Pure Randomness

Every now and again events are thrown our direction which necessitate a change.  Being one who abhors change, I tend to procrastinate until the absolute last minute.  I knew the drive in my laptop was on its’ last legs a year ago when I bought a new one.  Last week it bit the dust.  I did perform regular backups so data loss was minimal.  What loss exists is not due to Wanna Cry but their evil twin, Micosoft (MSFT).  Though I have an Office license, my use (legally) of an upgraded version resulted in the inability to perform a backward migration.  It appears my best recourse is to purchase an upgrade.  My frugal nature has an issue with this solution (being held hostage?).  Meanwhile, seeing if Google fills the void.  I did add a sheet to my Dividends spreadsheet (Div Dates) which – assuming I get the hang of conditional formatting – has the potential of automating my watch list.

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Recent Buy – AKO.B

ako

Keeping with my Coca-Cola bottler strategy, yesterday I added a new holding to my portfolio.  Embotelladora Andina S.A. is based in Chile with territory covering Brazil, Argentina, Paraguay in addition to Chile.  Their product line includes Coca-Cola products in addition to bottling and distributing outside brands including Amstel, Dos Equis (XX), Heineken and others.  They have an integrated operation, meaning they manufacture the bottles, cases and caps used in their bottling operation.

Andina has two share classes, the A shares carry greater voting power while the B shares pay a higher dividend.  As I don’t expect to accumulate enough shares to impact the board, I chose the higher dividend.  The shares are traded on the NYSE as an ADR administered by Bank of New York Mellon (BK), another of my holdings.  The ADR ratio is 6 shares of Andina-B (Chilean exchange) to 1 AKO.B (NYSE).

A dividend is paid almost quarterly (Feb, Jun, Sep, Nov) but is variable as the cycle is Provisorio/Adicional.  The company’s goal is to pay approximately 35% of earnings to shareholders.  The TTM for the ADR is $.70 which translates into a current yield of 2.88% at my $24.25 purchase price.  The forward (12 month) yield would be about 3.1% depending on actual declarations and the future exchange rate.

A also added to my TD holdings making it a full satellite position (1.5% of portfolio dividends) due to weakness (can you say Wells Fargo?).

Dec 2016 Update

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)

Blog Updates:

Basically chose to be a slug through the holidays

Portfolio Updates:

  • 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)

Dividends:

  • 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%.

Spinoffs:

The MET spin (Brighthouse Financial – BHF) secured financing.

Mergers:

LSBG/BHB expected to close in January 2017.

Rolling Unabridged Update #3

The fourth month of the Rolling Unabridged Monthly Portfolio (RUMP) is in the books with the results posted a few days ago.  A few were added and more removed.  The only item of note was that KO has tied JNJ in the overall rankings.  The update cycle remains at an eight month lag which is within the desired 6-9 month window.  Following are the highlights, findings, questions and issues identified.

Blog Composition

Bloggers with online portfolios that are not dormant numbered 266 this round.  Roughly 4 were added and 22 dropped due to dormancy, one by making their portfolio private and one by becoming subscription only.

Data

As alluded to earlier, there were no significant changes in the rankings, however both KMI and PM were replaced by OHI and WFC respectively, both of which were recipients of blog chatter leading into the US election.

Strategy

One thing that has caught my attention with these analyses is the multiple strategies employed whether singularly or in combination.  One that I hadn’t seen since 2000 was concentrated IPO investing.  As both dividends and profits rare in this space, his decision to eject his DGI safety net and go ‘all-in’ is one gutsy call.One can only hope his success – or timing -is better than my dabbling at the height of the dot-com bubble.

A Deeper Dive

I have come to the conclusion that this type of analysis – although interesting – is meaningless.  Adam’s data (I Want to Retire Soon) is distorted by frequency while mine is distorted by weighting (or lack thereof).   Meaning in my data, one share of JNJ is equal to 100 shares as the holding – rather than quantity – is paramount.  Therefore I miss weighting changes as the company is either owned or not.  Since a clearer picture cannot emerge, I’ll continue to periodically update the data but only post on major events such as dividend cuts.

Sep 2016 Update

Last month saw the commencement of the Congressional take on the ‘bully pulpit’ with first Heather Bresch (Mylan (MYL)/EpiPen) then John Stumpf (WFC) called on the carpet.  One would think Heather would have been smart enough to avoid taking the same path blazed so brilliantly by Martin Shkreli (Turing/Valeant (VRX) fame).  Her show was overshadowed by the even greedier Wells Fargo with John either portrayed as ‘asleep at the wheel’ or a criminal mastermind.  Wouldn’t life be interesting if Congress actually did anything other than use hearings to frame media sound bites?  The S&P was basically flat for the month ending down 0.12%.  My portfolio was basically flat as well, ending up 0.04%.  This increases my lead for the year to 11.88% with one quarter left to go.

Headlines impacting my portfolio:

  • 9/1 – CHD 2:1 stock split
  • 9/2 – Ireland to appeal EU anti-AAPL tax ruling
  • 9/6 – ENB to acquire SE
  • 9/12 – AGU/POT reach merger agreement
  • 9/19 – REITs officially become their own sector
  • 9/26 – YUM spin set at 1:1 YUMC for 10/31
  • 9/29 – Supreme Court agrees to hear credit card surcharge case
  •           – PNY/DUK merger approved, closing set for 10/3

Blog Updates:

I’m a little behind 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.

Portfolio Updates:

  • FMBH replaced FCLF due to merger
  • Added to TOWN – this ‘makes whole’ this holding following my sale of MNRK prior to the merger.  (didn’t want to hold TOWN across two accounts)
  • Added to AROW prior to ex-div for the stock dividend (shares added Sept 29)
  • Added to SBUX

All were funded by dividends with no ‘new cash’ deployed.  New cash was deployed for the  annual funding of the trust I manage (skip generation).  The trust is excluded from my DGI portfolio and WFC is this year’s addition.  This is only the second time I’ve duplicated one of my holdings – the other being DIS.  The other trust holdings are GIS, HSY, PG, WMT, WGL, UNP, KHC and TXN.

Dividends:

  • September delivered an increase of 24.7% over September 2015.  This was due about evenly between dividend increases (Y/Y) and late 2015 funding.
  • September was up 4.4% from the prior quarter.
  • Announced dividend increases currently average 12.91% with 63.09% of my portfolio having at least one raise so far this year.
  • Through September, dividends received were equal to 95.7% of all 2015 dividends, keeping me on pace to exceed last year’s total -now estimated to be October 4th (as compared to 2015 being Sept. 9th).

With the cash from PNY/DUK, I’ll be looking to redeploy primarily into existing Jan/Apr/Jul/Oct payers within my portfolio with no new positions expected.  Losing PNY and the expected loss of LSBG (another merger) will leave about a 5.07% hole in my January dividend receipts unless I act now.

Spinoffs:

The YUM spin has been set for Oct 31st with YUMC to begin trading Nov 1st.  I don’t think the XRX spin date and ratio have been set.

 

 

Conspiracy Theories

Two of the investing kingpins are in the news this week for different reasons.  Warren, obviously, for his annual meeting.  Carl, on the other hand, stole some of the thunder with his announcement yesterday that he exited his Apple position.  I’ll get back to Warren in a minute, but over the years have come to realize that rarely is a given act random.  Most times it’s calculated, particularly when significant amounts of money are at stake.  So I look for the hidden agenda, or for lack of a better term, the Conspiracy Theory.

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Warren’s Letter

Falling in the dead of winter between the end of football season and baseball’s opening day, the most anticipated spectator sport is upon us.  Berkshire’s annual letter.  There will likely be hundreds of articles parsing Warren’s every word between now and the annual meeting and mine is not the first.  But – as always – there are nuggets of wisdom to be gleaned from his experience.

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