Trading Diary: Taking stock of our stock portfolio

Home Depot, Lowes, Consol Energy all make our portfolio happy. Ditto Charles Schwab’s high-performing major growth company ETF, SCHG

Center aisle, Home Depot Massachusetts store. (Image via Wikipedia entry on Home Depot, CC 3.0 license)

WASHINGTON, October 10, 2017 – We didn’t post on Monday because we were busy collecting our thoughts. And struggling to complete our 2016 tax returns before the Monday (October 16) filing deadline.

This happens to us every year, as the numerous K-1 limited partnership forms we incur as a result of our affection for high-dividend Master Limited Partnerships, whose K-1s tend to straggle in whenever they do. (They’re not obligated to cough these complex forms up by the usual deadlines).

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Taxes aside, we’re still trying to figure out this current, mildly bullish but overly complacent market. As we note in our other column, Q3 earnings season is nearly upon us, and that could scuttle the current, seasonal bullishness pronto if initial earnings figures disappoint.

That said, we’ve been making some moves lately. Here’s what we’re doing and why.

Trading Diary

Our portfolio has been rather badly underweighted in large cap companies, i.e., really, really big companies. (Think Exxon-Mobil, symbol: XOM, etc.) So we’ve been slipping in small numbers of shares here and there to bring our holdings up to large cap snuff.

Recent buys include:

  • General Dynamics (GD)
  • United Technologies (UTX)
  • Apple (AAPL)
  • Pepsi (PEP)
  • Ford (F), our most recent buy

GD and UTX are now in the portfolio to give us a little defense industry ballast, given what’s going on in the world today. Apple, because, Apple, even though the usual Microsoft-forever pundits are pronouncing the imminent early deaths of the iPhone 8 and upcoming iPhone X models. Pepsi because of its diversification into non-carbonated drinks plus its dominant Frito-Lay line of popular snack foods. And Ford, because analysts we follow seem to think its fortunes are improving these days, though we’re not ashamed to collect that current 4.68 dividend either.

We continue to nibble on little bits of various Schwab ETFs, though our current favorite has been the amazingly well-performing SCHG, whose underlying index is based on top U.S. growth stocks. We’ve been slipping in shares here and there since December 2016, and we’re currently up 12.18 percent to date – super good given the vagaries of a number of our individual stock picks.

We recently acquired shares in a pair of obscure, foreign-flagged container shipping companies, both registered in the Bahamas. They are:

  • Textainer Group Holdings (TGH); and
  • Triton International Ltd. (TRTN)

The former is a small company that’s not widely followed, while the latter is a bit better known. These give us an unusual anchor in the transport sector, and we’re up roughly 9 percent on each, having only picked them up a couple of weeks ago.

Based on the ridiculous haircut they took a couple of months back when Amazon (AMZN) got into the household major appliance business via its arrangement with struggling Sears Holdings (SHLD), we swooped in and picked up shares in home improvements monster Home Depot (HD) and its slightly more consumer-friendly runner-up competitor Lowe’s (LOW), both at fire-sale prices. They’re up 11 percent and 4.14 percent respectively as of today and we continue to hold these stalwarts in the consumer durable category.

In addition, both these companies stand to benefit from the massive, post-hurricane rebuilding efforts currently underway first in Houston and Florida and now to some extent in Puerto Rico and the Virgin Islands. Prospects for hurricane-improved rebuilding-remodeling frenzy also inspired us to try a position in lumber and plywood manufacturer Louisiana Pacific (LPX). It’s been up and down and we’re currently at flatline with this one.

BTW, Amazon (AMZN) has announced its intention to get into the drugstore business, temporarily slaughtering excellent, reliable stocks like CVS (CVS) and Walgreens (WBA). We may pick up some Walgreens shares today or tomorrow depending on how hard they’re hit again, basically for the same reason we picked up HD and LOW. A deal is a deal.

Energy-wise, we continue to hold shares of surprisingly cheap but rather volatile Marathon Oil (MRO) and old-line-but-soon-to-be-transformed coal company Consol Energy (CNX). Consol is supposed to spin off its Pennsylvania-centric coal operations some time this quarter, likely unlocking hidden value in these bouncy shares, in which we’re currently 4.5 percent to the good. We’ll wait and see what happens. The stock has been slightly weak lately, so we may double up our position at the right price.

As for Marathon, we’re not too sure, but in a good way. The stock has been a bit weak lately. But we’re already up in this position over 11 percent, so we’re not about to complain. We’re just not quite sure how much longer we should hold these shares.

Finally, we’ve just made a buy in the shares of a 40-year old Norway-based liquid natural gas (LNG) maritime company, Hoëgh LNG Partners LP (HMLP). It offers a fair amount of stability in a rising area of the energy sector, plus a substantial 9.5 percent dividend at the stock’s current price. Plus, it adds to our meager international holdings (currently anchored by UK-based international telco Vodaphone [VOD]), another area we’ve been weak in lately.

In more general market news, as of 1 p.m. ET, the DJI continues to lead the other averages, up 50 points (+ 0.23 percent) on the day. It’s followed by the S&P 500, currently up 4.25 points (+ 0.19 percent) and the still rather weak, tech-heavy NASDAQ, up 1.19 points (+ 0.02 percent) thus far in Tuesday action.

That’s about it for today’s column. Good luck to us. And to you.


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