It’s the time of year when winter is but a memory (for most of us), taxes have been filed and proxies are filling our mailboxes. As I review the filings and determine how to cast my votes, I’m struck with one of these off-the-wall thoughts that hit me every now and again. I wondered how much was earned – and the margins derived – via the annual proxy season. I didn’t delve into the number of trees sacrificed though I’ll wager it’s fewer than before electronic transmissions.
Generally I refrain from back-to-back posts with similar topics but decided to make an exception this week as the moving parts have kicked into high gear. My post last week addressed my uneasiness with cryptocurrency as well as my interest in the underlying blockchain technology. It appears that my view has some support as two blockchain ETFs debuted on January 17th (BLOK and BLCN) and one January 25th (LEGR). This should be followed by KOIN next week. Horizons and Harvest (HBLK) also have ETF applications pending. Grenadier penned a piece on Seeking Alpha that did some analysis on the first two. Four of LEGR’s top five holdings are included in either one or both of the originals so it will probably be similar. David Snowball highlights this sentiment in his piece There’s no idea so dumb that it won’t attract a dozen ETFs stating, “…there are no publicly traded companies that specialize in blockchain; there are mostly companies with a dozen other lines of business that have some sort of efforts going into blockchain.” This is 100% correct.
The upward trend continued this month with catalysts being the tax plan and holiday sales. My guess remains that the first half of 2018 will be good for corporations (i.e., dividends and buybacks) with a shift in focus later with deficits and mid-term elections playing a leading role. I remain convinced the yearlong weakness in the US Dollar will continue and expect to allocate more cash into foreign equities during the first half 2018. I will review this plan as my personal tax implications become clearer. For the month, the S&P index increased by .98% while my portfolio increased by 3.29% largely fueled by Financials (again). For the year the S&P increased by a stellar 16.26% while I came in at +20.58%! The S&P return with all dividends reinvested adds about 2.41% which my hybrid approach still beat.
December was a continuation of the Trump effect with significant reassessment underway in many portfolios. The DOW continued its march to 20,000 before failing and pulling back at month end. While consumer optimism is at multiyear highs, this has not resulted in holiday sales records probably due to the inability of a President-Elect’s posturing to translate into tangible policy change. This month The S&P gained 1.82%. My portfolio recorded a gain of 3.92% largely reflecting my overweight position in the Financial sector which has been a beneficiary of election sentiment. This increases my lead over the S&P for the year to 19.83% achieving one of my 2016 goals of besting the S&P index.
Headlines impacting my portfolio:
- 12/7 – CIBC/PVTB merger vote postponed
- 12/13 – WFC fails ‘Living Will’, BAC passes
- 12/14 – Fed raises .25%
- 12/20 – BAC sells UK MBNA assets to Lloyd’s
- 12/20 – AMC receives last approval for CKEC merger
- 12/21 – KO buys BUD African, El Salvador and Honduras bottlers
- 12/21 – MET financing for spin secured (BHF)
Basically chose to be a slug through the holidays
- Added to HAS
- Added to HWBK
- New position – CNDT (XRX spin)
- Added to CVLY (stock dividend)
- Added to LARK (stock dividend)
- Added to CBSH (stock dividend)
- December delivered an increase of 24.0% over December 2015. This was due about evenly between dividend increases (Y/Y) and October purchases from merger proceeds.
- December had a 5.4% increase over the prior quarter.
- Dividend increases averaged 12.3% with 74.5% of my portfolio delivering at least one raise.
- Dividends received exceeded total 2015 dividends by 29.3%.
The MET spin (Brighthouse Financial – BHF) secured financing.
LSBG/BHB expected to close in January 2017.
One year ago I embarked on a mission to determine whether Primerica stock (PRI) was a better investment then the sum of its’ parts – well at least most of the parts. SEC filings were scoured to identify their investments as insurance companies are required to maintain reserves (the float). A portfolio was established (3Q 2015) , funded (4Q 2015) and tracked (Oct 2015 to Sep 2016) to be able to declare a winner.
And the winner is … Primerica by 16.15%. Now I realize that a single snapshot in time may not be reflective of reality, but to my surprise Primerica outperformed the basket through this snapshot in time.
Once again while I’m waiting for my last two dividends to post to close out the quarter, an update to the Primerica challenge is due. Just to recap, a Primerica rep provided some advice to me a while back the gist being even if I bought no products, I might want to buy the stock since it has performed ‘pretty well’. So I did – but got to thinking – do the pieces that are sold via the reps perform better as a standalone investment rather than packaged under the Primerica banner? The results thus far have been mixed and as we head into the final quarter of this year long challenge, Primerica has taken the lead but the game remains a tossup.
Falling in the dead of winter between the end of football season and baseball’s opening day, the most anticipated spectator sport is upon us. Berkshire’s annual letter. There will likely be hundreds of articles parsing Warren’s every word between now and the annual meeting and mine is not the first. But – as always – there are nuggets of wisdom to be gleaned from his experience.