current portfolio value is $42,930 for a gain of $24,930 of 138%, which is approximately 7% / year when adjusted for the timing of cash flows.  You can see the detail here or on a link on the right.

This portfolio has moved over to the beneficiary and the former trustee now has agency so that we can take advantage of free trades on the former trustee’s account.  We are now at a phase where it makes sense to consider making some sales to take “risk off” on the account.  In addition, cash yields about 1.85% “risk free” in a money market account, so the impact of leaving money in cash is less impactful (it used to be earning effectively zero).

Here are the stocks that we are considering selling:

  1. Tesla (TSLA) – Tesla is a highly risky and volatile stock.  There is enough information out there about this stock to fill 10+ blogs like this.  As a result it is under consideration for selling
  2. Anheuser Busch Inbev (BUD) – This giant multi-national beer company is well run by the G3 group out of Brazil.  But growth has been hard to come by because they are gigantic and they are battling the high end craft beer in the USA and cheaper alternatives abroad
  3. WIPRO (WIT) – This Indian outsourcer has a low dividend and hasn’t been making much of a return.  A candidate for selling
  4. Wal-Mart (WMT) – Massive retailer in battle for its life with Amazon.  Starting to acquire other companies and expand e-commerce footprint to compete.  May want to take earnings and move on
  5. Illinois Tool Works (ITW) – ITW has been a great stock for many years.  They acquire companies and integrate them and have earned above average returns.  They recently have had some worse earnings results and maybe it is time to take gains off the table and move on
  6. Comcast (CMCSA) – While Comcast has a hellish reputation, they have been a good stock.  Down a bit and under pressure, maybe it is time to take our gains and move on
  7. Ebay (EBAY) – Ebay was an amazing pioneer.  After the spin off of PayPal (PYPL) which is doing great, they’ve not done super well, and seem far removed from most top-of-mind Internet conversations.  Perhaps it is time to sell off remaining eBay

There are 19 stocks in the portfolio (we bought Exxon Mobil XOM twice at two different purchase prices so we show them separately and it looks like 20 stocks if you count the lines).  They are not all of equal weight – they range from about $1300 to about $4300, but the average ($43k / 19) is a bit over $2000.

If all the above stocks were sold, that would be about 33% of the portfolio.  At that point we could determine how much to keep in cash (perhaps all, or maybe just $10k of it) and how much to re-invest.  These sales would result in gains but they would not be too significant; they are all long term sales and the maximum rate is 15% for long term capital gains (and this only applies to the “gain” portion, which would be relatively small for these stocks).  Would calculate a more exact amount if we were specific on what was being sold.

We executed this plan in August and will determine what to do with the proceeds.

 

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 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

 

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.