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October Analytics

I post my monthly Portfolio snapshots here and a quick take on my performance and any surprises.

Nov. 3, 2019:

First, here is the portfolio's VALUE BREAKDOWN, with:

1. Total Capital Invested (not including reinvested dividends);

2. Total Dividends Received; and

3. Capital Gain (from price appreciation)

I added $427 of raw capital to the portfolio on October and was able to catch the small dip in the markets before it making new highs right at the end. Raw invested capital is $4,696.58

 

My expectations for the S&P was pretty spot on again for October. The sideways September price action was broken and it made new highs. 

 

From here, it looks like the S&P will continue higher, but I do expect volatility to increase soon. So there might be some good buying opportunities coming up.

By October end, my portfolio is performing outstandingly, with an annualized return over 25%! I don't expect this to be the norm; however, it's shown that it truly pays to begin investing in businesses that are at reasonable valuations. 

BUYS AND SELLS -

I sold my position in Toyota Motor (TM), realizing a gain of 17.1% including dividends and an annualized yield of 26.2% over 8 months. I sold TM because it was pretty difficult to valuate and determine a fair P/E number. Add to that the coming shift to EVs, and it looks like many auto companies will have some work to do in terms of transformational investments and increased capital expenses. Also, TM's dividend payouts are quite erratic because of the cyclicality and the foreign exchange effect between the USD and Japanese Yen.

I bought more JNJ with those gains on the Asbestos dip at $128.44, which moves capital to a safer location in my view while achieving a better risk-reward opportunity.

I also sold out completely of Reliance Steel (RS) for a realized gain of 41.3%, annualized return of 65.5% in a span of 8 months. Earnings are expected to dip in 2020 and 2021 but buying this stock at a 9 P/E in February provided a good margin of safety to revert to the mean of 13.7 P/E. At my selling price of $118, it's slightly above 2021's fair value based on expected EPS of 8.36, and I'd rather sell here since the next two years are expected to have no growth.

I purchased more of Magellan Midstream (MMP) and Blackrock (BLK). Energy is just getting smacked, but it's providing some very good opportunities for both capital gain potential and current dividend yield. Blackrock is one of two premiere passive investing vehicle providers, along with Vanguard. I intend to add more to the latter on future volatility, which I'm expecting.

I also started a position in Amazon (AMZN), my first non-dividend investment. I believe it's undervalued based on future Price-to-Cash-Flow. Also, General Dynamics (GD), a defense company, which should continue to do well in a world permanently filled with potential threats, including of course new ones in the field of cyber security. Finally, I added to 3M (MMM) at almost 20% below my cost basis, which drastically decreased it, lowering my margin of safety at not a high cost of capital.

 

BENCHMARKING against the S&P500 shows that I'm finally leading the index by 1.9%. I believe the outperformance will continue as value stocks have become more attractive. Although, some big tech growth names are also beginning to show value, which is why I bought AMZN.

 

Now, let's take a look at the SECTOR distribution and performance in my portfolio. 

tc2000 name.png

Industrials is now​ my largest sector holding, as valuations had come down on the manufacturing/industrial recession. But as we know, any recession is a good opportunity to buy stocks and so I bought Industrials. It should provide good returns going forward.

Healthcare, which I increased quite heavily in the previous two months, went from nearly the worst performing to the best performing sector in October.  

 

Next, let's check the average performance of stocks based on their DIVIDEND STATUS.

 

Added a Growth stock (Non-dividend) by way of AMZN and also another Champion by way of GD. 

 

The INDIVIDUAL PERFORMANCE of every stock in the Solid Dividend portfolio:

 

I still own 42 stocks in total after the moves made in October. I'm positive on 36 of them. Including my sold positions, I have a stock picking accuracy of 87%. Famed investor Peter Lynch once said that a 60% success rate is more than enough to beat the market in the long run

My best performing stock is back to Lithia Motors (LAD) after its earnings beat and 17% gain in one day. It's now more than doubled my investment in the stock (unrealized), and I still consider it fairly valued today.

The SOLID DIVIDEND Snapshot (11/3/19)

 

Annualized Return

 

As of Nov. 3, 2019, my portfolio has an annualized (or internal rate of) return of 25%, which accounts for the different time periods I invest capital.

 

If I continue picking good businesses at appropriate valuations and I'm patient for moderate (or severe) market pullbacks, I expect an annualized return above market average, which on the long-term is 9.8%.

As an investor, I'm excited by what lies ahead!

 

Valuations of Current Holdings

 

Financials (CFG, CMA, PACW, and SYF), mainly regional banks, continue to be undervalued, understandably so because of lowering interest rates.

AbbVie (ABBV) has bounced handsomely but is still a deep value based on forward expected earnings at least 2 fiscal years away. 

I'm now looking to take profits in both AAPL and HD. They're 'Highly Overvalued' on my scale.

 

Waterfall Chart

 

Stay tuned for more stock analysis, buy updates, and monthly analytics.

 

Check below for past months' analytics and dividend updates. Stay Solid!