March 2018 Update

IMG_20150815_181447

General Comment

March was an interesting month for the markets, as the weakness that we started seeing in February continued along with some extra volatility effectively worsening the pullback that we were already living in February.

As I mentioned in the previous update it seems that investors are looking at excuses to sell, while a couple of months before it was quite the opposite. Clearly a correction means that we can buy stocks that were out of our league (pricewise) before so it’s not necessarily bad news.  It’s never nice to see stocks being 20/30% in “the red”, but it’s really part of this whole game of investing, and as I always say, once the strategy is set you need to be consistent with it, especially when things turn sour.

While in 2017 I did not deploy all my funds and preferred more options related action, 2018 is going quite the opposite way, as the portfolio remains a DGI portfolio this is not bad, but unless there are major changes down the road this means that I shall be happy if I can meet the same result of 2017.

My two “extra-university” projects proceed well, one is actually almost ready to be released to public. University lectures are also proceeding quite well, but we are now getting into the “final” stage of the semester, which means that I need to start giving grades and write finals… I have never thought that giving grades was SO HARD…

LH FUND

Explanation of terminology and graphs is HERE.

Let’s see the numbers:

Month TR YTER NYYoC Forex
11.15 0.00% 0.00% 0.00% 0.00%
12.15 -3.33% 1.22% -0.13% -1.00%
12.16 7.06% 1.14% 1.16% -4.35%
12.17 9.94% 1.04% 2.64% -5.94%
1.18 9.06% 1.06% 2.66% -7.40%
2.18 6.13% 1.06% 2.66% -7.95%
3.18 5.85% 1.04% 2.81% -7.21%

YTER is decreasing (vs. previous month) – good news here, means that costs and taxes are still going down, but 2017 tax statement is due in June and this value will shoot, alas.

TR is falling (vs. previous month) – to be honest good news here too. The speed of the fall is much slower, LHPF lost 3.2% since the start of the correction that we are having. Considering what markets did as a whole (more than 10%) I can’t complain.

NYYoC is growing (vs. previous month) – an important increase after two pretty flat updates, this is thanks to the options that I closed which bumped up revenue in a strong way.

Forex is down (vs. previous month) – Another good sign, euro is getting weaker against Dollar and Pound, but compared to my average exchange rate we are still behind.

Dividends and Options

March was a great month with a 2504 Euro turnover. But it’s a story of two different tales.

Dividends accounted 736 Euro (+23% vs.2017) and Options ended up with a 1768 Euro (+61% vs 2017).

Dividends on the rise, Options get the first positive result (in terms of YoY growth) in 2018!!

So what happened this month? One of the perks of Option trading is that you can “roll” a bad trade to a later date. Effectively you close a trade with loss and open a new trade with the same amount of potential profit or even more. Options are not “closed” until they expire or are bought back (in my case I only sell PUTs and CALLs so I can close them when I buy them back). This month a long standing losing trade was called before expiration, that meant that I locked in a good profit on the option but unfortunately as a whole the trade was unsuccessful. This was the case with STX, where my options were so deep in the money that they were called away. Fortunately I managed to repair my position a little in this year that I have been killing myself on STX option plays and the loss was only 200 euro (if I didn’t sell options on this trade my loss would have been 1200 euro). Anyhow, the CALL was closed this month and that gave quite a big boost in terms of options income as you can see.

List of Options closed in February
Screen Shot 2018-03-31 at 13.16.25.png
DCA/Increased Positions

Bought 35 PG @ 77.50 USD

One of my “never sell” stocks touched the average price and I have decided to fill in the number of pieces that I hold so that I can start trading covered calls on it.

New Positions – Sold Positions

Bought 300 BIT:IGD @ 7.06 EUR

IGD is an Italian REIT that was penalized heavily by the market when they decided to raise equity via a capital increase. They invest in malls and supermarket locations, while in the States it looks like retail is getting a lot of competition from the internet, here in Italy people are still attracted by these commercial centers and as a result IGD is doing really well in many areas of their business. I normally don’t buy in a capital increase but I feel that IGD has got some solid locations and a well managed company (and surprisingly not a huge amount of debt), so I bought the shares and subscribed the capital increase that will allow me to get additional shares at a discounted price.

Bought 200 CVS @ 66.40 USD

Originally I wanted to buy only 100 pieces of CVS. CVS is the major player in the pharmacy business in the US, a business that came under heavy fire when they announced a takeover of one of the major insurance companies in the US named Aetna. Market penalized the stock heavily, but the company is solid, well managed and proved in the past that all acquisitions were made to expand the business scope and opportunities. I feel that integrating vertically like they are doing is a great move, they have the experience, know the market and in the future they will control from the insurance to the actual clinic (they offer already this service at many locations), passing through the pharmacy business. So how did the other 100 pieces materialized? Well actually it was YET another option being called before time, this was a PUT option so I was forced to buy the stocks.

Bought 650 LON:DOM @ 330 GBP

Domino’s Pizza PLC is an english company, subsidiary of US Domino’s. Despite the fact that UK stocks are really performing badly for me, I have decided to get a “slice” of this company based on the beautiful records that they are posting. Growing since 2006, dividends and earning, sound strategic plans, oiled business model and huge investments in technology. All of these points are quite interesting to me, on top of that the expansion plan in Germany will soon kick off, de-fact entering the biggest European market. I am in for growth here, compared to other stocks that I hold Domino’s is a “bet” on a company that might have the chance of becoming an interesting player in the fast food market in Europe.

Options Plays

As mentioned before STX calls were “called away”, resulting in a total loss for this trade, not as bad as it would have been if I didn’t sell options, but still a loss.


Conclusions

Lots of movement in terms of stocks being acquired, compared to other very boring months, results should be seen later of course but I am confident that they will come out. It’s not clear what the market will do, and in a way I am a bit disappointed that I have still so many bad trades that are blocking capital, because some companies are really interesting at these prices but the rule is not to trade on margin for me, so I will not use it.  I guess 2018 is going to be a transition year, quite probably lateral, but I do not see a case for a bear market yet.

We’ll see what happens as usual, the positive note is that despite all the falls and market crashes Long Haul Portfolio is still holding it together increasing yearly returns as it’s designed to do.

Advertisements

2 thoughts on “March 2018 Update

  1. Anche tu sei entrato in IGD?!
    Molto bene! Io ho preso solo 100 pezzi perché c’era l’aumento di capitale che era un po’ un punto interrogativo. In realtà sono già in gain oltre il 20%. E fra un mese e mezzo grande dividendo!
    Ciaooo

    Liked by 1 person

    1. Ciao Lore,
      Si è stata una cosa molto “rapida”, frutto di una ricerca abbastanza approfondita ma limitata a 3 giorni, perchè c’era il cutoff per l’aumento. Il titolo è molto interessante al prezzo a cui era, ha perso molto ma non ci sono grossi motivi a parte l’aumento di capitale e la correzione dei mercati. A quel punto ho deciso di entrare, i centri commerciali ancora sono abbastanza forti in Italia e poi gran parte del portafoglio è in mano alla Coop. Vediamo che accade, avevo deciso di rientrare sui REIT Europei, percui alla fine al posto di riacquistare Unibail ho preso IGD. 🙂
      Ciao e a presto,
      Stal

      Liked by 1 person

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.