Wednesday, July 23, 2014

Adding More TUP

TUP is getting hammered today, the stock is down over 9%.   At $76.50/share, the dividend yield is over 3.5%.  I currently have a 2/3 position, so will add another 1/3 to establish a full position.  They missed earnings by a penny, and missed revenue targets by around $13 million.  I've read the entire earnings press release here:

Not a great quarter, but not a disaster either.  I'm using the dip to add.



Tuesday, July 22, 2014

Good News for HAL

Long time Chump holding HAL is rallying today.  From SA:

Here is a FASTGraph snapshot of HAL (yesterday's close, not today's)

No longer undervalued, but at fair value.  I'll continue to hold, and look to trim when the price hits $90 share.  At today's close price, $73.26, my IRA gain for this holding is a cool 109% aggregate since mid-2012, so for about 2 years of holding.  Not bad.



2 Small Adds Today: MCD and T, and a word on HOG

MCD reported disappointing US sales, and shares are down 1.5%.   I'm not concerned, so I added a few shares on weakness. Current yield is 3.37%, so I'm happy to have some more shares.

T is roughly flat, but using by position add guidelines from my last post, its been over 60 days since I started the position, and I'm still within 5% of my original purchase, so I added some more shares today.  I view T as a nice defensive holding, like a utility, but with a bit more growth potential.

As an aside, I also added some HOG today to my taxable account.  Harley is down over 6.4% today, but the story is good, and I expect a recovery in the shares relatively soon.   Harley pays a small dividend of 1.75%, beat earnings, but missed sales and lowered full year guidance.  Launch of new products were delayed some, but sales and earnings are still growing rapidly, and after they introduce some new products, should accelerate.



Friday, July 18, 2014

Earnings News for BAX & Establishing a Position

My latest addition to the portfolio, BAX, had a pretty stellar quarterly report today:

Per an earlier blog, I purchased only a 1/3 position in the stock at $73/share.  Today, after the good news, the stock closed the week at $76.52, for a gain so far on the investment of roughly 4.6%.  Darn, I wish I had bought more.  Should I buy more now?  I'm re-copying my dollar cost averaging rules below.  I put these into play when I sold INTC a few weeks back and reviewed my purchase decisions, and how illogical they seemed.  So, as a review, here are my rules for establishing a new position, and my comments after each bullet:

  • When starting a position, is the stock undervalued (>10% vs. six year PE), or fairly valued?
    • Started position in BAX at fair value
  • If undervalued, start with a 2/3 position right out of the gate.
  • If fairly valued, start with a 1/3 position.
    • This is what I did
  • Wait 30 days, or for a 10% decline in the stock, then re-evaluate.
    • 30 days were up on 7/17/14, on that day, the stock was up from purchase
  • If a 10% drop occurs (vs. purchase price), add another 1/3.
    • this has not happened
  • If after 30 days, the stock is same or higher, wait another 30 days
    • the stock is higher, so I'll wait until August 17, and look again
  • After 60 days, if the stock is still within 5% of purchase price, establish full position
    • if BAX continues its present climb, It will be up over 8% by then
  • If the stock has run up more than 5%, do nothing more.
    • Do nothing is looking likely right now, but we'll see in a month
  • In cases where the stock drops 20% from original purchase, add another 1/3 position, for a greater than full 4/3 position

So, I do nothing with BAX for another three weeks.  As I review the rules above, the 10% drop after 30 days seems a bit extreme, I think perhaps I'll revise that to 5%.  

Regarding BAX, I suspect I'll just stick with a small 1/3 position and let it grow.  I'm okay with this.


Thursday, July 3, 2014

IRA Performance Update for July 3, 2014

Here is the YTD performance for the benchmark S&P 500:

*Source:  CNN Money

And while the performance shown here for the week is correct, the YTD performance is understated because it doesn't include dividends.  Using YCharts! S&P500 total return index (SPXTR), the YTD performance of the S&P 500 with dividends is +8.54%.

The Chump portfolio was up modestly this week, with a YTD performance now standing at 10.99%, currently better than the S&P benchmark by 2.45%, or 28.7% better.  Here are the Chump IRA holdings; today I present them by industry (courtesy of FASTGraphs):

*Note:  I also own KMI (Kinder Morgan), which is in the energy category.

The yellow highlights are lofty PE ratios vs. the normal PE for the past six years, and should be considered for trimming or selling.  The green highlights represent PE ratios still nicely undervalued as of yesterday's close.

Looking at my industry/sector breakdown, I'm heavy in industrials, consumer staples, and financials, and light in materials and utilities.

Here is an interesting chart showing YTD performance by sector from Finviz:

The two sectors in which I'm light have had very good year to date performance, so I've likely missed out on some good/better returns due to my current imbalance.

I'll look to add a good materials company, and another utility in the coming month.  As always, your suggestions are welcome.