Stocks to choose from for 2018:
- CME Group (CME) – a financial firm that trades and clears futures products and has a high dividend (they have an annual dividend plus a special year end dividend of 3.5%+ in total). They make money from trade volume which tends to increase in times of volatility or disruption in the markets, and are thus kind of a “hedge”
- PayPal (PYPL) – PayPal spun off from eBay and makes more money as the world moves to digital payment methods from cash. They also own Venmo which they have yet to monetize (existing stock owned by Portfolio One)
- Union Pacific (UNP) – Union Pacific is a large and well-run railroad company (existing stock owned by Portfolios Five and Six)
- Electronic Arts (EA) – An American video game developer that has been hit lately but could be a bet on the potential of this sector and streaming
- Inditex (IDEXY) – this Spanish company is known in the USA as “Zara” and is a leader in “fast fashion” and integrating e-commerce with direct retail
- Alibaba (BABA) – the Chinese e-commerce giant has been growing and expanding into different domains (existing stock owned by Portfolios Three and Seven)
- Taiwan Semiconductor Manufacturing Company (TSM) – this manufacturer of semiconductors counts Apple as a large customer and has been doing very well for many years (existing stock owned by Portfolio One)
- Infosys (INFY) – Indian outsourcer and technology company has been doing well and benefits from the weaker Indian currency (existing stock owned by Portfolios One and Three). Note – this stock just split 2/1 effective 9/12 so the price history will look strange if you see it online
- Gold ETF (IAU) – this ETF tracks the price of gold. Gold does not provide a dividend but could be a hedge against inflation or disruption
Between the eight portfolios, there are almost 40 different stocks to follow. Generally, we select “new” stocks rather than re-recommend existing stocks. However, for this round, we will have some “new” stocks but also continue to recommend some existing stocks that the portfolios can choose from. This will slow the overall growth of stocks across all the portfolios which will make it simpler to track.
We will continue to recommend a mix of US and foreign stocks to choose from, although each portfolio can select whatever they’d like (they don’t have to split their investments equally between both). Recently the US dollar has gone up, resulting in (relatively) poorer performance for foreign stocks. However, this can change and these are long-term portfolios so we recommend US and foreign stocks rather than taking an effective “position” on the future direction of US currency (i.e. if you thought the dollar was going up indefinitely you would buy US based assets exclusively). Folks often fail to remember the past, when the US dollar fell for years against many different currencies.
Portfolio Six is 3 1/2 years old. The beneficiary contributed $2000 and the trustee $4000 for a total of $6000. Current value is $5410 for a loss of ($590) or (-9.8%), or (-4.1%) a year when adjusted for the timing of cash flows. Go here or to the link on the right for a spreadsheet with details.
This year we sold Seaspan (SSW). We purchased Union Pacific (UNP), Tata Motors (TTM) and ConocoPhillips (COP). ConocoPhillips cut their dividend by 75% after this purchase which impacted their share price, although they have been doing better recently. ConocoPhillips is on watch. Coca Cola Femsa (KOF), the Central American soda distributor, is also on watch, due to the fall in the Mexican peso vs. the US dollar. We continue to do well with Procter and Gamble (PG).
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 $10,435 for a loss of ($65) or (0.6%) or basically flat performance when adjusted for the timing of cash flows. The spreadsheet detail can be found here or in the links on the right.
We sold Seaspan (SSW), Yahoo (YHOO) and Sasol (SSL) this year while buying Union Pacific (UNP), Tata Motors ADR (TTM) and ConocoPhillips (COP). Right now ConocoPhillips (COP) is on watch after cutting their dividend 75%, and LinkedIn was hit hard during their recent earnings guidance, also putting the stock on watch.
We had some gains and losses this year the brokerage account makes it easy to calculate taxes since it includes the original cost basis as well as the sales information.
Attached is an update for Portfolio 6 after fall purchases and sales. New stocks include Union Pacific (UNP), Tata Motors (TTM) and ConocoPhillips (COP). Returns do not include the impact of dividends so they are understated.
Attached is an updated view of Portfolio Five after 2015 purchases and sales. New stocks include ConocoPhillips (COP), Tata Motors (TTM), and Union Pacific Corporation (UNP). Returns only include stock price rises and decreases not dividends (so dividend paying stocks are understated).
Attached are the stock selections for 2015. We are expanding the list slightly because most of the funds not only have new cash to invest for 2015 but we also did a recent round of selling that needs to be re-invested.
- Box (BOX) – $13, 52 week range $11-$24, $1.5B market cap, no dividend, little debt. Box provides a cloud-based document storage and governance capability and is growing rapidly among Fortune 500 corporations
- Mastercard (MA) – $101, 52 week range $75-$101, $114B market cap, 0.7% yield, $1.5B debt. Mastercard is a global credit card brand that benefits from the long-term migration of cash and checks to credit. Their biggest competitor, Visa, recently announced a merger with Visa Europe which likely will distract that company for several years and give Mastercard an opportunity to pick up market share
- ConocoPhillips (COP) – $55, 52 week range $41-$74, $68B market cap, 6% yield, $25B debt. ConocoPhillips is an oil and gas exploration company that is a major bet on future price rises for natural gas and oil with technical knowhow and efficient production. They recently made major cuts in response to the commodity price collapse
- Union Pacific (UNP) – $86, 52 week range $79-$124, $73B market cap, 2.6% yield, $13B debt. Union Pacific operates a massive US rail network and has been hit recently by reductions in the industrial and commodity economies. However, they are highly efficient and represent a solid long term bet on industrial growth and recovery
- Tata Motors (TTM) – $30, 52 week range $21-$51, $19B market cap, no dividend, $11B. Tata Motors is an Indian based company that benefits from low costs and growth in the Indian car market and also owns Jaguar and Land Rover. The stock will be down a bit early next week because they just released earnings and showed an unexpected loss due to a one time event
- China Eastern Airlines (CEA) – $30, 52 week range $20-$50, $8B market cap, no dividend, $6B debt. China Eastern Airlines can benefit from the growth in outbound Chinese tourism and investment as well as potential government mandated consolidation in the airlines sector which could result in higher profits and reduced competition
- Alibaba (BABA) – $83, 52 week range $57-$120, $207B market cap, no dividend, $8B debt. Alibaba is a major web commerce / mobile player in China. Much of Yahoo’s value was based on an ownership stake in this entity (we recently sold off Yahoo)
- Novartis (NVS) – $89, 52 week range $88-$106, $214B market cap, 2.7% yield, $22B debt. Novartis is a major Swiss based drug maker
This is a new section. These are some riskier stocks either because of high prices or uncertain outcomes.
- Tesla (TSLA) – $232, 52 week range $181-$286, $30B market cap, no dividend, $2.6B debt. Tesla is a maker of electric cars led by the charismatic Elon Musk. Their valuation is very high considering that they lose money, gas prices are low which reduces the savings from electricity, and they deliver a fraction of the cars that a “major” automotive giant would. On the other hand, their fan base is passionate and their design is praised
- Facebook (FB) – $107, 52 week range $72-$110, $301B market cap, no dividend, little debt. Facebook is the ubiquitous social media presence with a huge and growing global and mobile footprint and messaging. Their market cap has almost tripled since their IPO and are led by the charismatic Mark Zuckerberg
- Cheniere (LNG) – $46, 52 week range $43-$82, $11B market cap, no dividend, $16B debt. Cheniere is a long term bet on liquified natural gas, which takes (relatively) cheap US gas and ships it to offshore countries seeking clean energy and diversified energy sources. This is a risky but possible bet because the facilities are mostly built but yet to ship gas and prices are falling, but the long term upside is also large if they can survive and prosper