Weekend Update - We Made It To March!

Weekend Update - March 1st, 2014

The calendar says March, the thermometer says winter.  It reads -1 this morning. Weatherman says another storm is coming this way later Sunday early Monday.

Drinking my first cup of java.  Just finished doing my "exercises".  I am almost assuredly going to gain some weight through this ordeal if I am not careful.  I am just less active since hurting my knee and also it is easy to munch.

Overall Thoughts

Post my taking "stock" and getting some cash in the door from year-end bonus, I was pretty active in the markets this week.  So far I am comfortable with my moves, but one week is too early to judge.  Funny, if you had asked me at the end of Friday whether I had a decent week, I would have said "no".  But looking back, I was up a very snappy 1.6%!  The market was up 1.2%.  So it was a good week. For the year I am up 4.9%, versus 1.4% for R3K.  So Hooray!

MFI Portfolio

I was looking at my MFI tranches in total, and you can certainly say that February was a good month. I started the month with a 24.7 point lead over R3K and ended up 25.6 points.  Assuming I started my MFI reboot with 100,000, I started February at $150,619 and now I start March at $158,119. Pretty hard to complain about that.  However, my newest tranche, February 1st 2014 is (gasp) trailing the R3K! It is up 3.8%, versus 4.7% for the benchmark (pretty good Feb for benchmark!). As additional benchmarks, my "rejects" for the February tranche are up 7.4% and the five runoff stocks are up 5.2%) WNR is the major culprit. It is down 6%.  As I have mentioned many times, these refiners are largely beholden to crack spreads and the trend has not been our friend in February per this chart (a chart of this spread here). But is a marathon, not a sprint. And frankly if the spreads continue to narrow, I may buy more in my next tranche. They generally reverse at some point.

5/6/2013	Start	Current	Dividend	Pct Gain	R3K Gain
KLIC	$11.40	$11.54	$0.00	1.2%	18.3%
CYOU	$29.24	$29.24	$0.00	0.0%	18.3%
RDA	$9.74	$18.06	$0.10	86.5%	18.3%
NVDA	$13.85	$18.38	$0.32	35.0%	18.3%
CF	$183.97	$250.90	$2.80	37.9%	18.3%
Totals				32.1%	18.3%
8/15/2013	Start	Current	Dividend	Pct Gain	R3K Gain
CF	$187.26	$250.90	$2.00	35.1%	13.9%
FLR	$66.06	$77.69	$0.53	18.4%	13.9%
AGX	$15.60	$28.59	$0.75	88.1%	13.9%
KLIC	$11.29	$11.54	$0.00	2.2%	13.9%
RPXC	$15.92	$16.02	$0.00	0.6%	13.9%
Totals				28.9%	13.9%
11/15/13 Stocks	Start	Current	Dividend	Pct Gain	R3K Gain
AVG	$17.22	$18.73	$0.00	8.8%	4.7%
ATVI	$17.71	$19.35	$0.00	9.3%	4.7%
GA	$9.04	$11.38	$0.23	28.5%	4.7%
RPXC	$17.04	$16.02	$0.00	-6.0%	4.7%
SYNA	$48.01	$65.04	$0.00	35.5%	4.7%
Totals				15.2%	4.7%
2/1/14 Stocks	Start	Current	Dividend	Pct Gain	R3K Gain
ATVI	$17.13	$19.35	$0.00	13.0%	4.7%
KLAC	$61.47	$65.15	$0.45	6.7%	4.7%
RPXC	$16.22	$16.02	$0.00	-1.2%	4.7%
SNDK	$69.55	$74.30	$0.00	6.8%	4.7%
WNR	$39.11	$36.45	$0.26	-6.1%	4.7%
Totals				3.8%	4.7%
Category/Tranche	August	November	February	May	Total
Initial Investment	25,000	25,000	25,000	25,000	100,000
Current Tranche	28.9%	15.2%	3.8%	32.1%	20.3%
Previous Tranche	14.1%	43.7%	78.3%	0.0%	30.9%
MFI Overall Gain	47.0%	65.6%	85.1%	32.1%	57.4%
Current Balance	36,748	41,397	46,269	33,035	157,449
R3K Current Tranche	13.9%	43.1%	4.7%	18.3%	20.0%
R3K Overall Gain	39.2%	43.1%	26.8%	18.3%	31.9%
R3K Balance	34,788	35,777	31,708	29,578	131,850
Annualized IRR	28.4%	47.8%	77.1%	40.5%	52.0%

Discretionary Stocks

Sometimes it feels like the discretionary portfolio is all about GTAT.  This week, GTAT skyrocketed 18%! When your largest holding does that, it really helps. That being said, I certainly had some other successes.  I increased my FGL holdings by 50% and was rewarded with a 6% uptick on the week. I increased my CS holdings by 50% - on some news about helping US citizens evade taxes - an that was up almost 2% post my add.  RIOM was my albatross (as was TC-PT in my dividend portfolio), down 11.7%. I came very close a couple times during the week to buying more.

I do now have three "post-IPO" plays in this portfolio. FGL is a stock I am very comfortable with and will likely hold longer term (recall I graded them an "A"). MBUU announces their earnings on next Friday, and I have decided to hold through their earnings (unless they move up materially pre-earnings). LMNS is my most recent add from this past week.  I went in relatively "big" (they are my #6 largest holding, between INTC and BBEP).  There is undoubtedly "risk" in this play, I would certainly call in more speculative than investing.  But I have been following these stocks post IPO for 6 to 8 months and the patterns have been favorable much more often than not, so at least it is a calculated risk.

Stock	Shares	Avg Cost	Current Price	Dividends Received	Pct Change	R3K Change	Diff
BAC-WTA	6,000	5.35	7.20	-	34.6%	18.9%	15.6%
C	1,500	51.52	48.63	-	-5.6%	2.2%	-7.8%
CS	2,800	29.47	31.37	-	6.4%	3.5%	2.9%
FGL	3,000	20.06	21.66	-	8.0%	1.5%	6.5%
GNW	9,000	7.10	15.54	-	118.7%	39.8%	78.9%
GTAT	14,000	3.39	14.33	-	322.7%	20.1%	302.6%
HIG-WT	1,650	21.24	26.42	-	24.4%	14.3%	10.1%
KLIC	7,000	11.48	11.54	-	0.6%	9.9%	-9.4%
LMNS	8,000	12.94	12.20	-	-5.7%	0.1%	-5.8%
MBUU	4,000	17.50	18.43	-	5.3%	4.7%	0.6%
RIOM	15,000	2.26	2.12	-	-6.2%	1.6%	-7.8%
SIRI	15,000	3.73	3.61	-	-3.2%	2.8%	-6.0%
Total Open				-	33.5%	8.8%	24.8%
Closed					5.0%	2.3%	2.7%
Combined					14.3%	4.4%	9.9%

Dividend Portfolio

I know this continues to be the laggard of my three portfolios. But I am okay with that.  This is not meant to be the "sizzle".  This is meant to be steady.  To produce an ever-increasing stream of income.  It is important as an investor to focus on more that just "valuation".  If you do not plan to sell your stocks tomorrow, valuation is frankly largely meaningless.  The markets swing around from time to time.  Do not get hypnotized.

Stock	Shares	Avg Cost	Current Price	Dividends Received	Pct Change	R3K Change	Diff
AOD	13,818	8.02	8.46	6,188.89	11.1%	16.4%	-5.3%
BBEP	5,713	16.74	19.99	4,962.84	24.6%	9.8%	14.8%
CSQ	6,718	8.60	11.15	10,996.89	48.6%	51.1%	-2.5%
FSC	6,646	9.65	9.82	-	1.7%	1.0%	0.8%
INTC	3,754	22.25	24.76	5,335.45	17.6%	34.7%	-17.1%
NTC	6,629	12.00	12.17	377.85	1.9%	1.3%	0.5%
O	585	20.46	44.42	8,916.85	191.6%	111.7%	79.9%
OIBAX	4,093	4.99	6.08	7,881.68	60.5%	117.4%	-56.9%
PM	1,000	78.60	80.91	-	2.9%	0.7%	2.2%
TC-PT	4,000	15.39	15.03	5,686.40	6.9%	18.5%	-11.6%
TGONF	7,000	10.27	10.80	1,317.50	7.0%	14.2%	-7.2%
Total Open				51,664	17.4%	20.0%	-2.6%
Closed					12.8%	10.8%	2.0%
Combined					13.6%	12.3%	1.3%
Annualized IRR Since 12/31/10					17.3%
2014 Gain					0.8%

I added to this portfolio quite a bit this week. I bought PM, added to AOD, BBEP and FSC. I made a cool "income" table, to illustrate the power of this portfolio and the power of compounding. This table shows the monthly and rolling quarterly dividends that this portfolio would generate, assuming reinvested dividends, no change in stock price and constant dividends (hopefully I will get some growth).  Also, these all incorporate my "factor".

Rolling Quarter	Month	AOD	BBEP	CSQ	FSC	INTC	NTC	O	OIBAX	PM	TC-PT	TGONF
	3/1/2014	781	928	470	554	-	378	107	70	940		1,050
	4/1/2014	786	936	473	559	-	380	107	70		1,675
14,440	5/1/2014	791	944	476	563	845	381	107	70
14,520	6/1/2014	796	951	479	568	-	383	108	70	951		1,050
14,590	7/1/2014	802	959	482	573	-	385	108	71	-	1,675	-
14,663	8/1/2014	807	967	485	578	847	387	109	71	-	-	-
14,745	9/1/2014	813	975	488	583	-	389	109	71	963	-	1,050
14,816	10/1/2014	818	983	491	588	-	390	110	72	-	1,675	-
14,890	11/1/2014	823	991	494	593	850	392	110	72	-	-	-
14,974	12/1/2014	829	999	498	598	-	394	110	72	974	-	1,050
15,047	1/1/2015	834	1,007	501	603	-	396	111	72	-	1,675	-
15,123	2/1/2015	840	1,015	504	608	852	398	111	73	-	-	-
15,208	3/1/2015	846	1,023	507	613	-	400	112	73	986	-	1,050
15,282	4/1/2015	851	1,031	510	618	-	402	112	73	-	1,675	-
15,360	5/1/2015	857	1,040	513	623	855	403	113	74	-	-	-
15,447	6/1/2015	863	1,048	517	629	-	405	113	74	997	-	1,050
15,523	7/1/2015	868	1,057	520	634	-	407	114	74	-	1,675	-
15,602	8/1/2015	874	1,065	523	639	857	409	114	74	-	-	-
15,691	9/1/2015	880	1,074	526	645	-	411	115	75	1,009	-	1,050
15,769	10/1/2015	886	1,083	530	650	-	413	115	75	-	1,675	-
15,850	11/1/2015	892	1,092	533	656	860	415	116	75	-	-	-
15,941	12/1/2015	898	1,100	536	661	-	417	116	76	1,021	-	1,050
16,020	1/1/2016	904	1,109	540	667	-	419	116	76	-	1,675	-
16,102	2/1/2016	910	1,118	543	673	863	421	117	76	-	-	-
16,195	3/1/2016	916	1,128	547	678	-	423	117	77	1,034	-	1,050
16,276	4/1/2016	922	1,137	550	684	-	425	118	77	-	1,675	-
16,361	5/1/2016	928	1,146	553	690	865	427	118	77	-	-	-
16,455	6/1/2016	934	1,155	557	696	-	429	119	77	1,046	-	1,050
16,538	7/1/2016	941	1,165	560	702	-	431	119	78	-	1,675	-
16,624	8/1/2016	947	1,174	564	708	868	433	120	78	-	-	-
16,721	9/1/2016	953	1,184	567	714	-	435	120	78	1,058	-	1,050

So you can see this portfolio is currently spinning off every quarter $14,440 in income. With reinvesting (note I do not reinvest TC-PT or TGONF), that will grow to $16,721 by September 2016. Recall that the Richest Man in Babylon preached the importance of compounding, "so the children of your gold will create more children".  I do not what my readers see in this table, but I see an important cornerstone of my retirement income. I am 54.  If you ran this out 6 years, to 2020 and assumed I did not add more money (which I surely would), you would be at about $21,000 every quarter (with my factor) at age 60.

Wrap Up

Well, I am sure you all get the picture.  Things are going well.  I'd like to think I am positioned ok for a downturn.  I am about 24% in cash still.  I have two short term holdings (MBUU and LMNS) that when sold would take me closer to 28%.

I will write more this weekend as a tracking portfolio has completed.