Tuesday, June 6, 2017

A Few Adds This Week PFE, SKT, KIM , SPG

When a dip presents, I'm occasionally adding to positions in the portfolio, I don't always post on the blog.  In the past several days I've been adding to the following stocks:

  • PFE
  • SKT
  • KIM
  • SPG
I'm also eyeing two stocks to trim or sell... KO due to deteriorating fundamentals combined with overvaluation, and AAPL, just a trim, it's grown into an overly large single position at 4.9% of my IRA....  I'm currently paralyzed by indecision on both actions....

Best, 

Chump

Prager U...Simply the Best

I absolutely love these short, compelling videos.  I show them to my family and friends....

Here is the link:  https://www.youtube.com/user/PragerUniversity

Regards,

Chump

Tuesday, May 16, 2017

Taking a Look at Berkshire and Baupost

Three of my favorite investors are Charlie Munger, Warren Buffet, and Seth Klarman.  So I thought I would pull up their current investments and recent changes to their portfolio.  It occurs to me that I should be checking what these legends are doing more frequently.

Here is the latest from Bershshire Hathaway:


Stocks I have in common with Berkshire are:
  • WFC, AAPL, KO, PSX, GE, JNJ
  • I hold 4 of his top ten, and sold IBM at a high last year, which I bet Warren wishes he had done
  • I note they own three airlines, which surprises me a bit.  Warren has been very negative on airlines throughout his career...."the quickest way to $1M in the stock market is to invest $2M into an airline stock...."
  • I own one airline, ALK, and have been quite happy with it's performance.  
  • BH also owns 6 financial stocks, including Visa and Mastercard.  Worth more analysis
  • There are a few on the list I'm not familiar with, I'll check them out soon.
Now for Baupost, taking the data from this SA article:  https://seekingalpha.com/article/4073081-tracking-seth-klarmans-baupost-group-holdings-q1-2017-update


I own fewer of these names, and only QCOM in my Chump IRA.  I own ABC, ESRX, and MCK in my taxable account, but these pay small or no dividend.  Interestingly, I owned FOXA as well, but sold it recently after the loss of Roger Ailes and Bill O'Reilly.  This list gives me plenty to evaluate.

Best,

Chump

Friday, May 12, 2017

Adding to KIM, and Starting a Position is SKT

REITs continue to get hit today due to some bad news in the sector, and in retail.  Some of the high quality REITs I already own are selling at a great discount, and Tanger Outlet REIT (SKT), is really at a great price.  I'm adding to my existing position in KIM, and starting a position in SKT.

Here is a FASTGraph for SKT:


Here are the reasons I like SKT:

  • Great price, undervalued
  • 5% dividend yield
  • Steady, consistent growth in cash flow the past 20 years!
  • Excellent credit rating
I really like REIT investments for my IRA.  The high dividends are not taxed, and I reinvest them directly.  This creates a compounding machine for the portfolio.  As a % of the overall portfolio, REITs now account for 17.2% of the portfolio.  Here are my REIT holdings:

  • O
  • OHI
  • STAG
  • DLR
  • KIM
  • SKT
  • SPG
I'm still looking to add at least one more REIT in the healthcare or storage spaces...I like PSA and HCA, but both are still above my buy point.......


Best regards,

Chump

Tuesday, May 9, 2017

Adding DOC (Physicians Realty Trust), Selling Lexington (LXP)

Here is an article on the REIT from Brad Thomas....

https://seekingalpha.com/article/4063591-physicians-realty-just-doctor-ordered

I've wanted to increase my ownership of healthcare REITs, with OHI as my only holding here.  I looked at Ventas (VTR) and HTA, both good candidates, but both a bit too pricey for me today.  DOC is trading at a nice discount to fair value, so that is my pick.  I bought a 1/2 position in the stock today at a price of $19.12 per share.  The yield today is around 4.7%.

Here is the FASTGraph for DOC:



Regarding Lexington... they are having some issues financially, and while their long term prospects seem fine, I think it will be a year or two before the price really starts to appreciate.   I've closed the position, and redeployed to DOC above.

Best regards,

Chump



Thursday, May 4, 2017

Adding in the REIT space - More Realty Income (O), and Simon Property Group (SPG)

REITs as a group are down today due some bad news for a triple net REIT that I don't own.  But the entire sector is getting punished.

My position in O is smallish, at 3/4 of normal.  The reason for this is that I trimmed O back from an oversized position to this undersized position on 6/26/2016 at a price of $68 and some change.  At the time, I was worried about the size of my O position, and the high valuation.  Here is a chart showing O's price from that day to today:


Selling at $68 was a good move.  Buying back in at $54.97 could be a good move, we'll see.  But one thing is certain, buying back the 110 shares I sold at $68, for a new price of $54.97, has saved me over $1,430, less dividends.  The buy back gets me back to a full position.  If O drops further, I'll build it back to where it was, which was a 5/4 position...

I'm also adding SPG today, good stock, good price, good dividend.

Best,

Chump

Wednesday, May 3, 2017

Sold KMI (finally), Added to TROW, KR

I finally closed my position in KMI....still overpriced, cut the dividend, prospects are a bit bleak for the near term future, and I could do better with the money.

Added to my positions in TROW and KR.  Kroger is a value play, and TROW has some nice momentum after a good earnings report.  Both are now 2/3 sized positions in the portfolio.  As an FYI, TROW is in my Chump IRA, while KR is in my taxable account due to the smallish yield.

Best,

Chump

Priceonomics: Craft Brewing in the USA

San Diego is a respectable 14th on the list!

https://priceonomics.com/where-is-craft-beer-most-popular-in-america/

Best,

Chump

Friday, April 28, 2017

Reflecting on my MCD Sale in December of 2015

I closed my position in MCD back in December of 2015.  The blog I posted at the time can be found here: http://chumpmenudo.blogspot.com/2015/12/  or in the archives on the right side of this page.

Every time I look at my stock holdings and my watch list, I see MCD making new highs, which causes me some angst.  This past February, after reading a book by Michael Lewis, I wrote an article about selling stocks (here:  https://seekingalpha.com/article/4049789-buy-coke-interesting-book-recommendation) and how regret is such a strong emotion for investors, and how it can keep us from making smart investment decisions.

Should I regret selling MCD back in late 2015?  The quick and easy answer is yes, I sold it at around $118, and today it's trading above $140, what a Chump I am!

But wait, if you look more deeply at the decision, which would be impossible to do without a diary, log, or in my case, a blog, the story changes.  Going back to my blog post from December 2015, I was concerned about the valuation of MCD.  Looking at the FASTGraph for MCD from that time, I was right to be a little worried:


The price and PE had become disjointed from their earnings.  In short, MCD was becoming a risky hold, and in my opinion, was likely to revert to a more normal historical PE in the coming year, from the then current PE 24 down to a more normal PE 19.

However, because I dislike selling quality stocks, I was inclined to hold on to MCD and continue to collect the dividend, unless I could identify a more attractive alternative.  The fear of regret was holding my back!  I was imagining selling MCD, then watching it go to $140!

At about this same time, I was reviewing my watch list favorable alternatives.   I had read a good article by Brad Thomas, actually several, touting the virtues of a REIT called Stag Industrial, so it was on my watch list.  (As an interesting aside, I noticed Brad has written about STAG 32 times on SA.  The only REITs with more coverage from Brad are O and VER)  After doing some research, I determined that I would shift by investment from MCD to STAG.  Here is the FASTGraph for STAG at the time:


STAG was trading below its normal P/FFO ratio, was paying a 7.4% yield, and seemed a good value with a reasonable margin of safety, so I made the swap.

So while my initial reaction was to regret my sale of MCD, if I look at where the proceeds from that sale were invested, do I still feel regret?  Here is an accounting of the Swap:


These are just close approximations, not a perfect accounting, but it's clear that I made a pretty good decision, at least as of today, and I can have a lot less regret over the sale of my MCD holdings.

To summarize my thoughts:
  • I still struggle to trim or sell good stocks when their valuations get too high.
  • However, if the price of a holding gets disjointed from earnings, I believe trimming, or selling is prudent to de-risk the portfolio and protect against inevitable corrections.
  • Especially if I can find an alternative on my watch list of sufficient quality with a more attractive valuation, dividend, and margin of safety.
  • And I can't simple consider how much money I "lost" selling a rising stock, I have to consider where the proceeds were redeployed.


And perhaps most importantly, I've learned that keeping both an historical record of my trades, and an up to date watch/wish list of quality stocks is really important to my investment success.  My swap above would have been difficult without the latter, and this article, and a reminder of why I made the sale, would have been difficult without the former!

Thursday, April 27, 2017

Really Nice Ryan Leaf "Letter to Self"

From The Players Tribune:


https://www.theplayerstribune.com/ryan-leaf-nfl-letter-to-my-younger-self/?utm_medium=email&utm_campaign=April%2027%20AM&utm_content=April%2027%20AM+CID_cc4ab55e7ab9c52208b270cf6c2ca318&utm_source=newsletter&utm_term=Letter%20to%20My%20Younger%20Self

Nice perspective.

Chump

Continuing to Add KIMCO Realty Trust (KIM). Also added some SPG

Down 5% since I started my position, now trading around $21/share.  5.1% yield, undervalued with nice steady growth projected.

FastGraph here:



Nice low P/FFO multiple, solid balance sheet and credit rating, I like this stock.  Don't love the sector, retail shopping malls, but that is why this stock is underpriced.  Recent bad news for brick and mortar retailers (Sears, JCPenney, etc...) has this segment underpriced.  But KIM focuses only on the very high end of this sector, and is much more insulated from the internet threat.

Another name I like here is Simon Property Group, SPG.  I added a 1/3 position in this stock yesterday for the same reasons....

Best,

Chump

Tuesday, April 18, 2017

Good Article from Dennis Prager

http://www.dennisprager.com/two-weeks-of-great-clarity/

If you prize clarity, then these past weeks were some of the best in memory.
1. When America leads, the world is better.
For the first time in eight years, the allies of America and the world’s decent people celebrated America’s return to leadership. Just about all of them understand that if the United States doesn’t exercise its power, the worst regimes on Earth will.
The left claims to care about the downtrodden of the world, but this concern is a moral fraud. The downtrodden the left most care about are American blacks, women and gays. And Palestinians. But these groups aren’t downtrodden; they are merely a vehicle by which the left attacks America and Israel to gain power. The truly downtrodden — that is, the most oppressed people in the world, such as Christians living in the Middle East, and the victims of Syrian President Bashar Assad’s tyranny — know who really cares about them: Trump and America’s conservatives.
2. The terrible presidency of Barack Obama is beginning to be acknowledged.
Following President Trump’s order to attack Syria about 63 hours after the Syrian regime seemingly used chemical weapons, even many in the mainstream media couldn’t help but contrast his prompt response with Obama’s nonresponse to Assad’s use of chemical weapons in 2013. And almost every report further noted that Obama failed to do anything after having promised that he would regard the use of chemical weapons by Assad as crossing a “red line.”
Likewise, Obama’s do-nothing policies vis-a-vis North Korea are being contrasted with Trump’s warnings to leader Kim Jung Un about further testing of intercontinental ballistic missiles and pressure on China’s leaders to rein in the North Korean regime.
These contrasts are important for a number of reasons, not the least of which being there is now hope that Obama’s star will dim as time goes on.
This will come as somewhat of a surprise to those on the left, but many of us who are not on the left believe that Obama did more damage to America than any previous president — economically, militarily and socially.
Regarding the social damage, as the first black president in American history, he could have been an unprecedented force for racial healing but instead left America more racially divided than any modern president. In his repeated citing of Ferguson, for example, he helped spread the lie that a racist white Missouri police officer had killed an innocent black teenager without reason (other than racial bias).
He deceived the American people (the “if you like your doctor, you can keep your doctor” assertion and more) in order to pass Obamacare, one of the largest government-expanding programs in American history. He used presidential power in an unprecedentedly authoritarian manner. He showed far more understanding of the Iranian theocracy than of the Israeli democracy. His Internal Revenue Service and Department of Justice were politicized in ways reminiscent of corrupt Third World regimes. And he left America fighting a (thus far nonviolent) second Civil War.
3. The interminably repeated left-wing lie that Trump and Russian President Vladimir Putin are in cahoots has exploded. With Trump’s military attack on Assad and verbal attacks on Russia, that claim has been shown to be what those with a little common sense knew it to be: a baseless, wholly made-up conspiracy theory meant to explain an election loss with which Democrats still haven’t come to grips. In fact, President Trump has shown more backbone with Russia in his first 100 days in office than President Obama did in eight years.
4. Another charge made over and over by the left — the mainstream media, academia and the Democratic Party — that the Trump election had unleashed an unprecedented amount of anti-Semitism was proven to be yet another left-wing hysteria based on a left-wing lie. It turned out that bomb threats phoned into Jewish community centers and Jewish agencies came not from Trump supporters and “white supremacists” but from a black radical and a disturbed young American Jew living in Israel.
Given that factual and moral clarity are conservatism’s greatest allies, we may be witnessing the beginning of a conservative Renaissance, the likes of which we haven’t seen since the advent of progressivism.

This column was originally posted on Townhall.com.

Monday, March 27, 2017

Adding TROW (T. Rowe Price)

I put TROW onto my watch list several months ago.  I set a target buy price of $68.  I started a 1/2 position in TROW at $67.64 today.  Morningstar rates TROW a 4 Star value, and the FASTGraph below is compelling:


TROW has a nice dividend yield of 3.4%, no debt, and has been increasing the dividend for many years.  At a PE of 14 vs. a normal PE of 20, it looks like a good bargain.  I put another buy price into my watch list at a 5% discount from today.  If it hits that in the coming weeks, I'll add more.

Best,

Chump

Wednesday, March 8, 2017

Buying KIM for the IRA, Adding KR (Kroger) to my Taxable Account

Many of my high yield holdings are down today in anticipation of an interest rate hike.  As a result, KIM (Kimco) had dipped below my target buy price.  KIM is a high end mall REIT, and somewhat impervious to the assault posed by Amazon and the internet. KIM has a nice high yield of 4.7%, and is now at a nice valuation to start a position.

Here is the FASTGraph:


I put a limit order in at $22.18, we'll see if it fills....

Regarding KR (Kroger), this stock got onto my radar due to my youngest daughter.  After opening brokerage accounts for all of my three children, they started looking at stocks.  They brainstormed stores and companies with which they did business, checked to see if publicly traded, then looked at a FASTGraph for each.

My daughter mentioned she really liked to shop at Ralph's, "they have everything."  Ralph's is owned by Kroger.  The FASTGraph for KR is shown here:


Turns out KR is big, with $115B in sales in 2016.  The valuation is good, and they've paid a growing dividend now for 10+ years.  Good pick.

Due to the yield of 1.7%, I've added it to my taxable account, where I hold stocks with lower yields for tax purposes.

That's all for now,

Chump

Thursday, February 16, 2017

Should I Buy Coke (KO)? And a Michael Lewis book recommendation.

This is a trick question, I already own KO.   I just finished an interesting book by Michael Lewis entitled "The Undoing Project:  A Friendship That Changed Our Minds.."  Mr. Lewis is the author of some really interesting titles including:
  • The Big Short
  • Liar's Poker
  • Flash Boys
  • Moneyball
  • Boomerang
  • The Blind Side
In the undoing project, he tells the story of two prominent Israeli Psychologists, Daniel Kahneman and Amos Tversky, and their work on how humans think and make decisions.

One of my takeaways is that humans aren't very good at making data driven decisions, and are influenced strongly by bias.  Among the many biases discussed, was framing.

"Should I Buy Coke," feels very different that "Should I sell Coke," but it shouldn't.   The data is the same in either direction, yet, I've owned Coke now for nearly five years, and I've grown attached to its brand, history, dividend growth, and I really don't want to sell my shares.

Yet, if you ask me whether you should invest in Coke today, I would likely tell you no; there are better opportunities out there based on today's valuation, Coke's pathetic growth, and the long term prospects of sugary drinks overall.  And while the dividend is okay, heck, you get a bigger dividend from several utilities, and they are growing faster than Coke!



Coke's stock has increased around 20% over the past 5 years, but trails the S&P 500 over that same period by a wide margin, which is pretty disappointing.

Here is the FastGraph for KO:



It's suffered four straight years of declining earnings and revenue, is moderately overpriced today, and is forecasting another 2% decline in earnings for 2017... not much to get excited about.

Thus my bias, if I know based on the data that Coke is not a great investment, and that I can name several better opportunities (SO, DUK, PFE, STAG to name a few), SO WHY DON'T I SELL?  I would never buy a stock with the fundamentals of Coke today....yet I hesitate to sell for some reason. Another concept in the book is the strength of the emotion "regret."  If I sell, and something good happens to catalyze growth at Coke, I will suffer regret, which would be much worse than if I simply stick with Coke, and nothing good ever happens.

It seems we humans prefer the slow loss of our investment over many years, or long periods of underperformance, to the threat of a sharp dose of regret.

Food for thought.

Chump









Monday, February 13, 2017

Started a Position in Pfizer (PFE)

More to come soon.  Good valuation, good dividend around 4%, good place to park some cash.

FastGraph below:


I have a larger than normal cash position in the portfolio due to the sale of three stocks in 2017, CSX, IBM, and DOV, all of which have had nice run ups since the election.

I'll look to add more to PFE if the stock drops 5% from where I bought it.....

That's all for now,

Chump

Monday, January 30, 2017

Some (much needed) Facts About President Trump's Immigration Order

Some good information from ZeroHedge:


Kellyanne Conway Rages Against "Misinformation" Over Trump's Immigration Order


Additionally, in an effort to dispel some more misinformation, Breitbart offers seven inconvenient facts about Trump's refugee actions...
1. It is NOT a “Muslim ban.” You will search the Executive Order in vain for mentions of Islam, or any other religion. By Sunday morning, the media began suffering acute attacks of honesty and writing headlines such as “Trump’s Latest Executive Order: Banning People From 7 Countries and More” (CNN) and printing the full text of the order.
Granted, CNN still slips the phrase “Muslim-majority countries” into every article about the order, including the post in which they reprinted its text in full, but CNN used the word “Muslim,” not Trump. The order applies to all citizens of Iraq, Iran, Syria, Libya, Somalia, Sudan, and Yemen. It does not specify Muslims. The indefinite hold on Syrian refugees will affect Christians and Muslims alike.
As Tim Carney at the Washington Examiner points out, the largest Muslim-majority countries in the world are not named in the Executive Order.
More countries may be added to the moratorium in the days to come, as the Secretary of Homeland Security has been instructed to complete a 30-day review of nations that don’t provide adequate information for vetting visa applicants.
It’s also noteworthy that the ban is not absolute. Exceptions for “foreign nationals traveling on diplomatic visas, North Atlantic Treaty Organization visas, C-2 visas for travel to the United Nations, and G-1, G-2, G-3, and G-4 visas” are expressly made in the order. The Departments of State and Homeland Security can also grant exceptions on a “case-by-case basis,” and “when in the national interest, issue visas or other immigration benefits to nationals of countries for which visas and benefits are otherwise blocked.”
There is a provision in the Executive Order that says applications based on religious persecution will be prioritized “provided that the religion of the individual is a minority religion in the individual’s country of nationality.”
This has been denounced as a “stealth Muslim ban” by some of the very same people who were conspicuously silent when the Obama administration pushed Christians – who the most savagely persecuted minority in the Middle East, with only the Yazidis offering real competition — to the back of the migration line.
2. The order is based on security reviews conducted by President Barack Obama’s deputies. As White House counselor Kellyanne Conway pointed out on “Fox News Sunday,” the seven nations named in Trump’s executive order are drawn from the Terrorist Prevention Act of 2015. The 2015 “Visa Waiver Program Improvement and Terrorist Travel Prevention Act of 2015” named Iraq, Iran, Sudan, and Syria, while its 2016 update added Libya, Somalia, and Yemen.
“These are countries that have a history of training, harboring, exporting terrorists. We can’t keep pretending and looking the other way,” said Conway.
3. The moratorium is largely temporary. Citizens of the seven countries named as security risks are banned from entering the United States for the next 90 days. Refugee processing is halted for 120 days. The longest-lived aspect of the ban may prove to be the halt on Syrian refugees, but that isn’t given a time frame at all. It will last “until such time as I have determined that sufficient changes have been made to the USRAP to ensure that admission of Syrian refugees is consistent with the national interest,” as President Trump wrote.
4. Obama banned immigration from Iraq, and Carter banned it from Iran. “Fact-checking” website PolitiFact twists itself into knots to avoid giving a “true” rating to the absolutely true fact that Jimmy Carter banned Iranian immigration in 1980, unless applicants could prove they were enemies of the Khomenei theocracy.
One of Politifact’s phony talking points states that Carter “acted against Iranian nationals, not an entire religion.” As noted above, Trump’s Executive Order is precisely the same – it does not act against an “entire religion,” it names seven countries.
As for Barack Obama, he did indeed ban immigration from Iraq, for much longer than Trump’s order bans it from the seven listed nations, and none of the people melting down today uttered a peep of protest. Richard Grenell summed it up perfectly in a Tweet:
5. Trump’s refugee caps are comparable to Obama’s pre-2016 practicesDavid French, who was touted as a spoiler candidate to keep Donald Trump out of the White House during the presidential campaign – in other words, not a big Trump fan – wrote a lengthy and clear-headed analysis of the Executive Order for National ReviewHe noted that after the moratorium ends in 120 days, Trump caps refugee admissions at 50,000 per year… which is roughly the same as President Obama’s admissions in 2011 and 2012, and not far below the 70,000 per year cap in place from 2013 to 2015.
Obama had fairly low caps on refugees during the worst years of the Syrian civil war. He didn’t throw open the doors to mass refugee admissions until his final year in office. Depending on how Trump’s review of Syrian refugee policy turns out, he’s doing little more than returning admissions to normal levels after a four-month pause for security reviews.
6. The Executive Order is legal: Those invoking the Constitution to attack Trump’s order are simply embarrassing themselves. The President has clear statutory authority to take these actions. As noted, his predecessors did so, without much controversy.
Most of the legal arguments against Trump’s order summarized by USA Today are entirely specious, such as attacking him for “banning an entire religion,” which the order manifestly does not do. Critics of the order have a political opinion that it will in effect “ban Muslims,” but that’s not what it says. Designating specific nations as trouble spots and ordering a pause is entirely within the President’s authority, and there is ample precedent to prove it.
It should be possible to argue with the reasoning behind the order, or argue that it will have negative unintended consequences, without advancing hollow legal arguments. Of course, this is America 2017, so a wave of lawsuits will soon be sloshing through the courts.
7. This Executive Order is a security measure, not an arbitrary expression of supposed xenophobia. Conway stressed the need to enhance immigration security from trouble spots in her “Fox News Sunday” interview. French also addressed the subject in his post:
When we know our enemy is seeking to strike America and its allies through the refugee population, when we know they’ve succeeded in Europe, and when the administration has doubts about our ability to adequately vet the refugees we admit into this nation, a pause is again not just prudent but arguably necessary. It is important that we provide sufficient aid and protection to keep refugees safe and healthy in place, but it is not necessary to bring Syrians to the United States to fulfill our vital moral obligations.
French’s major objection to the Executive Order is that applying it to green-card holders is “madness,” but unfortunately many of the terrorists who attacked Americans during the Obama years were green-card holders. Daniel Horowitz and Chris Pandolfo addressed that subject at Conservative Review:
Both liberals and conservatives expressed concern over hundreds of individuals going over to fight for ISIS. We are already limited in how we can combat this growing threat among U.S. citizens. Given that it is completely legal to exclude non-citizens upon re-entry, Trump extended the ban to legal permanent residents as well.

If a Somali refugee is travelling back to Somalia (so much for credible fear of persecution!), government officials should have the ability to prevent that person from coming back when necessary. Obviously, there are some individuals from these seven countries who already have green cards and we might not want to exclude. That is why the order grants discretion to the State Department to issue case-by-case exemptions for “religious persecution, “or when the person is already in transit and denying admission would cause undue hardship.” A CBP agent is always stationed at any international airport from which these individuals would board a direct flight to the United States (Paris and Dubai, for example). That individual would not allow anyone covered by this ban onto a U.S.-bound flight unless he grants them a hardship exemption.
Indeed, it appears that green card holders returning yesterday from those seven countries were all granted entry.
Because he is a progressive globalist, Obama deliberately blinded us to security threats, in the name of political correctness and left-wing ideology. Ninety or 120 days isn’t much time for Trump to turn all that around, especially because it is unlikely much will change in the seven countries Trump named.
The hysterical reaction to Trump’s order illustrates the very thing that worries advocates of strong immigration security: Americans’ security is the lowest priority, far below progressive ideology, crass political opportunism, and emotional theater.
We’re being effectively told by the theatrical class to tolerate a certain amount of Islamic terrorism because their feelings would be hurt by the tough measures we need protest ourselves from a tough enemy. But this time, President Trump is proving tough enough to push our security up into the top priority.

Thursday, January 19, 2017

Selling CSX

Hunter Harrison, the CEO of Canadian Pacific Railway, announced he will resign and try to join up with CSX, possibly as the CEO, to turn the railway around.

The full article is here in the Wall Street Journal:

http://www.wsj.com/articles/csx-investors-cheered-by-former-rail-rivals-sudden-switch-1484842700

And while this is potentially good news for CSX, the stock was already approaching my target sell price of $40 before this news.  With this announcement, the stock is up over 18.5% today, priced around $43.60 per share, and presents a great selling opportunity.

I sold my entire position today, almost a 2X sized position, and locked in a gain since purchase of roughly 115%.

Here is a FastGraph of CSX BEFORE today's price gain of over $6/share:


I'll move CSX to my watch list because I like the company, and put a target buy price on the stock of $27 per share.

That's all for now,

Chump

Wednesday, January 18, 2017

Selling Dover (DOV)

While I like the company, I'm selling my entire position today, up 62.8% since my purchase a few years ago.  I really don't like their current valuation, and expect stock price appreciation over the next few years to be tepid at best.  Perhaps I will re-buy the stock in the future at a better price.

Here is a FASTGraph for DOV:




The price has had nice appreciation in 2016, like many of the oil/energy sector stocks in anticipation of improved pricing.  That said, the pricing isn't improved yet, and the price of DOV stock has outrun earnings by several years.  

Below is an earnings forecast overlaid with the price:




Even if the price of oil rebounds, and DOV hits this earnings forecast, it's still priced too high! Owning DOV today is too risky, and likelihood of some downside to the price is strong.

Below is a chart from Morningstar showing fair value for DOV, again, it's currently overpriced:



Closing the position today, looking for a better near term investment with the proceeds.

As I stated in my last post, I have too many positions in the portfolio.  With this sale, I'm down to 34 positions, and may deploy the money into one or more of my current portfolio holdings.  Further, as I stated after 2015, its good to close positions when they become dangerously overvalued, and not get too attached to any specific holding.

Best regards,

Chump

Friday, January 6, 2017

2016 Stats, New Rules, Selling IBM

I'm starting the review of my portfolio to position for 2017.  A few statistics:

  • the value of the Chump IRA is now slightly more than $700k (a double since I started tracking this closely in 2012)
  • there are 37 stocks in the portfolio, which I think is too many.  I'd like to be around 30, but will try and get down to 35 soon.
  • if I keep 10% cash, that's $70k, at present, I only have $43k cash or 6.2%
  • if I achieve the 10% cash goal, that leaves 630k to invest in 37 stocks, so the average full position should be around $17,000.
  • at 35 stocks, the average position is $18,000
  • at 30 stocks, the average position is $21,000
Actions
  • Establish definition of "Full" position as $18k, Morningstar 3* or better
  • Establish definition of "Full +" position as $22k, Morningstar 4* or better
  • Establish definition of  "Full -" position as $12k, Morningstar 2* or worse
  • Establish starting 1/2 position as $9k
Of course the Morningstar ranking are just guidelines, in some cases I may disagree a bit on the valuation or reason for owning the stock.

My first action today is to sell IBM.  I bought IBM a couple of years ago, held it through a multi-year swoon, watched it gain around 26% in 2016, and am now at a profit of a whopping 4.5% since my purchase.

Among my reasons for selling:
  • Questionable business model and future
  • 5 straight years of declining revenues
  • 5 straight years of rising long term debt (to pay the dividend)
  • Currently overvalued, 2* rating at Morningstar
I'm going to add $16.5K to my cash position with this sale, and have one fewer name in the portfolio, taking the total from 37 to 36 stocks.

Best,

Chump

Tuesday, January 3, 2017

2016 Year End Performance and Holdings

Happy 2017 to all my (very quiet) readers, here is a quick summary of the Chump IRA for 2016. Turned out to be a nice year for the portfolio, here are the numbers vs. the benchmark:

  • Chump IRA up 19.13%
  • S&P 500 with dividends up 11.96%
Thus, Chump outperformed the benchmark by 7.17%, not too shabby.

Here are the holdings in the portfolio today (courtesy of Morningstar, where I track these):


The holdings are sorted by 2016 full year return.  This gives a sense of where the performance for the year came from, though it isn't perfect.  Some of these stocks were purchased later in the year, and others not listed were sold during the year to capture gains.

I've also included the M* ratings for each stock, and the target buy and sell prices that I have set for each holding.  These are super useful, and add discipline to my process.

I printed this summary on Tuesday, January 3.  Interestingly, as I suggested late last year, many poorly performing healthcare stocks were sold by institutional traders for tax purposes, and hide the fact that they were holding poor performing stocks.  These actions created a nice value buying opportunity in healthcare, and many of these same institutional investors are now loading back up on these names, thus the rally in healthcare today ;-)

Thats all for now,

Chump