Johnny-come-latelies

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.

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Jan 2017 Update

January saw DOW 20,000 being attained before dropping under once again.  The post inauguration euphoria  beat a hasty retreat in the wake of record protests, a wave of executive orders and a record number of lawsuits filed against a president in his first eleven days.  In finance terms, this uncertainty translated into concerns about the the ability or  time required to effect change through the legislative process – in particular tax reform.  This month The S&P gained 1.79%.  while my portfolio recorded a gain of 3.51% largely due to the final significant merger completing.  After a great 2016, I’m making some changes in my 2017 strategy that will (hopefully) accelerate performance in 2018.  Meanwhile I’ll be content with a slight win versus the S&P this year.

Headlines impacting my portfolio:

  • 1/5 – WMT ends V ban in Canada
  • 1/9 – SBUX discontinues Evenings concept
  • 1/10 – NWBI divests MD assets to SHBI
  • 1/13 – LSBG/BHB merger completes
  • 1/17 – ADP acquires Marcus Buckingham Co.
  • 1/20 – IRM acquires Kane Office Archives LLC through BK court
  • 1/23 – AMC acquires Nordic Cinema
  • 1/24 – Executive order moving Keystone (TRP) forward signed
  • 1/25 – DOW 20,000
  • 1/25 – BLK moves 1T$ from STT to JPM
  • 1/26 – JNJ to acquire ALIOY then spin R&D unit to ALIOY shareowners
  • 1/30 – GDOT buys UniRush (RushCard)
  • 1/31 – BX prices INVH IPO

Blog Updates:

posts under consideration for Feb are Methods to my Madness Pt 3 update, Anti-Trump strategy, My Coca-Cola strategy and The Commonality Between Trump and Me

Portfolio Updates:

  • Added to CLX
  • New position – CCLAY
  • New position – BHB (LSBG merger)
  • New position – SWRAY

Dividends:

  • January delivered an increase of 15.46% over January 2016.  This requires normalization due to PEP and WRE paying in January rather than December, KO paying in December rather than January and BUSE paying in February.  On a normalized basis, this represents a Y/Y increase of 3.1% which is attributable to dividend increases (Y/Y).  This means my October purchases from merger proceeds were successful in maintaining my Jan,Apr,Jul,Oct income stream.
  • January had a 3.0% increase over the prior quarter.
  • Declared dividend increases averaged 7.44% with 19.65% of my portfolio delivering at least one raise (1 cut – YUM).
  • Dividends received were 9.2% of total 2016 dividends and if the current run rate is maintained would exceed this total around October 15th.

Spinoffs:

The MET spin (Brighthouse Financial – BHF) remains pending.

Mergers:

Agrium/POT, JNS/HGG.L remain pending

Closing the Primerica Experiment

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.

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Unbundled PRI Q3

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.

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The -opoly World

Early Retiree Reality (ERR) recently published a thought provoking article titled My Duopoly and Oligopoly Shopping List on Seeking Alpha.  The premise is essentially that duopolies and oligopolies provide wider moats which results in greater profitability.  I would encourage you to read it.  This idea is similar to one I’ve been working on with my Speculative Pillars series on Cord cutting, Transaction Processing and to a lesser degree Regional Banks.  Although neatly packaged, I failed to make the leap into the –opoly world.

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Unbundled PRI Q1

Yes, I know you want me to get to the end of year results and 2016 goals already.  Those will be my next two posts.  Promise.

Meanwhile, it’s time for a review of the first quarter of my Primerica analysis.  Here’s my initial write up.  On Christmas Eve, I used my remaining free cash to purchase this group of companies.  I did make a few changes to the original selection:

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