Another month, another narrative. Inflation ticked up a little forcing the Fed’s hand to verbally acknowledge that higher for longer is the new reality. Then the gamesmanship over next year’s Federal budget as a government shutdown loomed, is in the words of Rep. Mike Lawler (R-NY), (there’s a) “clown show of colleagues that refuse to actually govern”. When translated means by demanding funding (or de-funding) programs that would never pass in a divided government, the opportunity has been lost to obtain a small incremental step. The real losers being us – how’s your portfolio holding up in this circus-like atmosphere? The only thing that seems to work (for the moment) is cash and we’ll see what the next 45-day cycle brings.
Some small purchases and sales were made selectively with all remaining cash placed in short-term interest-bearing instruments.
Portfolio Performance
For the month, the S&P dropped 4.87% while we dropped 3.72%. The index is ahead for the year by 11.07%, an improvement but still probably too big a gap to overcome by year-end.
Dividends
Dividends and interest for the month was a bright spot registering a 30.96% gain over 2022, with interest now at 3.2% YTD. A special dividend from Swire Pacific was half the increase. The run rate is 111.98% and Dividend increases are averaging 9.47% including one decrease with 60.63% of the portfolio announcing. The 8.4% on the Scoreboard is collected versus announced.
New Positions
- none
Positions Increased
- CLX – underweight Anchor position – weakness due to hack
- MKC – rounded up to exceed former position size (ancillary)
Completed Mergers
- none
Positions Sold
- VBTX
Positions Reduced
- none
Cancelled Mergers
- none
Pending Mergers
- none
Cash Position
- Cash on hand increased to 5.81% from 5.71%.
Spinoffs
- ABBNY announced a delay in the Chargedot IPO due to “challenging market conditions”
- Baxter (BAX) announced plans to spin off their kidney care unit
- Novartis (NVS) plans a Sandoz spin off in 2H 2023
Corporate Actions
- The Swire (SWRAY) special dividend was a result of the sale of their Coca-Cola bottling business to their parent company (non-public). The going forward dividend will be adjusted down and the stock price has dropped accordingly. As the thesis for owning has changed (their remaining businesses are Hong Kong Real Estate and a controlling interest in Cathay Pacific, I will probably sell next month.
All in all, a solid month with the disappointment being the drop in portfolio related to Swire. At least it was offset a little by the special and we still didn’t drop as much as the index. Hope you had a good month!
Seeking Returns 