Friday, April 17, 2015

Economic Moat in Action with Phillip Morris (PM)

What is an economic moat? This term was made popular by Warren Buffett and it refers to a companies ability to maintain a competitive advantage over its competitors. It does this to protect long-term profits and market share from competing firms. Read More at Investopedia. Investing in excellent companies with a moat and track record are factors when I make investment decisions.


Looking at a moat in action with Phillip Morris (PM). The bulls won and the bears lost after 1st quarter numbers of PM were released. PM increased market share and pricing power to beat expectations. It would be silly to say I expected good things from PM this quarter. There were negative questions going into the quarter with currency issues, how safe the dividend is, and the recent hold on the stock buyback program. I bought the stock in the face of these fears. Mr. Market gives opportunity to the ones who can see past short term distractions. This is where growth and a moat become important. I invested in PM because it has consistently proven itself. I also liked the idea of buying an asset that is yielding 5.2% knowing a dividend raise is expected in the coming months. PM has performed well since the purchase last month. The currency may still be a headwind but when this problem is over we could see PM's moat come into full effect. There is a lot of price to earnings P/E multiple expansion needed to equal its peers. In the past PM used its profits to buy other assets like Kraft foods and other companies. This diversified its holdings, but now after many spinoffs and being spun off from its parent company Altria Group (MO) the company gives almost everything back to shareholders. The last reason I will mention to why I really like this company is that it is a play to diversify away from the dollar. If someone is afraid of future dollar weakness PM makes all of its earning in other currencies. At the moment it is a ball and chain to its ankle but one day it will be a boost to earnings. 

The moat concept of investing is pretty easy. Looking at a few other recent purchases we can see how I like buying companies with a moat, strong brand, and franchise! BUT the main thing to look at is that Mr. Market has given the opportunity with big price dips from the highs. Each company has hit road blocks and the short term is cloudy. Taking a step back and looking at the big picture one can see longer term opportunity. I like looking at the long term track record of dividends and dividend growth threw economic booms and busts.


Companies with a moat purchased for the portfolio on dips.

American Express Company (AXP)
Exxon Mobil Corporation (XOM)
Yesterday Wal-Mart Stores Inc. (WMT)


Let me know what you are investing in!

(DSF)


Disclaimer: This is a personal weblog. The opinions expressed here are my own. All data and information provided on this site is for informational purposes only. Please do your own research before investing.

Saturday, April 11, 2015

My Mindset and Actions on this Oil Megadeal! (RDS B)


Fear stifles our thinking and actions. If we let fear make decisions for us we will lose money. Today I will take a look back at a post from June 27, 2014 the Amazing History of Oil. This was my first purchase for the portfolio and I bought Royal Dutch Shell plc (RDS-B). At the time it had the same dividend it does today .94 quarterly payout. When purchased it yielded 4.35% now it yields 6.25%. I also mentioned that it is good to leave dry powder available for future purchases if the stock price drops lower. The price has dropped lower and I have made two other purchases. The current yield for the stocksnowball.com portfolio is 5.38%. I mention all of this about the dividend because I like RDS-B as a income play and ca$h cow! I was content with that starting yield and am content with the yield I have now. I don't like losing money! Let me repeat that I don't like losing money when a company share price goes down but I understand why I bought it in the first place.

Understanding why the share price has suffered so much can ease fear. I know the underlining commodity oil has fallen 60%. While the position in RDS-B is down, its not down as bad as the commodity. The recent acquisition of BG Group also helps diversify the company away from just an oil company. Adding natural gas and liquid natural gas to the portfolio. The price paid for BG Group was a steep 52% premium over the recent current share price. This is expensive but all depends on future oil and gas prices. Shell did mention it was cheaper than finding the same amount of reserves if it had to explore itself. My opinion is we will have to wait and see how this deal is perceived 1 to 2 years from now and make a decision at that time. I do think we will see more mergers and depending if the price of oil stays here or drops may depend on if this deal was early. I personally think you take the deal when you feel its right. Shell's management has been around the block and made some good moves so I am putting my trust in them at the moment. 

After the third purchase RDS-B is 12.7% weighting in the SNB portfolio. I think the downside is limited unless oil finds new lows. 

Purchase history of RDS-B
  6/27/14    12 shares @ $86.80  yield 4.33%
10/16/14    15 shares @ $69.34  yield 5.42%
  4/10/15    20 shares @ $60.19  yield 6.25%  
Total shares 47.5434 @ $69.88  yield 5.38%

(DSF)


Disclaimer: This is a personal weblog. The opinions expressed here are my own. All data and information provided on this site is for informational purposes only. Please do your own research before investing.

Tuesday, April 7, 2015

March 2015 Update Stocksnowball Portfolio

The performance year to date (4/3/2015) is 2.54% and the SPY is up 2.49%

This month I made a YouTube video update: 




April 3rd SNB Portfolio link Transactions page 2 

Have a good month!

(DSF)


Disclaimer: This is a personal weblog. The opinions expressed here are my own. All data and information provided on this site is for informational purposes only. Please do your own research before investing.


Sunday, March 8, 2015

February 2015 Update Stocksnowball Portfolio

The performance year to date (3/8/2015) is 1.45% and since the portfolio inception the annualized IRR is 2.53%.

The best performing company is Walt Disney Company (DIS) and the worst perfuming Nordic American Offshore (NAO). DIS continues to excel but I am worried about the valuation getting ahead of itself but as of right now I am a long term share holder with no plans to sell. The largest weighting is still IBM which after reading Warren Buffett's latest share holder letter made me feel more at ease with the decision to buy. Like Warren Buffett mentions form your own opinion on stocks and companies so you don't get easily persuaded. I was surprised to see Warren drop XOM completely from his portfolio. I am seriously looking at adding XOM with some of the cash available.

I also want to share a few of the companies I am looking at after some the the 13f fillings came out. David Einhorn made a purchase in YHOO and I think their is value as well with the spinoff later this year. I also am looking at blue chips like Coke Cola (KO) and Microsoft (MSFT). After McDonald's (MCD) run up I was temped to sale at $100 but it has pulled back I still might sell but as of the moment have not. One Oil and Gas name Chesapeake Energy Corp. (CHK) seems to be getting at a screaming value compared to book value.

Let me know where you see value or what strategies you have!

March 8th SNB Portfolio link Transactions page 2 

Have a good month!

(DSF)


Disclaimer: This is a personal weblog. The opinions expressed here are my own. All data and information provided on this site is for informational purposes only. Please do your own research before investing.

Sunday, February 1, 2015

January 2015 Update Stocksnowball Portfolio

This is the first month of additional funds with the $400 monthly deposit helping boost cash reserves. The market in general had a lot of swings as did the Stocksnowball portfolio (SNB). We ended the month with a small -0.40% down.

Sold some Assets

Starting with Buffalo Wild Wings (BWLD). The rise since October has been phenomenal so I locked in profit. I really like the company and will repurchase on weakness the numbers need to be perfect for any chance for the stock to keep rising. I think the theory that money saved from gas prices will lift everything is overblown. I do think there will be extra money from low gas prices. Most of it probably went to buying iPhones (haha), but all joking aside I think it is over hyped for all the restaurant stocks that there is so much extra cash for people to spend. Healthcare is another place where prices are rising and could offset this theory.

The next sell was First Majestic Silver Corp (AG) the company bounced back with the silver price but I don't know if commodities keep going up, so I sold, locking in a loss. The company is well run but until we see some inflation its going to struggle.

Then I sold a recent purchase in Whiting USA Trust II (WHZ). If you look at this trust it will dissolve in 7 years leaving about 28 more payouts/distributions. Each payout's profit is determined by how much they make in the period or quarter before. I felt selling into strength and earning at least 3 or 4 payouts after one month is solid strategy. I think after the distribution depending on the amount it could fall again and then it might provide an opportunity.

Adding to my position of IBM 

There is a lot of negative attention in the media. Like Warren Buffett says, "The best thing that happens to us is when a great company gets into temporary trouble...We want to buy them when they're on the operating table." Quote source read more here. This is what I think when I buy IBM you don't make money when everyone is agreeing with you and the story is good. You make the money when people agree with you later. Not to mention I see stories all the time saying IBM was a bad buy for Buffett. The dividend is up 47% since Buffett bought IBM so as an income guy I can really appreciate this and understand the value of stock buybacks and dividend raises. IBM is investing a lot back into the company as well.

SNB Portfolio link Transactions page 2

Outlook for February and beyond.

Will oil keep falling? I think for the last month we have seen it hold at the mid to low 40's but I think we see new lows. I think the dollar will hold for awhile at these levels but continue to drift higher vs other currencies. This could effect earnings for the rest of the year until next year the earnings will be compared to 2015. I feel the Fed should of raised rates back in 2013. I think they will mid way through this year. I think things are already distorted and delaying will make things worst! I can't see how letting companies and individuals borrow at low rates forever will help the economy grow? Banks surely are feeling the pain. Savers are punished under the current system.

Let me know your thoughts!! Comment and share! I am also thinking of starting a private group of investing minds on Facebook let me know if you have a passion for investing,talking stocks, books, and other financial stuff.

Have a good month!

(DSF)

Disclaimer: This is a personal weblog. The opinions expressed here are my own. All data and information provided on this site is for informational purposes only. Please do your own research before investing.

Friday, January 30, 2015

Control Your Risk using Stock Options! Using Amazon

I urge people who like to trade or invest to learn how to use options. Don't be scared to learn a new investment tool. I have recently repeated one of my favorite trades buying AMZN mini option contracts AMZN7. When AMZN dropped around the $290 mark I like to buy a few call options at the $295 or $300 strike price a few months out. It is a strategy were if a normal $295 contract cost $1700 you can buy mini contracts at 10% the price. So 2 mini AMZN7 contracts would cost $170*2. Risking $340 and benefiting unlimited on the upside and your down side is capped at $340. After the earnings release I hit what you might call the jackpot, or pot of gold, or my favorite a swan dive right into Scrooge McDuck money bin. I basically made 250% in a week and a half. Amazon does not pay a dividend but in the last year I have made over a $1,000. I did this using roughly $350 over and over investing in mini options. Where did I get the seed money?  The $350 came from dividends from companies like (PM) Phillip Morris and (MCD) McDonalds. Using cash cows to fund other investing opportunities. Managing RISK is important when investing in a company like AMZN who's P/E is crazy to put it mildly. It is good to limit one's downside if things go wrong. The best part is I can reinvest the $1,000 back into my cash cows when they are at lows.

Photo credit Disney Tumblr.com

Disclaimer: This is a personal weblog. The opinions expressed here are my own. All data and information provided on this site is for informational purposes only. Please do your own research before investing

Saturday, January 3, 2015

Month 6 Recap of the Stocksnowball Portfolio! End of Year Results and 2015 Goals!

In 2014 was a great learning experience and 6 months have been recorded in the Stocksnowball portfolio (SNB)! The reason I say it was a learning experience is in 2014 the portfolio lagged my benchmark of the S&P 500. I feel strong about my portfolio and it will take some time for the companies to make changes. This is something I knew when I made the purchases. 2015 could be a big year!

2014 returns since inception.
S&P 500 +4.72%
SNB +.73%

First goal is to outperform the benchmark in 2015!


Tranactions
Taking a look at the monthly transactions the haul for Dividends was $67.42 and interest of $2.62. The purchases this month include Whiting USA Trust II (WHZ) and Verizon (VZ). WHZ for me is another place to park some cash it will pay me outsized dividends that can be used to fund other positions. The trust has many years left so a longer time horizon is needed. I really fell good about the priced purchased and many years ahead of the trust it will out pace any cash position and hopefully have a solid return compared to others in the portfolio. VZ is a solid dividend company and another cash cow for the portfolio to help build income it will be interesting to see how much support for the name leaves when interest rates rise. The sells were the same position BWLD but I have been selling small chunks on the way up. I feel strong about the company and left some on the table but wanted to lock in a profit.

Transactions 
Date Type Instrument  Shares Price Commission Amount
Dec 31, 2014
Interest




$2.62
Dec 30, 2014
Sell  Buffalo Wild Wings Inc.
5
$183.58
$6.95
$910.95
Dec 26, 2014
Dividend  Icahn Enterprises, L.P. 



$15.00
Dec 22, 2014
Dividend  Royal Dutch Shell plc



$25.51
Dec 18, 2014
Sell  Buffalo Wild Wings Inc.
5
$173.55
$6.95
$860.80
Dec 15, 2014
Reinvestment McDonald’s Corp. 
0.1986
$90.62
$0.00
$18.00
Dec 10, 2014
Dividend  Target Corp.



$8.91
Dec 10, 2014
Purchase Verizon Comm Inc. 
25
$45.88
$6.95
$1,153.95
Dec 8, 2014
Purchase Whiting USA Trust II
125
$6.40
$6.95
$806.95

SNB Portfolio
The yearly dividends and interest are $160.43 or $26.74 monthly. The 2nd goal is to double the dividends earned monthly to $53.48 the process has started by adding WHZ and VZ. This will help fund the account while looking for good companies to invest in.

The last goal for the portfolio going into 2015 is to reach $30,000. This will be helped with the deposits this year of $5500 but that will leave $4353.39 needed to reach the goal. A 16.97% gain in value after the deposits. Its a lofty goal!

Stocksnowball Portfolio 
Starting Value $20,000 on June 27,2014








Company 1/1/2015Close Buy Price Shares Market Value Cost Basis Gain/Loss  Gain % Weight of Portfolio Commisssion Dividends (drip) and Int. Annualized IRR
RDS-B
$69.56
$77.12
27.1390
$1,887.79
$2,106.88
-$219.09
(10.40%)
9.37%
$13.90
$36.79
-12.19%
AG
$5.02
$9.58
41.0000
$205.82
$399.73
-$193.91
(48.51%)
1.02%
$6.95

-48.51%
MCD
$93.70
$94.05
21.3799
$2,003.30
$2,017.01
-$13.71
(0.68%)
9.94%
$6.95
$35.01
1.07%
ADDYY 
$34.51
$37.61
27.0000
$931.77
$1,022.42
-$90.65
(8.87%)
4.62%
$6.95

-8.88%
BWLD 
$180.38
$134.55
5.0000
$901.90
$631.84
$270.06
42.74%
4.48%
$13.90

42.74%
IEP
$92.47
$104.41
10.0000
$924.70
$1,051.05
-$126.35
(12.02%)
4.59%
$6.95
$15.00
-10.61%
DIS
$94.19
$86.87
12.0000
$1,130.28
$1,049.39
$80.89
7.71%
5.61%
$6.95

7.71%
NAO
$12.28
$14.58
75.0000
$921.00
$1,100.45
-$179.45
(16.31%)
4.57%
$6.95
$33.75
-13.45%
IBM
$160.44
$160.30
10.0000
$1,604.40
$1,609.95
-$5.55
(0.34%)
7.96%
$6.95

-0.34%
WHZ
$5.56
$6.40
125.0000
$695.00
$806.95
-$111.95
(13.87%)
3.45%
$6.95

-13.87%
VZ
$46.78
$45.88
25.0000
$1,169.50
$1,153.95
$15.55
1.35%
5.80%
$6.95

1.35%
Subtotal



$12,375.46
$12,949.62
-$574.16
(4.43%)


$120.55
1.54%
Cash (USD)



$7,771.15
$7,771.15
Total Gain/Loss w Div

38.57%

$22.13
0.37%
Total



$20,146.61
$20,720.77
$146.62

100.00%

$160.43
0.73%
SOLD 











TGT
$70.55
$58.72
17.1452
$1,209.59
$1,020.64
$188.95
18.51%
0.00%
$13.90
$17.75
19.68%
BWLD
$173.55
$145.89
5
$860.80
$729.46
$131.34
18.01%
0.00%
$6.95
$0.00
18.01%
BWLD
$183.58
Various
5
$910.95
$670.89
$240.06
35.78%
0.00%
$6.95
$0.00
35.78%


Thanks for reading and feel free to comment and share as it is much appreciated.
Sheldon (DSF)

Disclaimer: This is a personal weblog. The opinions expressed here are my own. All data and information provided on this site is for informational purposes only. Please do your own research before investing

New Strategy for investing in Under Armour Inc. (UAA) and Monster Beverage Corp. (MNST)

On March 24, 2017 my blog entry Under Armour Inc. (UAA) Opportunity I talk about my purchase of 100 shares of UAA on 2/6/2017 for $20.55. I...