Monday, September 17, 2012

Portfolio Update Through Friday 9/14/12

With the QE3 announcement on Thursday, the market rallied late Thursday, and again on Friday boosting the portfolio (and darn near everything) nicely.  The portfolio is up YTD 13.4% vs. the S&P which was up 16.7% through Friday.  As a reminder, the portfolio was assembled starting in June 2012.  Prior to this, the portfolio held various ETFs, and 40% cash.  My goal is to catch and pass the S&P by year's end!

Several actions took place in the portfolio this week including:

  • Dividend payout and buybacks on JNJ, CVX, and WAG
  • Sold Eastman Chemical (EMN, reasons given in earlier post) for a 7.2% gain
  • Cash was partially deployed to start a position in TEVA (see analysis in last post)
  • Altria (MO) overvalued - so I placed a stop loss for a portion of my position.  Stop loss was triggered on Friday, so MO % of portfolio was cut from 4.78% to 3.31%.  

Here's how the portfolio looked on Friday after market close:

(Click on the chart to see it more clearly)

Here are metrics of interest on the portfolio:

Total yield for the entire portfolio is a respectable 3.2%.  60% of my investments are targeted in the non core, slightly more risky, but also more undervalued stocks.  I sorted each group by EYE ratio, earnings yield estimate, which correlates well to the PE over/under valuation column.  Looking at the most undervalued stocks, they tend to be in the non core group.  The blue chip names in the core group are mostly at fair value, or overvalued.  KO, WMT, MCD, MO, JNJ, and  CVX - all examples of popular dividend core stocks, but all expensive.  I would not add to any of these until their valuations/prices become more attractive.  Among the core holdings, best values still appear to be AFL, WAG, MDT, and DOV.  AFL is a "full" position already, but I'll consider adding to the other three on any dips this week.

Looking at the non core group, there are some better values vs. the core:  CLF, HAL, AAPL, TEVA jump out.  CLF is a full position, so I'll consider HAL, AAPL, and building up TEVA.  Funny to see AAPL at nearly $700/share, and know that it appears to be well below fair value.  On the negative side, COP gives me some concern.  They've revised estimates, and are now at fair  value, and are project 0.00% growth for the next 5 years.  I'll look into this more, and decide whether it may make sense to sell COP and replace it with a better selection.  


  1. Hey Chump,
    Something to consider - have you thought about any type of risk metric for your portfolio that can be compared to to the S&P or other portfolio managers? (i.e. Sharpe ratio is a common one)

    The Canadian

    1. Yes. Check out the column entitled EYE Ratio. This is essentially the same thing; the earnings yield expectation ABOVE the risk free alternative, in this case, it's the 10 year treasury. Like with Sharpe, the higher the ratio, the better. It's a useful way to compare stocks' relative risk vs. reward. I try to add money only when this number is above 7:1. I guess I could calculate a waited average EYE for the entire portfolio.

      Regarding comparison to S&P, the beta for each position is shown, and again, I suppose a weighted average Beta for the entire portfolio might be useful.