3rd Quarter Review

And just like that we are through the 3rd quarter already! I can't believe that we are in October and also can't believe that the site (and the fund) are already through three solid quarters of existence. Like always we will start with a review of what my 2017 goals were at the beginning of the year:

  1. Have a total portfolio worth of $12,000.
  2. Have a total gain of 10% or higher.
  3. Total Dividend Income of at least $450.

As we sit at the end of Q3 all three of these goals have been accomplished. Of course the first and third are locks at this point but the second could change dramatically depending on the market.


SOURCE: http://www.thebirdandtheelephant.com/wp-content/uploads/2015/04/homer-computer-doh.jpg

SOURCE: http://www.thebirdandtheelephant.com/wp-content/uploads/2015/04/homer-computer-doh.jpg

Now unfortunately in my ultimate blunder I did not take a screenshot of my Fund's Google Doc (found here) to let you see a photo but I did have sense enough to take a look and jot down some numbers. Here is what the fund currently sits at:

Total Value: $12,316.11

Total % Gain/Loss: 10.90% Gain 

Also a quick look at the activity in the fund...

Review of Quarter's Transactions:

  • Cash Invested This Qtr: $930.40
  • Dividends Paid/Invested: $131.71 
  • New Purchases:
  • Added to:
  • Positions Sold:
    -CTL (Sold all shares)
  • Total # of Companies Owned at Start of Qtr: 18
  • Total # of Companies Owned at End of Qtr: 19
  • Potential Yearly Dividend Income, Start of Qtr: $507.44
  • Potential Yearly Dividend Income, End of Qtr: $550.30

Portfolio Analysis

So there really wasn't a lot of activity in the account this quarter. Why? Well to be honest there were a few things going on in my head. The first is that I have met my goal of total value and have decided to shoot some money to a savings account instead of the fund. This is purely because I believe that this bull market is making it harder and harder to find great value purchases and I would rather wait at this point for an opportunity. The second was simply that life caught up a bit. We purchased a home in May and I am doing some renovations that cost some money. Add to that a yearly trip that we take and the cost begin to dig into some of the money that otherwise go into investing. In a perfect world I would invest 1k every month but that doesn't always happen.

Let's look at my single transaction in the sold column, CenturyLink Inc. (CTL). So my rule of holding for a year minimum has been broken once again, and once again it is because of potential legal issues. I purchased CTL after they dropped on the Level 3 merger news. Since then it has been a bit of a ride but after the announcement of the potential fraudulent sales I decided to get out. This was already a high yielding stock with a risk of keeping the dividend intact and, to be honest, a business that without changes will decline. The legal matter just gave me a final reason to leave and not risk my position.

I made two new purchases during the quarter, China Mobile Limited (CHL) and Big Five Sporting Goods (BGFV). Both of these were companies that I have been following for sometime and had been looking to enter. That being said I didn't quite get the timing right and it really hit the fund hard.  

CHL is a mobile phone service provider in China and has been picking up some steam over the last few years. China is a growing market, in terms of 4G, and CHL holds the keys to the proverbial castle. I really like the company so the 7% or so that I am down on it doesn't worry me at all. 

BGFV on the other hand was a much more significant loss. I purchased BGFV in a couple of clusters that were just plain old bad timing. My first purchase was right before Amazon Prime Day and that knocked it about 7% (along with a lot of retailers). The second was a few weeks prior to earnings, where guidance was lowered and this killed the stock. That also paired with Dick's announcing they would push promo's for the rest of the year and, when it was all said and done, I was at a 35% loss on my position. Guess what though? In my eyes there really hasn't been a lot change with the company on a YoY basis to make it this cheap. In fact I think it's worth double it's current market value. Yes I said double!

Biggest Winner:
This one is pretty cut and dry. Gilead Sciences, Inc. (GILD) skyrocketed this quarter to the tune of about 18% on the announcement of their acquisition of Kite Pharma, Inc. I said many times to buy GILD, sit and collect the dividend, and wait for the acquisition to turn the stock positive. This in fact happened and made me look smart (looks are deceiving, see below). 

Biggest Loser:
BGFV. We already went through this two paragraphs ago and there really isn't a lot to say. The dividend looks good, retail isn't in as much of a crisis as every thinks, and I still am long. Will I add next quarter? Probably. Will it go up? Anyone's guess I don't control the market. Either way I still like this stock and will not exit it until I see financials change significantly. 

*Note - Don't think I am immune to the loss this created this quarter. Without the 35% loss in this position the fund would still be more than a full percent over the S&P on the year (Currently I sit a full percent under S&P returns).


Going Forward:

The fourth quarter will be filled with patience and I am looking to even out my holdings. I currently need to add about 10% to my dividend growth stocks category so I will be hard at work looking for value plays in that category. I will continue to stick to my strategy and build my portfolio slowly and consistently. As always please feel free to leave me any comments or questions.