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.
What a start to the final month of the year. At least there is a little something for everyone. First the CME tripped the first wave of circuit breakers in the futures market. Then the chartists found the S&P closed the week in a death cross. Then there’s news of a possible yield curve inversion. Lest we not forget, the most recent China issue which may or may not even be legal. While the Huawei issue is unfolding, Lighthizer continues to stir the pot by saying he considers March 1 “a hard deadline” otherwise the delayed tariffs will be imposed. Hmm … kind of like bringing a gun to a knife fight – or – perhaps the administration really believes that “free and fair trade” is an outgrowth of convoluted negotiations.
If week one is any indication, the traditional “Santa Claus Rally” will be delivering a lump of coal this year. Being the eternal optimist, I’ll argue Christmas isn’t here yet so I had to take advantage of the sell-off to do a little buying:
- First, I added to my ETF group. I accomplished two things with this:
- As the majority of these are foreign, they are underwater. Therefore, an ‘average down’ scenario.
- These all pay December dividends (one quarterly, three semi-annual and one annual) all yet undeclared. All are now captured.
- Second I executed a rebalance on a small portion of the portfolio. I chose a ‘rebalance’ as the fees were lower than the alternatives. End result being:
- Sale of BOKF. I had this issue in two accounts due to a merger, now it’s only in one, with the proceeds and accumulated dividends:
- Added to ADP, MMM, KIM, FAF as these are underweight target holdings
- Added to AVNS as they may have received a good price for the division sold to OMI
- Added to LARK and CASS – missing the ex-date for the stock dividends
- Added to BR, CNDT, CDK, FHN, JHG, KSU, PJT, WU, XRX – capturing WU’s December dividend
I still have another rebalance queued pending completion of a merger (might be into the new year) and then we return to normal operations.
I also will be selling my OMI – perhaps later in the month to see if Santa really exists!
Purchased 28 March, at $24.0299 14:42 CDST
Closed $23.66, down 10.62% for the day at 15:00 CDST
I need to be careful announcing that I’m done with purchases for the month as I did last week. Inevitably I’m proved wrong. Well, in the back of my mind, I was hoping for a better entry point to increase my holdings in PJT Partners. Today, one arrived – packaged like an American Greed episode.
I added to my position in PJT Partners this morning at $27.62. My initial position was obtained via Blackstone’s 40:1 spinoff back on October 1st. Since then I’ve watched as they’ve grown the business to the point of declaring their first dividend (.05 payable 23 Mar, record date 9 Mar).
PJT Partners is not an MLP despite their name. They are a consulting group who have been adding clients like crazy. Recent announcements have included:
- Windland Energieerzeugungs GmbH / Blackstone (wind farm sale)
- Kenya Airlines (capital raising)
- Yahoo (strategic alternatives)
- Viacom (sale of Paramount Pictures stake)
If this isn’t enough to consider a company with no dividend history and a recent quarterly loss, how about the fact that they also have a client list of distressed energy companies. They provided advice to Magnum Hunter through their bankruptcy and by all accounts, this should be a growth market this year.
I do consider this purchase speculative (primarily due to lack of history) and as such accounts for less than 1% of my portfolio.
I heard a term used by Jim Cramer the other morning on CNBC. He claimed (several times) that we were in the midst of a Rolling Bear Market. I can’t claim to have familiarity with the term so I embarked on a little research. The earliest reference I found was an article by Bob Carlson which defines the term. Essentially the argument is that there as now an ebb and flow to the markets, like a wave, that is rolling in on sectors. Like energy, then materials, then financials and so on.
Back on October 15th I wrote a piece titled As The Dust Settles which chronicled the bizarre events going on at Magnum Hunter (MHR/MHRC). With the recent Kinder Morgan (KMI) dividend cut, I figured it was probably time for an update given the similarities between the two, particularly since Magnum Hunter filed for Bankruptcy protection on Tuesday. Continue reading