BUY: New Residential Investment, BHP BIlliton, Atlantia

IMG_20141020_091103First November for the Long Haul Portfolio, three more operations have been carried over all of them on the buy side. I have already pinpointed the stocks that I want to sell, will wait for the right moment to do so, but the target is to reduce the number of equities, and work more on concentrating efforts on more “core” holdings. PF target allocation of a 40-40-20 breakdown between the three currencies composing it (USD-GBP-EUR) is “almost” there and I have 2 more stocks on my radar to complete deployment of the GBP capital (namely WPP and PSON, but both are not at the right price yet).

Who I though it was at the “right price” was BLT (BHP Billiton), the world leader in raw materials production. Sadly I was mistaken, but this is the issue when buying using a set of rules. In this case the stock was over the -20% mark for the “second top-up”, at 900 GBP. Went in and then there was that massive incident in Brasil, where BLT is involved for 50% of the mine, and commodities are sinking even lower, so in the space of a few weeks I can see the stock floating at -20% again. Will not add anymore, or if I want exposure to the Materials segment I will do so buying BASF instead.

Another top-up was NRZ, New Residential Investment Corp. Now this is a tricky one, and it goes a bit against my rule of “invest in what I can explain to a kid” rule, so I will not try to explain it here because most certainly I will end up writing something wrong. What I know from my studies on how the mREIT work, is that NRZ is not involved in the standard mREIT business practice, where companies own mortgages on properties (hence they are very sensible to interest rate increases). NRZ is more of a financial institution that gives financial services to the companies that service mortgages. Check out a better explanation: HERE. To make a long story short, increase in rates will result in an increase in profits for NRZ. The company is listed as an mREIT, but it’s not, but so far suffered from a quite unwarranted selloff, making it attractive for me to buy into, as they passed the -10% mark after starting the position. Got them at 11.90 USD. Now the best part: 15% dividend! Because of the low valuation dividend has risen a lot, it seems that the “correct” one would be around 9%, but the selloff helped a lot there. NRZ has been rising dividend twice this year and third quarters results were positive.

Last spot goes to Atlantia, an Italian company that works in the Industrial services sector, they are engaged in a series of engineering related works (highways, airports and infrastructures). In Italy they are the sole company engaged in maintenance of the highway network, and,  like Carillion and Interserve, they also operate in foreign countries. I consider highway bit quite important as place them in a sort of monopoly play. I got in at 24.50, which is an high value (I was targeting 22), but in doing so on the 20th of November I got the dividend on the 23rd, plus I wanted to start a position with them and I have decided not to wait any longer.

Generally speaking as markets have been doing quite well it’s difficult to operate now, but I am not complaining, I like to see some securities in the “green” for a change, plus I have almost finished all the capital that I had to invest, so from now the number of trades will diminish substantially (this is also because the commission bonuses that I had have also expired) .

How was your activity in November? Many trades?

 

LONG: NRZ, BIT:ATL, LON:BLT, LON:CLLN, LON:IRV

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6 thoughts on “BUY: New Residential Investment, BHP BIlliton, Atlantia

    1. Ciao TV,

      Thanks for the support! Well diversifying between currencies adds a layer of complexity, but also an opportunity for some gains, as I started with a strong Euro. Having said that in the long run the currency effect shouldn’t count all that much. Waiting to see which stock you picked!! 🙂

      Ciao ciao

      Stal

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  1. The index part of my portfolio for November had the emerging markets focus. After review, It turns out I am well below my target allocation for EM. So, the mechanical thing to do is to buy the tracker. It helps to see that they are 20 pct below their market top. As you have seen, this means nothing, they can easily go down another 20 or 30 pct…

    With the current market valuations, I am investing less than normal, and building up a small war chest on the side to deploy when we the opportunities are there… It will happen, I just do not know when.

    Do I read this well.. did you get a 15 pct dividend… amazing. How much is this after taxes?

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    1. Ciao ATL,

      The 15% dividend is because the value went down, and being a REIT they must pay 90% of their income in dividends. NRZ has reported a very strong 3rd quarter and in the 2nd quarter they made some acquisitions that bumped up the price (but I was in prior this jump), eventually price did come down when the winds of interest rate hike started to blow in a stronger way. As I mentioned they will profit from the hike unlike the mREIT stocks to which they are (wrongly) coupled with. After tax this will be something around 8.5% I guess.

      War chest is a good thing to build up, I will start mine from January as the first take of this first year of investing was to deploy all the cash that I had to invest, hopefully this will mean reducing drastically commissions which are dragging down returns right now, but it’s just a matter of time I guess. 😛

      Ciao ciao,

      Stal

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    1. It depends on the market, Italian and EU shares go for about 0,2%, UK are VERY EXPENSIVE (15 pounds + registry tax), US is actually quite good with another 0,2% in USD. All three of them have “minimums” so it doesn’t make much sense investing less than 1000 euro.
      Taxation of Eu dividends is simply stupid, so in the end UK and USA are the biggest parts of the PF…

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