April 2019

General Comment

April is always a rather special month for me.

First and foremost it’s the month of my birthday. But even more important than my birthday it happens to ne my wife’s birthday too (if you are married or with some “significant one at your side” you know what I mean!).

Financially speaking April saw the bullish trend continuing, with a slight drop that hit the pharmaceuticals and REIT related markets in the US (a drop that lasted 1 week untile all was back to normality).

Commentators tell us that until the US elections we might continue to see rising markets, with a slower pace compared to the beginning of the year, but there is no sight of crisis or recession ahead. Maybe in 2020 (4 months ago 2019/2020 recession was given for “certain”), but all seems to point to a rising scenario.

After the Brexit bomb was delayed (I really start thinking that it’s never going to happen), now it’s turn of the European elections as a potential catalyst for some volatility. There’s a lot of expectations on these elections, surely there will be some changes, some countries like Italy and France are looking at electing a higher number of “Euro-critic” MPs. What will happen at central level remains to be seen, as the European parliament works on a coalition system, so even if Euro-skeptic forces are elected, they need to join parliamentary groups of at least 7 countries to be able to have a saying in parliament. If they do not do that, they cannot vote or propose anything.

For the non-european readers that might sound as crazy. In my view it’s a way to make sure that nothing really changes, as the two major groups will see a loss of votes, but the incumbents will have trouble finding alliances to make their vote count… We’ll see what happens but on the EU side these are not the black clouds that could dampen economy and so on.

The real black cloud coming over will materialise on the 31st of October. Mario Draghi last day at the office in the ECB. This will be the real game changer, economically speaking, especially if a German or Dutch president gets elected as it seems.

Anyhow, going back to the April that just went by, all is moving “well” at the moment, it’s hard to find things to buy in this market, but from a DGI prospective it’s important to keep an eye open.

LH FUND

Explanation of terminology and graphs is HERE.

Let’s see the numbers:

MonthTRYTERNYYoCForex
12.140.00%0.00%0.00%0.00%
12.15-3.33%1.22%-0.13%-1.00%
12.167.06%1.14%1.16%-4.35%
12.179.94%1.04%2.64%-5.94%
12.183.28%1.24%2.70%-3.53%
1.199.76%1.26%2.69%-2.75%
2.1912.02%1.24%2.69%-1.95%
3.1914.86%1.22%2.70%-1.21%
4.1916.86%1.21%2.83%-1.87%

Net Yearly YoC is increasing (vs. previous month) – 0.13% increase!!! Now, that’s what I’d like to see more. It’s a bit of a black swan event for this month, but we’ll take it! 😀

TR is increasing (vs. previous month) – Rally continues so this metric goes up too. Monthly Record since inception!

Forex is getting worse (vs. previous month) – Actually it didn’t get all this “worse” I made some changes to the way average exchange rates are calculated, now the figure is more correct…

YTER is decreasing (vs. previous month) – Last month of decrease for me, after this we will have the 2018 tax returns and this figure it’s going to skyrocket… 😦

Dividends and Options

April, unlike most months, told us a tale of dividends getting lower and options setting new records! It had to happen, so let’s dig into the details!

April ended with a 2892 Euro result.

Dividends accounted for 938 Euro (-11.04% vs.2018) and Options ended up with a 1953 Euro score (+161.96%% vs 2018).

Let’s see what got us to these results…

Seeing Dividends “not growing” in the YoY comparison is a big pain for me, that’s the part that is meant to give stability to the Portfolio and it’s the core of the whole “Dividend Growth Investor” strategy that we are following with this Portfolio. So what happened here? Compared to last year there were around 250 euro of dividends that I could not have as companies were sold or cut their dividend. So the fact that we ended up with only 100 euro difference it’s quite good, but not ideal.

On the other side, several options saw “maturity” in April, especially a log roll of CSCO that bought the income from options rise at record levels. (see report underneath)

List of Options closed in January

Following some comments from the readers I have decided to change the way I am reporting options. I am not reporting the “financial” part anymore, but rather the “money management” part or it.

By doing so I managed to add the information on the Price when the option was opened.

A little explanation needs to be given, on some options you will see that there is a “tick” next to the ticker. This means that that option has been rolled.

In order not to make mistakes when rolling I close the original option assuming that i buy it at the same premium as sold it for. I then open a new line with the same opening date as the former option, but new expiration date, and new premium (I usually roll for credit).

In April I have had CSCO been called away (I was FAR too much ITM), I’ve closed GME (a very old hugely bad situation that I inherited from my first attempts with options), and rolled O and SO, plus opened and closed another bunch of positions (BMY twice, BKE, ORI).

DCA/Increased Positions

Bought 40 LON:RB @ 58.5 GBP

Before ex-dividend, Reckitt fell by more than 10% because of some issues that a former company that they owned had in the states with some opium related medications. The fall was a bit of an overreaction, and the company it’s one of those “solid players” that every DGIer should own, so I managed to add a position lowering average price and increasing yield.

New Positions – Sold Position

Sold 200 CSCO @ 37 and 36 USD

As mentioned previously, I have tried to salvage this trade for a good year, but CSCO rallied far too much for my position to be saved in April. I wasn’t planning such an increase in the quotation, it’s true that tech stocks tend to run a lot when the market is “going well”… Anyhow, got out with my 20% profit, it’s a shame to have lost CSCO, but one should not get overly attached to companies after all…

Bought 100 BMY @ 44.98 USD

Bristol Myers Squibbs it’s a pharmaceutical company that I was following in recent months. I didn’t have a lot of cash to invest so it always sat on the sidelines, but after (force)selling CSCO I could start looking at some other options for investing, and BMY was one of them. I started with some options but decided to make a move after the ER, which was very positive in my opinion, but that the market took a while to digest.

Conclusions

The volatility in April (in the US pharma/REIT sectors) allowed me to clean up a bit my option portfolio (despite the fact that there are some big positions that I still have to manage), it allowed me to start selling options again and buy a new position. It also meant saying goobye to the only tech stock that I had, but to be honest with you I’d be happy if all my trades were “bad” with “just 20% gain” on them.

In short, I can’t complain, LH Portfolio is entering the “hot months” where more dividends and more taxes are coming, especially the latter will tell us if the targets that I have from 2019 can be met or not.

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3 thoughts on “April 2019

    1. Ciao Enrico,
      a dir la verità l’operatività in opzioni è molto calata recentemente (complice la mancanza di cash)… Il PF ha due metriche fondamentali. La piu importante per me è lo Yield Netto annuale (cedole, dividendi e opzioni), ovvero quanto “sputa” il portafoglio anche se i mercati scendono del 50%. L’altra metrica è il Total Return, ma oggettivamente per me questa è meno interessante in quanto cerco una gestione a 20 anni o piu.

      Cmq per adesso il Net Annual Yield è al 2,83% (vedi sopra), con target 3%. Il CAGR ad OGGI è 3.64% (netto).

      Per netto intendo pagate tutte le tasse, costi di trading, costi di commercialista e palle varie.

      Ciao e a presto!

      Stal

      Like

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