Friday, March 8, 2013

BBL & Portfolio Summary

After selling CLF a few weeks ago (before they fell off a cliff, luckily), I've been looking at the raw materials sector for a replacement.  BHP Billiton Group hit my radar due to the nice yield of around 3.6%, and what looks to be a very undervalued share price.  Here is a brief description of the company from Google Finance:

I like having commodities in the portfolio.  Commodity prices are sure to rise as the U.S., Japan, and other countries print money and devalue their respective currencies.  I also like the idea of holding shares of a company based outside of the U.S. for portfolio diversification.

From FAST Graphs:

EPS are continuing to grow, while the share price is well below "fair" value, and the normal PE level for this stock.  The company's dividend history isn't stellar, but pretty good the past several years as shown below:

I chose BBL vs. BHP because they are based in the UK vs. Australia, and do not tax dividend payments to the U.S.  Thus, in my IRA, I get the full 3.6% yield.  Morningstar has BBL ranked as a five star selection, here is their summary of the basic materials sector:

Thus, I placed a limit order today for a 1/3 full position.  It filled for $62.59.  I'll look to add to this position in the coming months.

With the addition of BBL, here is a summary of the holdings sorted by the attractiveness at current
 prices, highest to lowest:

When considering the relative valuations and growth prospects, please ignore OHI at the bottom.  As a health care REIT, it should be valued differently (Price vs. FFO), and is fairly, but not richly, valued at these prices.

Since my last update, I've made several changes:  More AAPL and MSFT, sale of CLF, addition of BBL and KMI, and OHI.

That's all for now,



  1. Hi Chump,

    Nice portfolio you have there. I thought you were in FDO?

  2. Hey grox01, thanks. Nice catch, I am in FDO, but forgot to add it to my FASTGraph list of holdings from which I generated the report above...oops.

    It's been a good 2013 for the Chump portfolio, up nicely and almost fully invested since November. I'l summarize the performance numbers this weekend or next.

    Best wishes,


  3. Nice to read you again!

    I presume you are still in the "building phase", have you thought about rebalancing with more growers?
    I know you appreciate higher total return, thus your pressing in AAPL, MSFT and BBL.
    I did rotate some of my low grower in favor of higher one's.

    Doing so can bring more risk though, but bought at great price can reduced it. Have you take a look at GT?
    I also favor NOV over CVX. I know, not really in the same field and we can not directly compare them, but still in the oil industry ;) Also, you might notice that dividend is not the primary objective in the building phase.
    Lately I have added on AAPL, AFL and TEVA.

    Best wishes too :)

  4. grox01:

    Yes, still building. I recently finished Ben Graham's book "Intelligent Investor" and book by Larry Miller called "Single Best Investment." I'm starting to think that the best stocks, even for accumulation phase, are dividend growth stocks. My current thinking is to find stocks that fit the following criteria: 1. "Great" business, growing earnings, not declining (CCC list almost exclusively)
    2. Under fair value (I know you do this as well). I refuse to buy at or above fair value based on PE vs. norm for past 4 or 5 years.
    3. Maximize yield
    4. Dividend is growing every year, maximize % growth
    5. Maximize eps growth rate

    And then of course, there are many other ratios, debt, cash growth, etc... that I look at.

    I now believe that the best run companies in the world have a strong, consistent dividend growth mentality & policies. This is my favorite screen to find stocks. I'm a cynic, and as such, I believe actual cash payments to shareowners is the best measure of a company's health, and management's competence!

    Thus, unlike many I read on SA, I don't believe that dividends are more important than growth and total return, but what I do believe is that dividends are the BEST predictor of growth and total return over long periods!

    GT: No dividend and don't like that super high beta
    NOV: I like Oil and services, but already own CVX, COP, HAL, KMI, and BBL

    As you know, I also like AAPL, AFL, and TEVA, and have added to all this year.