Friday, August 9, 2013

Chump Portfolio Update August 9, 2013 - Busy Week

1st, some good reading.  I'm currently reading Seth Klarmon's "Margin of Safety" recommended in a recent post by Tim McAleenan of Seeking Alpha.  A link to the book online can be found here:

I'm not finished yet, but I really like the book.  Below is passage I found quite interesting and contrary to what I thought previously:

I've gotten a bit complacent with the Chump IRA the past several months, remaining fully invested, and letting the portfolio run.  Returns have been good, but I need to trim or sell off positions that become overvalued.  I've hesitated to do this "robotically,"  letting my fondness for some of my stocks coupled with greed win the day.  Time to stick to my rules, and downsize some of the overpriced positions and get some cash back into the portfolio.

With this in mind, I trimmed down positions in JNJ, DOV and sold my remaining shares of CMI entirely.  Here are the FAST Graphs for DOV and JNJ respectively:

In both cases, I bought shares when price was well below the orange earnings line, and am trimming now with prices well above the line.  Pretty simple.  Both of these have grown into large positions, well over 4% each.  I'm trimming about 10% off of each, which leaves me overweight in both.  I'm going to think about further reductions next week (hey, one step at a time, I HATE selling good companies).  The chart for CMI isn't as clear cut:

I purchased CMI last summer at around $94 per share, and sold off my remaining position today for nice gain.  I like CMI, and it's now reached fair value.  When I bought it, it was well under value.  I never intended CMI to be a "core" position in the portfolio (unlike dividend champions JNJ and DOV), and EPS are down two straight years.  Further, I've been swapping CMI for Deere (DE), with a better brand, growing earnings, and better yield of 2.5% vs. 2.0% for CMI.

I closed CMI today, and added to my DE position.  I now have a full position in DE, a chart for Deere is shown below:

At today's price of $82.32, DE is undervalued, and a better opportunity than CMI.  In addition to my purchase of DE, I also started a position in IBM.  A FAST Graph for IBM is shown below:

IBM is a solid blue chip company, is raising the dividend every year, though it's only 2% today, and is now in an undervalue situation at today's price.  I'll look to add to the position on dips in the coming weeks/months.  To fund this position, I sold some INTC this week.  I have a large position, and hold it in a taxable account as well.  I'm reducing my exposure to INTC in favor of IBM.

After a busy week, here is a summary of the Chump portfolio, via FAST Graph, with some useful metrics, ranked by forecasted total return:

That's all for now,



  1. Hi Chump!
    I like your portfolio :) except for O lol

    What are your intention with INTC?
    I too been adding IBM and I took a bite at DLR.


    1. Hey Grox, good to hear from you. Regarding O, I suspect you like it fine, just not current price ;-) I have a very small position, and it's definitely over priced. I may liquidate it next week actually.

      Regarding INTC, I own too much. I have a full position in the IRA, and full position in my taxable account. I've actually made money on the non-taxable account, but am down 20% in the IRA. Reducing my position slowly in the IRA, but I plan to hang on to it in the taxable account, unless they decide to cut the dividend. We'll see.

      I'll take a look at DLR, any other suggestions?


    2. Re: INTC, I misspoke above; I've made money in my "taxable" account. But am hesitant to sell for tax reasons. More likely to sell my IRA position and keep the taxable one.


  2. Hi Chump,

    Can you do a search with FG for only stocks that has a 5 years est. total return of say 15% to 25% ?
    I would like to see what comes up on that list. It doesn't have to pay a dividend.

  3. Don't you have FG? You should! I'll do your diligence for you Grox! I screened as you say above, but it gives too many companies, so I added a few tweaks:
    - PE of 15 or less
    - 2% dividend or more
    - EPS estimated growth of at least 30% over the next 5 years
    - Minimum price of $5/share

    I post the results in the next blog.

  4. I have the basic FG.
    As for the few tweaks... I would prefer pe of less than 18 and no dividend minimum.

    Maybe what you could do with the big list you are getting... is to sort them after by the 5 yr est. tot return and select only those in the range of 15 to 25% growth?

    Thank you for taking the time :)

  5. Okay, I'll re-run, easy enough.