The month was relatively crazy with geopolitics driving the highs and domestic lunacy driving the lows. In between were relatively strong earnings and interest rates inching higher driving the question of the bull market sustainability. Personally, I’m not overly concerned yet but Marco Rubio‘s “implication that Republicans have found no good answer to the problems Mr Trump described is irrefutable.” may be an omen of things to come. Meanwhile, I took advantage of some dips and stayed the course. April saw the S&P rise 0.27% and my portfolio outperformed the index by registering a rise of 0.65%! YTD I still lag the S&P by 0.43%.
I’m rarely at a loss for my weekly observations – especially post inauguration – with this week being no exception. Without further introduction, I’ll dive right into current headlines and my take on the impact to investors.
After a pause in action due to the post election run-up in valuations, it appears the action is opening up once again in merger activity. One of the positions I initiated in October is the latest target. I entered Stonegate Bank (SGBK) due to their US government sanctioned Cuban interaction as well as being a potential takeover target. In fact, Vivianne (Well Rounded Investor) and I had this very discussion. Low and behold, Home Bankshares (HOMB) saw the benefits that I did.
The terms of the deal are not purely defined probably due to potential market volatility. It will be a cash and stock deal with the ratio defined nearer to close. Per the 8-K, the combined stock/cash value is $49.00 per SGBK share. Considering my entry point was $34.17, a roughly 43% gain over 5 months is not too shabby. The only disappointment is the $49 total is a less than 6% current premium which would indicate HOMB believes a significant part of SGBK’s rise in share price was due to emotion (Trump rally) rather than fundamentals.
My intention is to take the money, retain the shares and perhaps buy a little HOMB on weakness as I believe my initial Cuba premise still stands. Besides, HOMB being a $13B bank post acquisition places them in the arena of being a potential acquisition target themselves.
In my web wanderings, I encounter many disparate views on investing. Some I agree with, others I don’t. Then there are the few I can’t even wrap my head around. About a year ago, it appeared that sentiment had begun to shift. One post, The dark side of dividend income by Bite-Sized Income (now dormant) highlighted this change. In a nutshell he presented an argument that dividend investing (@ 4%) is not worth the time. A plausible scenario is presented but it is unlikely the majority of us could capitalize on it.
My past blog post was my most popular by far. Now that’s not saying much since mine is not one that is read by the masses. In fact, one could surmise that a little bit of my meanderings go a long way. So thanks to all the visitors and commenters.
Since then the awareness has become more mainstream and positions being taken on all sides of this craze. As most of my readers are aware, I prefer a slightly eclectic view of events. As a consensus forms I tend to migrate to the next concept. Before doing that I wanted to bring some closure to my views on this topic.
- Exceed the performance of the S&P 500
This has been one of my goals since 1980 and achieved 31 times.
- Re-establish portfolio balance per the strategy
This most likely a two year goal since my largest strides will have to take place following the completion of the PNY/DUK merger
- Minimize portfolio sales (ideally none)
Holdings are maintained separate from my published portfolio to supplement my income via a covered call strategy in an attempt to avoid unplanned sales. Dividend Growth Investor covers this nicely with a glaring exception: Major medical expenses.
- Complete the acquisition process with about 160 total stocks
Other than a handful of companies to fill a few gaps, I want to add a final round to my Regional Bank strategy
- Increase my Canadian holdings to 3-5% of the portfolio
No new holdings are expected, only additions to existing positions. I figure to add while the US dollar is strong with the expectation that – at some point – the situation will be reversed.
- Maintain my walking regimen
Weather permitting average 20 miles per week
- Improve blog functionality
There remain some sections that don’t work quite right
- Write 52 posts
We’ll find out just how much I have to say
- Reduce mortgage balance to 30% LTV
- Volunteer 50 community service hours
Motivated by Well Rounded Investor’s goals