Weekend Update - July 7 2013

When I moved to New England two summers ago, I had images of cool nights, windows open and nice summer days.  Not this summer.  After a brutal winter, we have now turned the dial up and it is just plain hot.  I know readers in Phoenix or Las Vegas will not have much sympathy, but it has been a very sticky heat, low 90s during the day and 75ish at night. At least we have AC.  My daughter is taking summer school at the local HS, and they do not have AC... where do all those tax dollars go?  To administrators?

Transactions

I did have a couple transactions during the week.  I sold my HILL (not sure why I bought it) for a smallish profit.  I bought some more STO (not a ton) and then I bought a sizable stake of BBEP.  This is an Oil & Gas MLP that has traded down pretty sharply in July.  On July 1st it was $18.42 and I bought for $15.23.  LINE (a peer) is under "informal investigation" (whatever that means) by the SEC and BBEP has traded down in sympathy.  While there is risk in this approach, I have found that when one stock in a sector is under some sort of scrutiny, you can often find some pretty good deals amongst their peers.  Look at HLF versus NUS in December. When Ackman began his MLM bashing, NUS quickly traded down from $44 to $34. Today they are pushing $64.  BBEP pays $1.90 dividend.  Not sure that is sustainable, but even if not they should provide nice income stream.  Finally, today I will have owned PGR for a full year.  Early next week I will sell, which will take me to about 23% cash.

Dividend Portfolio

It has been a struggle.  With the threatening of Tapering, everything that has any resemblance to a bond or is somewhat interest rates sensitive (housing or mortgage REITs) have sold off sharply.  Then the stronger US dollar has been pounding precious metals. These dynamics have hampered the value of my dividend portfolio.  They will likely continue, albeit at a slower pace.  But a major purpose of my dividend portfolio is to provide income, and so far as I can tell, it is still doing that.  And my reinvested dividends will now generate more future income.  So it is not all bad.

Stock	Shares	Avg Cost	Current Price	Dividends Received	Pct Change	R3K Change	Diff
AAPL	213	495.23	417.42	1,041.93	-14.7%	12.9%	-27.6%
AOD	18,691	3.95	3.94	1,684.43	2.0%	6.3%	-4.3%
BBEP	3,000	15.23	15.24	-	0.1%	0.3%	-0.3%
CIM	29,294	2.83	2.82	4,354.92	4.8%	7.8%	-3.0%
CSCO	4,358	17.29	24.57	3,479.34	46.7%	22.6%	24.1%
CSQ	5,668	8.35	10.19	7,554.26	38.0%	38.6%	-0.5%
FCX	2,948	30.29	27.34	2,891.05	-6.5%	8.9%	-15.4%
INTC	3,045	22.10	24.06	2,891.61	13.1%	21.2%	-8.1%
O	567	19.83	42.66	8,074.49	187.0%	89.2%	97.8%
OIBAX	4,023	4.97	6.08	7,388.76	59.3%	90.4%	-31.1%
PGR	2,118	20.56	25.94	2,596.23	32.1%	20.8%	11.3%
PRE	540	67.59	89.60	1,974.05	38.0%	21.0%	16.9%
RIG	1,250	51.79	47.79	700.00	-6.6%	4.7%	-11.3%
SLCA	3,018	20.29	21.07	375.00	4.5%	-0.6%	5.0%
STO	2,211	22.97	20.43	3,024.82	-5.1%	20.3%	-25.4%
TC-PT	5,500	15.43	15.90	2,234.10	5.7%	4.5%	1.2%
TCRD	4,200	14.73	14.98	-	1.7%	0.1%	1.7%
TGONF	2,500	10.38	10.39	-	0.1%	2.6%	-2.5%
Total Open				50,265	10.4%	13.8%	-3.4%
Closed					13.9%	9.4%	4.5%
Combined					12.9%	10.6%	2.3%
Annualized IRR Since 12/31/10					15.7%
2013 Gain					7.9%
Total Open				50,265	10.4%	13.8%	-3.4%
Closed					13.9%	9.4%	4.5%
Combined					12.8%	10.5%	2.3%
Annualized IRR Since 12/31/10					15.7%
2013 Gain					7.9%
Estimated Dividends for Next 12 Months
Stock	Shares	Ann Dividend / Share	Yield	Projected Dividend	Sector	Worth
AAPL	213	$      12.20	2.9%	2,602	Consumer	89,010
AOD	18,691	$        0.32	8.2%	6,056	Hybrid	73,642
BBEP	3,000	$        1.90	12.5%	5,700	Resources	45,720
CIM	29,294	$        0.36	12.8%	10,549	Real Estate	82,637
CSCO	4,358	$        0.68	2.8%	2,963	Tech	107,073
CSQ	5,668	$        0.84	8.2%	4,761	Hybrid	57,752
FCX	2,948	$        1.25	4.6%	3,685	Resources	80,594
INTC	3,045	$        0.90	3.7%	2,741	Tech	73,270
O	567	$        2.17	5.1%	1,230	Services	24,190
OIBAX	4,023	$        0.29	4.8%	1,167	Bond	24,461
PGR	2,118	$        0.41	1.6%	869	Insurance	54,953
PRE	540	$        2.56	2.9%	1,381	Insurance	48,351
RIG	1,250	$        2.24	4.7%	2,800	Services	59,738
SLCA	3,018	$        0.50	2.4%	1,509	Resources	63,592
STO	2,211	$        1.16	5.7%	2,567	Resources	45,161
TC-PT	5,500	$        1.60	10.1%	8,800	Resources	87,450
TCRD	4,200	$        1.36	9.1%	5,712	Hybrid	62,916
TGONF	2,500	$        0.54	5.2%	1,350	Services	25,975
Total			6.0%	66,442

I did show next 12 month dividends on purpose.  I am pretty sure the $66,442 is an all-time high for me as is the going forward yield of 6%.  Note that PGR will be gone next week.  My big regret is selling LNC last fall, which has gone from $23 something when I sold them to $38.  Life insurance companies and financials will do  much better in higher interest rate environment.

MFI Portfolio

As my MFI portfolio is not hampered by the components impacting my dividend portfolio, it is flourishing.  Also, this rally has really been lead by mid cap type stocks, that largely comprise my portfolio.

8/15/12 Stocks	Start	Current	Dividend	Pct Gain	R3K Gain
DLB	$34.43	$33.92	$4.00	10.1%	19.4%
KFY	$13.98	$19.34	$0.00	38.3%	19.4%
MSFT	$30.19	$34.21	$0.69	15.6%	19.4%
NSU	$3.62	$2.91	$0.12	-16.2%	19.4%
UIS	$19.96	$23.24	$0.00	16.4%	19.4%
Totals				12.9%	19.4%
11/15/12 Stocks	Start	Current	Dividend	Pct Gain	R3K Gain
AAPL	$537.62	$417.42	$5.70	-21.3%	23.2%
ABC	$40.21	$55.56	$0.42	39.2%	23.2%
LPS	$23.89	$32.40	$0.30	36.9%	23.2%
VIAB	$49.12	$69.31	$0.83	42.8%	23.2%
WU	$12.77	$17.04	$0.38	36.4%	23.2%
Totals				26.8%	23.2%
2/1/13 Stocks	Start	Current	Dividend	Pct Gain	R3K Gain
AAPL	$450.60	$417.42	$5.70	-6.1%	9.0%
GA	$6.10	$7.70	$0.42	33.1%	9.0%
STRZA	$16.06	$21.99	$0.00	36.9%	9.0%
CA	$25.07	$28.26	$0.50	14.7%	9.0%
NUS	$41.94	$63.71	$0.60	53.3%	9.0%
Totals				26.4%	9.0%
5/6/2013	Start	Current	Dividend	Pct Gain	R3K Gain
KLIC	$11.40	$11.23	$0.00	-1.5%	1.7%
CYOU	$29.24	$30.49	$0.00	4.3%	1.7%
RDA	$9.74	$11.02	$0.00	13.2%	1.7%
NVDA	$13.85	$14.24	$0.08	3.4%	1.7%
CF	$183.97	$175.45	$0.40	-4.4%	1.7%
Totals				3.0%	1.7%

Discretionary Portfolio

I may have sold my LNC, but at least I kept GNW.  It continues to rocket forward and I expect that to continue.  The clouds on their horizon though are exposure to Canada and Australian mortgage markets.  The falling price of copper, gold and iron ore will certainly pressure them. But I believe that will more than offset by improving US mortgage market and higher interest rates, considering GNW is a large life insurer.

Stock	Gain	Cost	Price
GNW	73.4%	7.10	12.32
GTAT	23.6%	3.39	4.19
KLIC	0.7%	11.15	11.23
ACAS	-0.5%	12.75	12.68
Grand Total	30.9%	6.40	8.37

Have a great weekend everyone!