he fourth quarter swoon continued in earnest this month resulting in an annual loss for the markets. While the final trading day closed higher (DJIA up 265, NASDAQ up 51 and the S&P up 21) it was nowhere near close enough to avoid the worst December since 1931. Though surprised by the resiliency of the US dollar, last year’s intent to migrate further into foreign equities was largely preempted by tariff uncertainty. My other 2018 concern of rising federal deficits stifling the economy did not manifest itself as yet – though I remain skeptical of administration claims that growth can outpace the deficit. For the month, the S&P index dropped by 9.18% while my portfolio dropped by ‘only’ 8.44%. For the year the S&P posted an unusual loss of 6.65% while my overall loss was 3.57%. In an otherwise ugly ending to the year, my primary goal of exceeding the S&P’s return was attained marking the 33rd year (of 38) that I’ve been able to make this claim.
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.
October was basically a quiet month with OPEC failing – once again – to shore up their hold on the oil markets. Chevron announced a small increase in their dividend maintaining their status as a Champion. Several small positions were added at month end as the market began a pullback (continuing into November) enabling me to start redeploying funds received from PNY’s merger with DUK. This month The S&P dropped 1.94%. My portfolio was basically flat, ending down 0.1%. Note: I normalized these numbers to consider the impact of cash infusion from the merger. My ‘pure’ equity positions decreased by 4.15%. The need for this normalization should end as my excess cash is used. This increases my lead for the year to 11.5% with two months to go.
Headlines impacting my portfolio:
- 10/3 – JNS to merge w/ Henderson
- 10/11 – SRCE gains FRB approval for Sarasota, FL branch
- 10/19 – C finalist to be designated as clearing firm for Renminbi trades
I’m a little behind again this month but the portfolio data has been compiled and will be posted in the next couple of days with the goals update later in the week. The Unabridged portfolio should be next week as per normal.
- Closed PNY due to merger
- Added to BMO
- Added to CVLY prior to ex-div for the stock dividend
- Added to JNS (weakness on currency exposure)
- New position – ABM
- New position – AMT (Jan)
- New position -BLL
- New position -CASY
- New position -CHCO
- New position -KOF (Mex. peso exposure)
- New position -COKE
- New position -CCE (UK exposure)
- New position -CSAL
- New position -CTBI (Jan)
- New position -CCI
- New position -HUM (Jan)
- New position -LAMR
- New position -NWFL
- New position -OCFC
- New position -ONB
- New position -OUT
- New position -PLD
- New position -QCOM
- New position -DGX (Jan)
- New position -SRC (Jan)
- New position – SGBK (Cuba exosure)
- New position – BATRA
- New position – VALU
- New position – VER (Jan)
- New position – YUMC (YUM spin-off)
- October delivered an increase of 28.9% over October 2015. This was due about evenly between dividend increases (Y/Y) and late 2015 funding.
- October was down 10.68% from the prior quarter due to special and semi-annual payments in July.
- Announced dividend increases currently average 12.59% with 67.11% of my portfolio having at least one raise so far this year.
- Through October, dividends received exceeded total 2015 dividends by 7.2%.
Roughly half of the PNY/DUK proceeds have been redeployed with an additional 3 orders pending for January payers. I’ve filled some of the hole I’ll face in January, so I plan on maintaining a small cash position through the election before making further decisions.
The XRX spin (Conduent) is on track to complete by year end. MetLife has filed for a spin of their Brighthouse Financial unit under the ticker BHF.
Proxies were received and voted for both the LSBG/BHB and AGU/POT mergers.
April was generally favorable for the markets. Earnings reports presented few surprises although the trend of beating analysts’ expectations while presenting lower year over year results continued. Financials were modestly positive while old technology seemed to disappoint. Until month end, the market was drifting higher. Then Apple’s and Starbucks reports were weak, the BOJ failed to raise rates and Carl Icahn announced he sold his Apple position over China fears. So the month ended basically flat managing a gain of .27% – at least it was positive.
My portfolio value managed a 2.66% gain with the weaknesses (KMB, SBUX and AAPL) being offset by M&A activity (Comcast (CMCSA) acquiring Dreamworks (DWA) and First Cloverleaf (FCLF) being acquired).
- I changed my portfolio reporting to measure % of dividends provided instead of market value.
- Updated the Blog Directory
- Sold Monarch Financial (due to upcoming merger).
- With the proceeds, initiated positions in SRCE, BKSC, CVLY and AROW
- Moved CVX from DRIP to brokerage resulting in a fractional share sale
- Added to LTXB prior to their earnings release.
- Added to SBUX after earnings.
- Added to AAPL after earnings(and the Icahn announcement)
- Added to XRX – I anticipate a reverse split prior to – or in conjunction with – the spinoff. So trying to position myself more favorably in this event.
- April delivered an increase of 38.7% over April 2015. This was due primarily my first dividends from NJR and SJI coupled with dividend increases.
- April was also up slightly from last quarter by 4.4%
- Announced dividend increases currently average 10.05% with 48.6% of my portfolio having at least one raise so far this year. .
- Sold: Monarch Financial
- Bought: Source 1, Arrow Financial, Bank of South Carolina, Codorus Valley Bancorp
- Cancelled Chevron DRIP
Today I made the decision to sell Monarch Financial. This was going to be pulled from my account – probably later this month – anyway, so I chose to accelerate the process for these reasons:
- Locked in a 22% total gain over the past year and half
- Since I also own the acquirer, I didn’t want the same stock in two accounts
- In the event the merger fails (doubtful), could buy in cheaply