May 2018 Update

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General Comment

Sell in May and go away. I didn’t. I actually bought!

Yes May was a bit hectic, the LH Portfolio continued the recovery started in April but stopped around mid May when the markets took another nosedive. This affected the LH Portfolio, as it seems that since the beginning of the year the major 3 sectors in which I am invested are rather weak, and the weakness continued in May too. I find that the weakness can be good to invest more, but right now I am pretty much maxed out on the cash situation so lots of ideas stay “ideas”…

Anyhow after mid May there was a return to a more stable situation, most of the losses were because of the Italian government election woes, but now that that crisis seems to be over it looks as things are a bit more stable (I would not consider it a “crisis” but the media seem to disagree with me…).

Fiscally speaking I got my tax returns to hand in, and that meant quite a blow in May as you will be able to see from the results below. But that’s nothing I can change, at the moment, so paying is the only choice.

In the meantime summer hit Pizzaland, and finally I can enjoy the 32 degree celsius that I love so much. We are not going to have holidays this year because we did some renovations to our house, but to me, being in summer is already an “holiday” for the soul!

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% 1.07% 2.66% -7.40%
2.18 6.13% 1.06% 2.66% -7.95%
3.18 5.85% 1.04% 2.81% -7.21%
4.18 9.02% 1.03% 2.90% -6.07%
5.18 8.89% 1.36% 2.68% -4.42%


TR
is decreasing again  (vs. previous month) – Since the beginning of the year after Trump rally subsided (do you even remember the rally?) LH Portfolio moved up and down but did not manage to grow that much. This month despite a strong recovery on the Forex side, TR was weighted down by market movements and 2017 taxes. 

NYYoC is falling (vs. previous month) – Dividends and Options did not manage to offset the tax returns for 2017 that I have had to pay, so the growing streak came to an halt. Every year more or less in May taxes are going to bring the PF down to earth, but that’s expected and accounted for.

Forex is down (vs. previous month) – Weakness in the Euro helps and the gap between my main currency (Euro) and the rest gets smaller. I still see a pretty weak pound, but that’s not going to change anytime soon for at least 2 years untile Brexit is done.

Dividends and Options

May is always a good month as many European companies pay their yearly dividends, I wish I had more months like May!! This time we got a 2464 Euro turnover. This is the second month that we passed 2000 euro worth of earnings, matching 2017 result already!

Dividends accounted 2053 Euro (+10,5% vs.2017) and Options ended up with a 411 Euro (-39% vs 2017).

Dividends account for the 5th consecutive growth vs.2017, great job there! Unfortunately it will all end next month, but will cross that bridge later.  Options did well too, albeit with a lower score than 2017, the result was positive.

While Dividends did their part, and I also lost some stock due to some options that were called earlier, Options were doing great until I had to roll one of my very bad trades (DBK) and that killed much of the profits. But the result was still positive so this is good I know that this is a “stabilisation year” for the option trades, so keeping the result positive it’s already pretty good!

List of Options closed in May
Screen Shot 2018-06-06 at 21.29.02.png
DCA/Increased Positions

 

Bought 10 AMS:UL @ 193 EUR

Unibail Roadamco is my only European REIT together with BIT:IGD. Unibail is by far the biggest player in Europe and one of the biggest in the world, a specialist of Shopping Centers and Malls. Despite the fact that in the US malls are suffering a slump in sales, back in the old world, Asia, Africa and Oceania this trend is not so strong (yet). Unibail recently bought out Westfields, the Australian N.1 mall operator, who owns extremely good locations also in Europe. The stock was hovering well past my -10% initial repurchase level and I have decided to top it up also because dividend was just around the corner and I could get a piece of that too.

New Positions – Sold Positions

Sold 100 BKE @ 18.25 USD

Didn’t want to see BKE go, but I still own 200 pieces and this was part of an option play that worked out pretty well, so no complaints.

Bought 100 BIP @ 37.7 USD

I have been following Brooksfield Infrastructure Partners for quite some time, and finally I’ve decided to take the plunge and buy this company. They are an MLP, investing in infrastructure (energy and non-energy related) all around the globe. Here I’ve targeted a very good management, who’s doing a great job since last century at buying “cheap” and sell “expensive” with the projects that they buy and develop. Dividend is quite good, as it’s almost at 5%. The nature of the business bring BIP to invest in companies that have regional/local monopolies and that ensures a good intake of steady and predictable cash to come in. Just what I love to hear from a DGI point of view.

Bought r00 BIT:PST @ 7 EUR

Poste Italiane, is the postal service in Italy. A good chunk of the company is “state owned”, a part is public. On top of deliveries of standard mail PST managed to expand the business to insurances, banking, mobile phones and other financial related services, they operate a huge number of post offices (now also “stores”) and pays an hefty dividend. It was FAR too high in price until the Italian Government Flash Crisis stuck, bringing the stock from 8ish to 7 euro, in TWO DAYS. As I liked them and the selloff was just on the news (no fundamentals change) I’ve decided to buy when everyone seemed to be selling (buying when the stock is doing -8% is never easy, but…).

Options Plays

Nothing to report


Conclusions

May was good for the results, scoring more than 2000 euro worth of income is a great result for this Portfolio. On the other side taxes managed to depress numbers and spirits a little, but they were accounted for so no huge tragedy there apart from the fact that I keep getting taxed on earnings that were taxed at the origin!

The markets seem to be in a lateral/slightly depressed phase, depending on the industry. Tech are doing great, defensive not so much. This is something I need to think about because the cycle is not penalising defensive stocks, meaning that a potential recessionary/downwards pressure might be on the tables soon. Nothing that I particularly want to experience right now but there is no use at pretending that economy is cyclical and that “bad times” are surely coming. Not sure when, but they will come!

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