Game Therapy

Today takes us off the beaten path with a more personal, rather than investing, theme. As many of you already know, in 2013 I suffered a series of five strokes which overnight turned my world upside down. 2014 was a blur of procedures, tests, medicine calibration and therapies centered on relearning some basic functions such as speaking (I now stutter), walking (with a cane) and basic logic function (depends on the side of the brain). The most difficult issues for me – (my wife’s may differ) – were walking with some right side paralysis, inability to drive and loss of basic math skills. The brain is a weird beast in that I can’t add and subtract but I can perform complex algebra.

Through this journey I’ve uncovered many things that frustrate me, one being walking as a therapy (doctors’ orders) is inherently boring – particularly when cross-country hiking is out of the question. That is until my granddaughter introduced me to Pokémon Go in July of 2016. Since then, I’ve experienced improved dexterity in the fingers on my weak side, an element of improvement in low level strategic thinking and an impetus to get my rear in gear.

The results I’ve had have now been replicated in government funded research studies – one of the reasons I’ve long had Nintendo (NTDOY) on my watch list, included Nexeon MedSystems (NXNN) in my portfolio and am closely monitoring Niantic’s funding rounds. This may be one reason the popularity of Pokémon Go has continued to increase rather than being a flash-in-the-pan. Other games, such as Fortnite, are generally too intense or fast moving for folks like me. I even have difficulty in Las Vegas with the strobe lights on the machines.

For awhile I’ve been struggling with the how and why of sharing this as I’m generally a private person. Then I ran across Captain Zach Brooks story and how his struggles parallel mine – though mine is a walk in the park by comparison. I saw his success as an inspirational guide and figured that perhaps mine could do likewise (in addition to answering the question as to the eclectic nature of some of my holdings). While my daily routine includes my walks (weather permitting), there is also a dose of Pokémon Go as well. And if you play the game and need another friend my trainer code is: 8321 0821 5972

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Recent Sell – GE

I decided to publish this as my weekly post as time is of the essence for any of my readers contemplating a similar decision.

Since the most recent dividend cut, I’ve been holding my GE stock – and almost pulled the trigger to buy more – for one reason: the potential value of the proposed spinoffs. The healthcare unit being a crown jewel and the rail unit being an interesting one.

Word on the street is that the healthcare IPO may not be as lucrative to GE investors as previously thought as GE may monetize a greater share (probably good for the company, though). This I was willing to overlook until the terms were actually released.

My decision to sell was reached when the revised terms of the rail unit were released. Last week it was announced that GE would monetize more of the deal – basically to shore up the balance sheet a little with cash and by shifting the tax liability to shareholders. End result is each share of GE will receive approximately .005403 shares of WAB. You read that right – owners of 100 shares will receive about a half of a share of WAB. As no fractional shares are to be issued, cash in lieu of shares is to be expected.

I’m willing to take a slight loss (as I previously averaged down). What I am unwilling to take is a possible tax liability as well. Frankly, my faith in this company no longer extends that far.

The record date has been set for February 14th with the spin and merger occurring February 25th. If so inclined, I’ll buy WAB at a later date. I am willing to buy into the healthcare unit at (or post) IPO depending on the structure.

I have to acknowledge that the days of playing the contrarian are probably over for this stock. My prior strategy – which was profitable – had been to buy companies which had purchased units that GE was offloading. Under this CEO – and for the first time in many years – this plan is no longer viable.

January 2019 Update

The new year began with a flourish shrugging off the December selloff and recovering most of the losses. With the month exhibiting minimal turbulence outside some earnings misses, my purchases were essentially toppers to existing holdings (except one) – all in the first week. The S&P rose 7.29% while my portfolio lagged a little rising 6.48%. In reality, I was probably even but my cash position was abnormally high as I failed to deploy the cash received from a merger (I exclude cash from my investing positions). I expect this will normalize during February.

PORTFOLIO UPDATES

  • Lost GBNK, GNBC and SHPG via mergers
  • Added TAK and regained IBTX via mergers
  • Added new position BDXA
  • Increased VGK, MSCI, SF, JPMV, HTH, GNTY, EBSB, EWA, DGX, CUT, CL, BNCL and BHBK positions

DIVIDENDS

While my primary focus resides on dividends with the goal being a rising flow of dividends on an annual basis, I’m placing less emphasis on the quarterly numbers as the number of semi-annual, interim/final and annual cycles have been steadily increasing in my portfolio.

  • January delivered an increase of 19.63% Y/Y, the impacts being dividend increases, special dividends and reinvesting merger cash proceeds into the portfolio.
  • January delivered a 0.83% decrease over last quarter (Oct) – the impact of two dividend cuts.
  • Dividend increases averaged 8.84% with 20.81% of the portfolio delivering at least one increase (including 2 cuts (GE, OMI).
  • 2019 Dividends received were 9.33% of 2018 total dividends putting me on target to exceed last years’ total in October.

Note: I updated my Goals page to provide a visual of these numbers.  Based on Mr All Things Money’s instruction set with a conversion to percentages.  My code only updates when the monthly Y/Y number is exceeded.  Otherwise, the prior year actual is used.

2019 conversion remains pending

SPINOFFs

GE‘s rail unit to spin then merge with WEB. This was restructured in January to generate more cash for GE – end result being a taxable event for shareowners

GE to spin 80% of the health business

NVS proposed spin of Alcon scheduled for shareholder approval Feb 2019

On Oct 4,2018 MSG filed a confidential Form 10 to spin the sports business

MERGERS

XRX merger with Fujifilm cancelled (still being litigated).

BNCL to merge into WSFS

BHBK to merge into INDB

SUMMARY

To escape January’s dividend cuts relatively unscathed is monumental. Back in October my expectation was for the effects to linger through the first quarter. Now I can just put my head down and focus on the long game.