Wednesday, July 23, 2014

Adding More TUP

TUP is getting hammered today, the stock is down over 9%.   At $76.50/share, the dividend yield is over 3.5%.  I currently have a 2/3 position, so will add another 1/3 to establish a full position.  They missed earnings by a penny, and missed revenue targets by around $13 million.  I've read the entire earnings press release here:

Not a great quarter, but not a disaster either.  I'm using the dip to add.



Tuesday, July 22, 2014

Good News for HAL

Long time Chump holding HAL is rallying today.  From SA:

Here is a FASTGraph snapshot of HAL (yesterday's close, not today's)

No longer undervalued, but at fair value.  I'll continue to hold, and look to trim when the price hits $90 share.  At today's close price, $73.26, my IRA gain for this holding is a cool 109% aggregate since mid-2012, so for about 2 years of holding.  Not bad.



2 Small Adds Today: MCD and T, and a word on HOG

MCD reported disappointing US sales, and shares are down 1.5%.   I'm not concerned, so I added a few shares on weakness. Current yield is 3.37%, so I'm happy to have some more shares.

T is roughly flat, but using by position add guidelines from my last post, its been over 60 days since I started the position, and I'm still within 5% of my original purchase, so I added some more shares today.  I view T as a nice defensive holding, like a utility, but with a bit more growth potential.

As an aside, I also added some HOG today to my taxable account.  Harley is down over 6.4% today, but the story is good, and I expect a recovery in the shares relatively soon.   Harley pays a small dividend of 1.75%, beat earnings, but missed sales and lowered full year guidance.  Launch of new products were delayed some, but sales and earnings are still growing rapidly, and after they introduce some new products, should accelerate.



Friday, July 18, 2014

Earnings News for BAX & Establishing a Position

My latest addition to the portfolio, BAX, had a pretty stellar quarterly report today:

Per an earlier blog, I purchased only a 1/3 position in the stock at $73/share.  Today, after the good news, the stock closed the week at $76.52, for a gain so far on the investment of roughly 4.6%.  Darn, I wish I had bought more.  Should I buy more now?  I'm re-copying my dollar cost averaging rules below.  I put these into play when I sold INTC a few weeks back and reviewed my purchase decisions, and how illogical they seemed.  So, as a review, here are my rules for establishing a new position, and my comments after each bullet:

  • When starting a position, is the stock undervalued (>10% vs. six year PE), or fairly valued?
    • Started position in BAX at fair value
  • If undervalued, start with a 2/3 position right out of the gate.
  • If fairly valued, start with a 1/3 position.
    • This is what I did
  • Wait 30 days, or for a 10% decline in the stock, then re-evaluate.
    • 30 days were up on 7/17/14, on that day, the stock was up from purchase
  • If a 10% drop occurs (vs. purchase price), add another 1/3.
    • this has not happened
  • If after 30 days, the stock is same or higher, wait another 30 days
    • the stock is higher, so I'll wait until August 17, and look again
  • After 60 days, if the stock is still within 5% of purchase price, establish full position
    • if BAX continues its present climb, It will be up over 8% by then
  • If the stock has run up more than 5%, do nothing more.
    • Do nothing is looking likely right now, but we'll see in a month
  • In cases where the stock drops 20% from original purchase, add another 1/3 position, for a greater than full 4/3 position

So, I do nothing with BAX for another three weeks.  As I review the rules above, the 10% drop after 30 days seems a bit extreme, I think perhaps I'll revise that to 5%.  

Regarding BAX, I suspect I'll just stick with a small 1/3 position and let it grow.  I'm okay with this.


Thursday, July 3, 2014

IRA Performance Update for July 3, 2014

Here is the YTD performance for the benchmark S&P 500:

*Source:  CNN Money

And while the performance shown here for the week is correct, the YTD performance is understated because it doesn't include dividends.  Using YCharts! S&P500 total return index (SPXTR), the YTD performance of the S&P 500 with dividends is +8.54%.

The Chump portfolio was up modestly this week, with a YTD performance now standing at 10.99%, currently better than the S&P benchmark by 2.45%, or 28.7% better.  Here are the Chump IRA holdings; today I present them by industry (courtesy of FASTGraphs):

*Note:  I also own KMI (Kinder Morgan), which is in the energy category.

The yellow highlights are lofty PE ratios vs. the normal PE for the past six years, and should be considered for trimming or selling.  The green highlights represent PE ratios still nicely undervalued as of yesterday's close.

Looking at my industry/sector breakdown, I'm heavy in industrials, consumer staples, and financials, and light in materials and utilities.

Here is an interesting chart showing YTD performance by sector from Finviz:

The two sectors in which I'm light have had very good year to date performance, so I've likely missed out on some good/better returns due to my current imbalance.

I'll look to add a good materials company, and another utility in the coming month.  As always, your suggestions are welcome.



Monday, June 23, 2014

Performance Update - YTD through June 20, 2014

The Chump portfolio continues to chug along in 2014, increasing its lead over the benchmark S&P 500 year to date.

Here is the performance of several indices through Friday, source is Morningstar, and returns include reinvested dividends:

The best performing index is the S&P 500, with a YTD return of 7.24% with dividends reinvested.  Interestingly, most money managers report the S&P 500 without dividends reinvested, which is disingenuous at best.  Here are a few examples:

  • M* (above) 7.24%
  • CNN Money reports 6.11% YTD
  • From YCharts, I calculate the return as 6.46%
  • Yahoo Finance, 4.78%
  • Etc....  pretty hard to find accurate data, which is a bit surprising

At any rate, the Chump IRA finished Friday at a new record high, with a YTD return of 10.74%.  So regardless of the benchmark, my IRA is beating it pretty handily.  Using the 7.24% from M*, Chump is beating by 3.5% absolute, or by 48.34% when you calculate percentage outperformance.

Here is summary of activity the past two weeks:
  • Closed my position in INTC (see blog on this topic)
  • Grew cash position to around 3.5 %
  • Received dividends from CSX, DOV, MCD, and O all of which were reinvested
  • Started a 1/3 position in Baxter (BAX)


Tuesday, June 17, 2014

Starting a Position in Baxter (BAX)

Thanks to reader Kolpin for the suggestion.  Here are some of the things I like about Baxter International, a large player in medical treatments, drugs, and therapies.  But first, a description of the company from Reuters:
Baxter International Inc. (Baxter,) incorporated on October 19, 1931, is a global, diversified healthcare company. Baxter, through its subsidiaries, develops, manufactures and markets products that save and sustain the lives of people with hemophilia, immune disorders, infectious diseases, kidney disease, trauma, and other chronic and acute medical conditions. The Company operated in two segments: BioScience and Medication Delivery. It is engaged in the medical devices, pharmaceuticals and biotechnology to create products that advance patient care worldwide. These products are used by hospitals, kidney dialysis centers, nursing homes, rehabilitation centers, doctors’ offices, clinical and medical research laboratories, and by patients at home under physician supervision. Baxter manufactures products in 27 countries and sells the products in more than 100 countries. In February 2012, the Company acquired Synovis Life Technologies, Inc. In November 2011, the Company acquired Baxa Corporation. In May 2011, the Company acquired privately-held Prism Pharmaceuticals, Inc. (Prism), a specialty pharmaceutical company. In April 2012, it purchased SIGMA International General Medical Apparatus, LLC. In September 2013, Baxter International Inc completed the acquisition of Gambro AB.
In May 2011, the Company completed the divestiture of its United States multi-source generic injectables business to Hikma Pharmaceuticals PLC (Hikma). Through the acquisition of Synovis Life Technologies, Inc., Baxter has acquired product lines that include medical devices used for soft tissue repair, including PERI-STRIPS DRY, TISSUE-GUARD and VERITAS Collagen Matrix, and devices for microsurgery, such as the COUPLER, FLOW COUPLER, and GEM MICROCLIP. Baxter products are manufactured and sold worldwide. Approximately 60% of the Company’s revenues are generated outside of the United States.
The BioScience business processes recombinant and plasma-based proteins to treat hemophilia and other bleeding disorders; plasma-based therapies to treat immune deficiencies, alpha-1 antitrypsin deficiency, burns and shock, and other chronic and acute blood-related conditions; products for regenerative medicine. These include biosurgery products and select vaccines.
Medical Products
The Medical Products business manufactures intravenous (IV) solutions and administration sets, premixed drugs and drug-reconstitution systems, pre-filled vials and syringes for injectable drugs, IV nutrition products, infusion pumps, and inhalation anesthetics. The business also provides products and services related to pharmacy compounding, drug formulation and packaging technologies. In addition, the Medical Products business provides products and services to treat end-stage renal disease, or irreversible kidney failure. The business manufactures solutions and other products for peritoneal dialysis (PD), a home-based therapy, and also distributes products for hemodialysis (HD), which is generally conducted in a hospital or clinic.

Morningstar Summary:  4 Stars with a fair value estimate of $84 (Today's price is $73)

Analysts opinions:  

From FASTGraphs:

Valuation:  at fair value, not undervalued
Dividend:  2.8%, with a good record of dividend growth (7 years, 10% dividend growth)
S&P Credit Rating:  A-
Projected growth in earnings:  8.3% (see below)
Volatility:  Low with a beta is 0.73

In summary, a solid, steady grower available at fair value today.  I consider this a good defensive stock, capable of earnings and dividend growth even in a recession or correction.  Limit order filled today for a 1/3 position at $73/share.