Biding Time …

The month (and quarter) has drawn to a close and am waiting for some foreign dividends to post before being able to officially call the month.  It appears that the dividends are up Y/Y, down Q/Q (mostly due to a shift in pay date) and portfolio flat against the S&P.  But I’ll do my normal elaboration next week.

Continue reading

June 2017 Update

June was an interesting month in that the Tech sector hit a rough patch, some IPOs had trouble getting out the door and financials had a second wind.  Frankly I think a lot of the action had more to do with repositioning as some funds/traders’ positions didn’t perform as anticipated and are now playing ‘catch up’ during the last half of the year.  The S&P ended the month up 0.48% while my portfolio recorded a gain of 1.44% largely on the heels of the bank CCAR results.  For the first half of the year, I’m ahead of the index by 5.02%.

Headlines impacting my portfolio (bold are owned):

  • 6/12 – HYH explores sale of surgical line (infection prevention)
  • 6/12 – SBSI acquires Diboll Bancshares
  • 6/14 – OUT acquires Dynamic Outdoor
  • 6/23 – IBTX sells 9 Colorado branches to TBK
  • 6/23 – CM completes PVTB merger
  • 6/23 – Upon merger, POT/AGU to be renamed Nutrien
  • 6/27 – V takes stake in Klarna
  • 6/27 – XRX sells France research center to NHNCF
  • 6/29 – MET spin finalized
  • 6/30 – OCFC to acquire SNBC

Portfolio Updates:

  • Added to KSU
  • Added to CLX


  • June delivered an increase of 31.84% Y/Y with, once again, the vast majority of the increase being attributable to foreign dividend cycles (larger, although less frequent).  With one exception this should now be normalized.
  • June delivered an increase of 12.4% over last quarter (Mar).    The breakdown of the increase is:
    • 37.4% replacement for TIS (which paid in April (late) and suspended the div)
    • 36.2% April purchase for tax reduction
    • 14.8% foreign cycle
    • 11.3% purchases from dividends/dividend increases
    • For the second month in a row, no new cash invested
  • Declared dividend increases averaged 10.82% with 56.5% of the portfolio delivering at least one increase (including 2 cuts and 1 suspension)
  • YTD dividends received were 59.58% of total 2016 dividends which if the current run rate is maintained would exceed last years’ total in early November

Note: My portfolio additions have begun migrating back to US equities as the weakness in the US dollar has been faster than I forecast.  Unless geopolitical events occur to reverse this trend I suspect fewer foreign issues will be acquired.


MET has declared their spinoff – Brighthouse Financial (BHF) – effective August 4th.  Holders as of July 19th will be entitled to 1 share for each 11 MET shares owned.


AGU/POT (Nutrien), SGBK/HOMB remain pending


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.

Oil Patch Lenders

In his recent Chatter Around The World post, Roadmap2Retire presented a snapshot detailing banks exposure to the energy sector.  A timely piece with the spring borrowing base redeterminations around the corner.  It was a little bit of a rude awakening since a nice chunk of my portfolio is posted in full color.  Although I did comment on the minimal issues I had, like any good article it got me to consider multiple questions.  Has the thesis changed since purchase.  Am I losing any sleep?  Is my investment at risk?  Is the landscape different?  What are my real issues with the master list?   Can I quantify the risks?  Let’s try to figure it out …

Continue reading