March has been a quiet month if we compare it to the Jan/Feb start of the year, in reality much happened also at international level (see FED and ECB actions), and thanks to the generous policies of central banks all around the world markets kept the “cheap debt” fueled recovery. How long will it last we do not know, time will tell.
To the Long Haul portfolio this month was rather positive for total returns (markets recovered) and also because I have started the cleanup procedures that hopefully will take me to have a smaller portfolio. The aim of the cleanup is not so much to get capital gain (better if it’s there of course) but it’s to make things a little bit smaller to have add greater weight to the stocks that remain (and also to have less things to check)…
LH Index Fund
As of the end of March 2016 the shares are worth 99.38 Euro (-0.62% against the average value of the shares I “bought”). Not much improvement this month compared to last month (it was around -2%) but I am not complaining, the fund should move slower than a normal stock. By the end of April I should be able to post a separate page with graphs and more visual data.
BOND – 36.61%
STOCK – 58.03%
CASH – 5.37%
NRZ – 65 @ 11.20 USD
LON:LGEN – 440 @ 2.28 GBP
LON:NXT – 20 @ 56 GBP
BIT:CMB – 75 @ 13.50 EUR
I picked Cembre to replace Orange, the dividend yield is higher than the telecom giant and the company is really well run and shows marvelous fundamentals. It’s much smaller and therefore there is an intrinsic risk factor that I need to account for, but is one of the best performers on the Italian market thanks (so far) to a very good management and strategy.
LON:PSON – 115 @ 8.9 GBP
Pearson was picked to replace BP. Another “fallen giant”, they are the world leader in education materials and anything to do with textbook. Pretty much like BP they have had a significant drop in revenues mostly due to slow demand from the US, and the stock price plummeted in recent months. Management passed a very strong restructuring plan to fast-track the online side of the business, laying off several people at the same time to cut costs. I am not a fan of these “tactical” actions (cutting jobs cannot be strategic, it’s short lived), but considering that they are a leader in this field and after the recent reports from management (who confirmed dividend), I decided to move in. My thought is that the risk profile is lower than BP with an higher dividend and, if all goes well, good prospects of growth. Plus, it’s a sector (education) where entry moats are huge, and there aren’t many players out there.
BP – 26 @ 77.73 GBP
Sold BP at a loss of around 12% including dividends, taxes and commissions the total loss was 12.67%. Simply put it, I had a small starting investment dated 17 December 2014 (right at the start of the Portfolio), yes dividend yield was good, but I was not going to add more money in this stock which is seriously under pressure from low oil prices and the Mexican Gulf spill payments. BP might also cut dividends, so I prefer to move the money to RDSA or CVX when the price is a bit more right to keep exposure to the Energy sector. Selling BP is also a step forward is rationalizing the PF.
EPA:ORA – 66 @ 15.65 EUR
Orange is a good company, but by buying into a telecom (especially so skewed on mobile communications) you also buy a lot of debt. YOC was 1.98% because of double taxation, in the end I can get a better dividend without buying into so much debt in a very competitive business like telecoms. Also my stake was really marginal, one more reason to sacrifice the stock for simplification. Total return 2.3%
BME:REE – 26 @ 77.73 EUR
Red Electrica was added to the PF for stability and great track record in dividends. The company never disappointed me, but despite the important weight in the European part of the PF, yield was still around 2% because of double taxation. Again, the rationale behind this move was that I can get a much better yield from an Italian or British utility, to avoid double taxes. Total return was 0.35%
MCD – 14 @ 126.023 USD
Macdonalds was one of the first stocks I have bought. There is little to say about the apart from the fact that MCD has been my best performer in the PF. Yesterday the stock price touched an impressive +40% mark, and I decided that it was time to cash in those 18 years of dividend in form of capital gain. The shares I had accounted for a small part of the PF, but with such a price increase adding more stocks was out of question. Might get back in if the opportunity arises. Total return 43.18%