It’s been a while, and I’ve been neglecting my blogging somewhat. But at the very least, I thought I should update everyone on some of my portfolio transactions. I’ve now exited four positions on my portfolio and have three new ones.
In general, I am trying to stay mostly invested while raising a little cash. As I have been selling some positions, I have not been reinvesting everything. I am reinvesting only my original capital while keeping my gains on the sidelines.
|Date||Ticker||Name||Shares||Sell Price||Sell Value|
|23 Jul 2014||NBD.TO||Norbord||550||$24.66||$13,563.00|
|18 Aug 2014||CSE.TO||Capstone Infrastructure||4900||$4.40||$21,560.00|
|8 Sep 2014||FCR.TO||First Capital Realty||700||$18.80||$13,163.01|
|16 Sep 2014||CFN.TO||Carfinco||1650||$11.36||$18,744.00|
Reasons For Selling
Norbord – I sold out of Norbord back in July at $24.66 as the US housing market was basically tanking. The stock continued to fall as low as $20.51, another 17%, so I think this was a good decision. It’s since crawled back close to my exit position, but I’m not really interested. Lumber prices have to be high enough that NBD can sustain its dividend long-term, and I don’t think they’re at that point yet. Small capital loss of 15% (about $2k) but I did receive $1.3k in dividends. The proceeds went into an initial position in LRE.
Capstone Infrastructure – I exited CSE with a good profit, a return of about 20% over a year. Nothing wrong with the company, but I do predict low and possibly negative earnings for the next couple of years as they start a new power contract. This is supposedly well-known and built into the stock price, but I’m concerned that when low earnings do come out next year that there will be sticker shock. Might be a buying opportunity if it drops on bad news in the future. The proceeds went into an initial position in MIC and the rest in cash.
First Capital Realty – FCR just announced a dividend increase, so why am I selling? I just don’t see the growth anymore. The company issues a lot of stock, and book value per share is dropping. I don’t see a lot of opportunity for capital gains. They even issue stock for all of their convertible debentures instead of paying cash. If it drops below $17, I might get back in. The proceeds went into, at the time, CFN, LRE and KMP (see below), which I thought all had better potential upside.
Carfinco – The reason here for selling is simple – Carfinco is being bought out by a Spanish bank. I actually just added to my CFN position on 8 Sep at $7.75. I sold my shares on 16 Sep and on 17 Sep I used about 60% of the money to add to three positions (below).
So what am I doing with the money? I’m being very particular – only good value plays are getting investments. There are plenty of overpriced stocks out there – like pipelines.
All of my buys are a little contrarian. The stock prices are moving down, not up. Then again, Carfinco’s price was moving down when I bought on 8 Sep. Good things can happen to cheap stocks – you have a margin of safety on your side.
|Date||Ticker||Name||Shares||Buy Price||Buy Value|
|17 Jul 2014||LRE.TO||Long Run Exploration||2900||$5.68||$16,472.00|
|8 Sep 2014||LRE.TO||Long Run Exploration||1000||$5.05||$5,050.00|
|17 Sep 2014||LRE.TO||Long Run Exploration||700||$4.95||$3,465.00|
|18 Aug 2014||MIC.TO||Genworth MI Financial||450||$38.15||$17,167.50|
|17 Sep 2014||MIC.TO||Genworth MI Financial||100||$36.45||$3,645.00|
|8 Sep 2014||CFN.TO||Carfinco||450||$7.75||$3,487.50|
|8 Sep 2014||KMP.TO||Killam Properties||250||$10.41||$2,602.50|
|17 Sep 2014||TPH.TO||Temple Hotels||650||$5.30||$3,445.00|
Reasons for Buying
Long Run Exploration – Definitely amongst the cheapest of the dividend paying oil companies with a payout that looks sustainable. In fact, they increased it earlier this year, and have made several major acquisitions. Even though oil prices are down, this is accounted for in their projections. If oil prices stay here or move higher, I expect a dividend increase within 6-9 months and likely a big jump in the stock price. Look at Surge Energy – very comparable.
Genworth MI Financial – Genworth MI insures mortgages in Canada. They’re amongst the cheapest of any financial company in Canada right now (P/E of 9), have four dividend increases in the last four years, a low payout ratio, trade only slightly higher than book value, and bought out a huge number of shares last year, boosting all metrics. They are in excess of regulated capital requirements, so I expect more dividend increases and share buybacks. These guys are like a regulated cash machine. The government recently ordered increases to premiums, which is guaranteed higher revenue. And if interest rates do rise, they have a natural hedge as they’re able to invest premiums at higher interest rates even if house prices fall (they’re an insurance company after all).
Killam Properties – I’ve owned this company for years and continue to add when I find more cash. Q1 was poor because of weather and unforeseen budget costs, but Q2 is back on track with $0.19 in FFO (79% payout ratio, P/FFO of 13.5). I now have 1450 shares.
Temple Hotels – I first added this position in January, and I still like them. I think the dividend is sustainable and could grow once they digest all of their acquisitions. A similar company, HLC, has been up almost 50% in the last three months and the same thing could happen to TPH. If not, I will be happy to collect the fully eligible dividend.
After all of this trading, I have a net cash position gain of $11,695.51 plus a pile of dividends over the summer. I also have an empty investment line of credit with a $33,000 balance. My portfolio is down to 22 positions, but I’m not going to add a new name unless I see a buying opportunity. Stock markets have been choppy, but they tend to start going up late in the year, so August and September are my favorite times to acquire stocks. Good luck to all.
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