April 2017 Update

IMG_20150520_225453600General Comment
On top of my birthday, event that probably did not affect markets around the globe, April saw the continuation of the good momentum that we saw since Trump elections. Markets have been generally positive, there is a start of a re-trace in the REIT sector in the US (interest rates hikes are finally kicking in), but either than that no strange movements are to be reported. European elections are off to a great start for “old Europe”, strengthening the currency and the Euro block, it seems that a lot of pro-European parties are on the rise. UK is on the move too, more political elections for them attempting to get a stronger mandate to negotiate Brexit. Yes, Brexit. After almost one year nothing has really changed, but it’s clear that it’s not going to be an easy negotiation. I still believe that there will be no winners, but I guess time will tell.

LH FUND

TR stands for Total Return (selling everything, paying taxes and commissions and converting to euro), YoC is Yield on Cost (what my investments have returned to me via dividends/options), TER is Total Expense Ratio (commissions + taxes).
Total Return is not something I am particularly concerned about at this stage (plus it’s an estimate as I have calculated potential taxes and commissions in it), it’s highly affected by the way the market behaves especially in a young portfolio such as this one. But it’s a metric that it’s worth keeping an eye on. YoC is on the other hand more interesting to me, as that is what the PF has produced over time, my target is to reach the 2% x year net mark (by net I mean YoC-TER).
Month TR TER YoC
12.2015 -3.33% 1.27% 1.13%
12.2016 7.06% 2.01% 4.75%
1.2017 4.76% 2.04% 4.93%
2.2017 7.26% 2.20% 5.30%
3.2017 8.15% 2.24% 5.82%
4.2017 7.82% 2.32% 6.36%

April return saw a peak in the month to 8,56% to then go back to a lower level by the end of the month, no complaints there as usual as the TR ratio is there just to give an idea of how things are moving.

Very modest growth in Options Yield (+0,03%) to 6,21% while Dividend Yield grows to 5,83%, all together the value goes to 6,36% which marks the total return of dividends and options since inception (Dec 2014). TER goes up a bit, there has been “more action” this month on higher commission trades, in May I will also have another “happy” moment with the tax office so expect to see some growth there too (alas…).

Dividends and Options

In terms of Dividends and Options return April was another successful month, with a total of 1487 Euro worth of income. That was created by 791 Euro Dividend income (+18,7% YoY) and 695 Options income.

Options this month were in a lower key because I have few position that I had to roll, resulting in a loss in the month, I have to get used to this “wavy” income stream as I still hold several positions that I am trying to close in profit. But this pattern was expected last month, and it will repeat in May too I am afraid…

April marks the third month in a row where the fund returned more than 1000 euro, so I am happy with it, despite the sound of a “major landmark” the 1000 euro threshold is quite normal if the plan is going well.

DCA/Increased Positions

BIT:SRG – Bought 770 shares @ 3.98 EUR

Increased my quota in one of the main Gas Utilities in Italy, great dividend and good prospects for a very defensive stock. Now I can trade options on it.

LON:OML – Bought 850 shares @ 1.93 GBP

I had to sell OML because of a Call option that was exercised early before dividend. Average price was better before, but I did not want to let the stock go and the price was “right” to enter again.

New Positions – Sold Positions

Bought 30 LON:RB @ 73.20 GBP – I have been after Reckitt Benkiser for almost 2 years now, it was always “too” expensive. Well, basically if I bought it 2 years ago I would have had a good dividend history already and a great average price. This is very important to remember when investing “dividend focus”, idle money stays idle, doesn’t get you any return. So I am in, at a price that I don’t especially like, but I can live with, hoping to be able to buy more shares in the future at a lower point, but happy to have a very good defensive stock in PF.

Bought 50 ERB:ABI @ 103.50 EUR – Another one of those “I would like to buy” stocks, AB-INBEV has been on my radar far too long. I did not have cash when it fell to 90 Euro and so I have decided to take the step now, it’s still a great company producing a great defensive product that just came back from the biggest merger ever made in its market where it basically bought it’s biggest competitor. Yield is good, considering the double taxation and on we went. I’d love to add more, but not at this price level, we’ll see what happens.

Sold 1000 LON:LGEN @ 245 GBP – Again, like OML the previous month I got an option executed before expiry (this time 5 month before expiration!!), I really did not want to sell these stocks but it’s part of the game of trading options. As a result I lost part of the dividend, but made a profit with the sale. Will look into buying into the stock again soon.

Options Plays
Options plays are strategies that I put in play with some stocks where I want to “trap” a dividend and sell the stock immediately after. It doesn’t always work, so sometimes you get to keep the stock for a longer time.
These results are already factored inside TR, Options and Dividend gains and are expressed “net”, including all taxes and commissions.
MDLZ Play – Start 28/03/2017 – End 07/04/2017 – 49.88 USD Gain – AROI (41,75%)
LON:ADN Play – Start 16/09/2016 – End 21/04/2017 – 226.40 GBP Gain – AROI (13,60%)
ABBV Play – Start 20/12/2016 – End 28/04/2017 – 361.81 USD Gain – AROI (15,91%)
MDT  Play – Start 21/03/2017 – Ended 28/04/2017 – 215.96 USD Gain – AROI (25,56%)
Conclusions
April was another good month, nothing to complain about, I still believe that some valuation are quite lofty, so it’s hard to find sources of possible investments. Learnt on my skin something that I did not consider well with options: need to stay away from calls depp in the money when dividends are paid in Europe. As the payment is often annual chances of early assignment are much very high. Despite making some capital gains I lost the dividends and that was a crying shame. On the other side the extra income that I am generating with options is just something that I am not prepared to let go.
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21 thoughts on “April 2017 Update

    1. Ciao IH, yes ABBV is part of the “plays” so option income is going to be higher as there is an higher degree of risk associated with them 🙂 Thanks for stopping by!

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      1. Utilizzo un servizio di un commercialista che si trova facilmente online, il costo non è mostruoso ed è ampiamente compensato dal risparmio di commissioni. Tanto per darti un’idea, da Fineco (che è gia molto competitivo) a IB sono passato da una media di 10.18 euro ad operazione (opzioni/azioni) a 2.38 euro… Poi l’operatività è molto maggiore su IB, l’unico problema è appunto che devi menartela con il dichiarativo.

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  1. Posso osare a chiederti quanto è complicato gestire il discorso in regime dichiarativo e soprattutto darmi una idea di quanto paghi il commercialista online?

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