Recent Buy – SWRAY


In keeping with my current strategy of utilizing a strong US dollar to my benefit, today Swire Pacific was added to my portfolio.  Swire Pacific is 49% owned by privately held, London based  John Swire & Son with the remaining 51% traded on the Hong Kong exchange under the ticker 0019 (a second class trades as 0087).  The ADR corresponding to 0019 trades in the US as SWRAY.  They are also one of Coca-Cola’s (KO) anchor bottlers under the 21st Century Beverage Partnership Model of KO’s that is expected to complete in 2017 with territory covering Hong Kong, the Chinese mainland, Taiwan and the western United States.

But Swire is much more than a Coca-Cola bottler.  Last year they celebrated their 200th anniversary and are a conglomerate in a style similar to Warren Buffet.  They own 45% of Cathay Pacific, have significant real estate holdings and refrigerated warehouse operations among their holdings.  The Coca-Cola Bottler’s Association did a great article on their success.

Swire Pacific pays a dividend twice per year on an interim/final schedule.    At today’s purchase price ($10.338), the dividend yield translates to roughly 4.77%.  There is a risk of currency fluctuation as dividends are declared in HK$.

As an aside, I wonder how this company fits into Pres. Trump’s world view as a Chinese (HK) company that employs several thousand US workers – many on production lines?

2016 Goal Review

I finished tabulating the results over weekend to determine how I performed against the goals I set last January.  I will wager few foresaw the events that occurred and the resulting implications.  So let’s review the impact to my goal attainment – or lack thereof.

  1. Exceed the performance of the S&P 500

This has been one of my goals since 1980 and achieved 31 times.  Number 32 is in the books as I outperformed the S&P by 19.83%.  Goal #1 met.

  1. Re-establish portfolio balance per the strategy

This most likely a two year goal since my largest strides will have to take place following the completion of the PNY/DUK merger.  I did make some progress in reducing overweight holdings but was correct in my assessment that the out of balance scenario would continue into 2017.  Goal #2 met.

  1. Minimize portfolio sales (ideally none)

Other than mergers, no sales were made.  Goal #3 met.

  1. Complete the acquisition process with about 160 total stocks

Other than a handful of companies to fill a few gaps, I want to add a final round to my Regional Bank strategy.  Well I did fill the gaps but overshot the total.   With 176 holdings at year end, I’d have to classify this as a partial.

  1. Increase my Canadian holdings to 3-5% of the portfolio

No new holdings are expected, only additions to existing positions. I figure to add while the US dollar is strong with the expectation that – at some point – the situation will be reversed.  This too is a partial.  I did add one Canadian issue and ended the year with Canadian stocks accounting for 5.14% of the portfolio.

  1. Maintain my walking regimen

Weather permitting average 20 miles per week.  Goal met.  The average (thanks to

  1. Improve blog functionality

There remain some sections that don’t work quite right.  I did fix the sections so goal met.

  1. Write 52 posts

We’ll find out just how much I have to say.   Goal met with 63.

  1. Reduce mortgage balance to 30% LTV

Almost met.  Spring storms resulted in significant damage so part of this budget section was reallocated to the deductible.  This was a fail as the ending LTV was 31%.

  1. Volunteer 50 community service hours

This was probably the biggest failure as my health prevented me from completing this goal.  I did complete 44% of this goal and donated cash in lieu of the time.

All together I’ll give myself about a 70 – 75% grade.  For 2017, my #1 goal will be to outperform the S&P (as usual).  This year will likely be problematic for other goals as I suspect politics will supplant reality causing volatility until settling down later in the year.  I will, however, share the strategies I embrace as we journey through 2017.

Recent Buy – CCLAY


I enjoy visiting others’ blogs and reviewing their portfolios.  At times my investing approach is validated other times I get a fresh viewpoint.  There are occasions when a company that is not on my radar grabs my attention.  Such was the case when I ran across Dividenden Investor‘s holdings.  In his depot, Coca-Cola Amatil can be found.  The name Coca-Cola was the reason for my intrigue and just had to figure out what sort of creature this one was.

Coca-Cola Amatil trades on the Australian exchange under the symbol CCL with their ADR trading in the states as CCLAY.  They are one of Coca-Cola’s (KO) anchor bottlers under the 21st Century Beverage Partnership Model that KO is evolving towards.  Amatil’s territory includes Australia, New Zealand, Indonesia, Papua New Guinea, Fiji and Samoa.  They are a bottler for Coca-Cola products plus liquor (Jim Beam, Maker’s Mark,, coffees and foodstuffs.  Coca-Cola has a 29% ownership.

Coca-Cola Amatil pays a dividend twice per year on an interim/final schedule with franking credits.  Recently, the credit has been between 75-100% which translates to no or minimal double taxation for US investors.  At yesterday’s purchase price, the dividend yield translates to roughly 5.9%.  There is a risk of currency fluctuation as dividends are declared in Aussie$.

This is a continuation of my theory of the US$ being overvalued so my intent is to buy while it’s high and collect increasing dividends through the exchange rate.  Of course there’s the risk the US$ will stay strong if a border tax is enacted.

Bank Strategy 2016 Review

The third year of this particular strategy is in the books with a pretty decent result.  In 2014, I embarked on a strategy of buying Regional Banks and collecting a dividend while waiting for a potential merger to occur.  The results were:

  • 2014 – 6-1-2 (21.9%) one full premium (2.3%) – 41 positions
  • 2015 – 16-3-0 (38.7%) three full premiums (6.1%) – 49 positions

Using 2014 as an example, I had a 21.9% success ratio of picking merger candidates, with 2 being reverse mergers (I get screwed on the premium), and one (2.3%) with a full premium.

I had some reservations at first, but soon embraced this strategy.  During 2016, I had a net gain of nine positions in regional banks – tweaking the strategy in April to include banks paying stock dividends and again in October to clear my watch list prior to the election.  (Yes, it was fortuitous timing).

Four transactions failed to complete by year-end, two were approved but closing scheduled after the new year  (one has now completed).  CIBC’s (CM) was postponed due to the post election price runup for Private Bancorp (PVTB).  Independent Bank (IBTX)’s acquisition of Carlile is in progress.  The pace of M&A activity appeared to have slowed leading into the election and due to anticipated rate hikes.

So 2016’s result is 8-2-0 (13.8%) two full premiums (3.4%) – 58 positions.  Due to valuations, I doubt I’ll be adding positions to this strategy in 2017.  I do expect the merger pace to pick up in the latter part of the year.

Dividend Cut – YUM

Buried in the midst of the holiday season was a press release by Yum! Brands (YUM) announcing their first dividend post spinning off the China business (YUMC).  The well written – though accurate release – made no mention of the fact that this was a 41.18% reduction from their prior payout – which incidentally had just been increased.

Now this wasn’t unexpected after the spin with the only disappointment being the manner in which they chose to announce.  Yum China is widely expected to initiate a dividend in the future with the only remaining question being whether it will offset the $0.84 annual reduction.  If initiated, I suspect it will be either on an annual or interim/final schedule.

Meanwhile, YUM has earned a spot in the penalty box.  As this issue is less than 1% of my portfolio the impact will be negligible to my dividends.

2016 Portfolio Review

As we enter the new year, I find it beneficial to take stock of the old – the triumphs and tribulations to fine tune and adjust to the new landscape.

Market Value

Market value of the portfolio increased 32.65%.  Pure capital appreciation represents 51.05% of that result with 15.7% resulting from the cash portion of M&A activity and the remaining 33.2% represents fresh injection of funds.


Total dividends received increased 29.3% with 12.3% a result of dividend increases.  No holding reduced its payout, one initiated a payout and 25.5% failed to increase or have no dividend.  None of the failures to increase which  are on David Fish’s CCC list are currently at risk.

Total Return

Capital appreciation + Dividends = 35.7%

2016 In Review

This year was my second best in roughly 34 years of investing with a perfect storm of M&A activity and the perceived Trump impact with financials being the catalysts.  I also didn’t expect to end the year with 171 positions.  A number of these were added during the fourth quarter in an effort to fill the dividend gap left by Piedmont with their merger.  I guess the biggest ‘failure’ was my inability to position the portfolio closer to the target weightings.  However, part of this was due the amount – and timing – of M&A activity.  Put on a positive note, this was was recognized this time last year.

2017 Strategy

I believe that this year will be one which the norms that we rely upon will be upended.  Geopolitical issues such as European elections, oil or North Korean sabre rattling will rule.  Add to that the Fed’s caution with trade, strong dollar and optimism outpacing reality.  My approach will be to expect a strong start with a fade as policy and fiscal issues bog down Congress with their multiple constituencies.  Coupled with tough year over year comps leaves us with only the hope that failed policies from years ago will somehow work as expected this time.  I’ll monitor the market and buy domestic companies on weakness, however my assumption is the bulk of my purchases will be in Canadian, UK, EU, Australian, Japanese, Hong Kong or Mexican companies to take advantage of the historically high US dollar.

I’ll continue to share the journey as we navigate into uncharted territory always keeping in mind that we’re only a tweet away from turbulence.