Friday, March 13, 2015

Hanging Tough

While the broader markets are moving like a drunken sailor, my portfolios continue to hang tough. I am up 6.2% on the year, which looks rock solid against the indices which are pretty much at break even following Tuesday's sell off.

I continue to have quite a bit of dry powder, though I have made four buys this week. Three have been just increasing my positions (BXE, FSC and UCO). My new position is SFUN, which scored very well on my MFI top 200 list this weekend. I plan to hold it until my May MFI tranche and then decide whether to roll it in there. I did sell my INOV, which was another IPO loss (I would do much better without that dabbling).

My MFI Select Portfolio has really been doing well, NHTC has been a big engine.

A while ago I asked what should I do with my money?  I have decided that near term I am going to pay down my mortgage. That will make my wife happy. And frankly the markets seem a bit stretched.

The rest of the money will be put to work over time. I decided against a new MFI tranche approach. Instead, I will ratchet up my current tranches - putting more money in per stock when the tranches come up. This is akin to dollar cost averaging.

Then I will also top off my six monthly dividend securities and try within a year to have the same amount in each.  I decided I already have forth securities in my portfolio in total. There is plenty of diversification, so I do not see the need to start new positions (the MFI tranches will be swapping out positions, keeping overall count constant).  The six securities are paying an average dividend of 6.6%.  So conceptually $1 million placed into them would generate $66,000 of income a year and that would be taxed around 20%.  And they would double over twelve years with reinvested dividends.

To put that into perspective, $1million in my MFI Formula portfolio right now would yield 2.8% on just regular dividends, and a couple stocks, like BKE and BAH have pretty regularly had special dividends.

My MFI select portfolio is not really dividend focused. The average yield there is about 1.4%, though again AWRE and AGX have often paid sizable special dividends.

In specific stock news, my two tickers that differ by a single letter, BXE and BKE both reported what I felt to be strong earnings this week. BXE made 29 cents a share and by my math, even with capital spending to increase production by 14% in 2015 has a cost of getting the oil and gas of about $23. Toss in no debt and this is an oil and gas play I can live with and wait for prices to go back up (though $100 oil may be many years away).

BKE had solid numbers this morning. They are trading up a bit during Starbucks trading hour.

I will publish more tomorrow, but my MFI select portfolio is really rocking. It is at its highest value compared to all the month end figures I have stored. It is now beating the bench mark by over 31 percentage points, at the start of February that was just 21 points, so have really widened the gap. In fact, since February 1st, this portfolio is up 10.2%. Sweet.


Andy P said...

Marsh, doesn't MFI ask you to discard ADRs? Your latest top 200 list contains a few (e.g. SFUN).

Lian Bao said...

Marshall, I bought some BXE yesterday before closing and may add if it continues to drop.

Marsh_Gerda said...

Andy - you are correct. MFI does discard ADRs. I include them in my top 200 list and that is one reason the official top 50 list often goes down to #80 or so on my list. I feel my readers would like to know about those stocks as well.