February 2021


A General Overview

February it’s really the shortest month out there! Came and went with, yet again, no major news. Here in Europe we are struggling with COVID vaccines, apparently because the negotiations with the pharmaceutical industries didn’t go that well. Actually we should say that they made a mess of it, and in the end we are seeing vaccines arriving late. We’ll see (again) where this delay takes us, what is sure is that we are getting ready for yet another month of lockdowns and further restrictions.

One year ago, as we entered this whole pandemic story, the feeling was MUCH DIFFERENT, a bit like when your teacher is sick at the last moment and you get to skip the whole school day unanticipated.

Now we are a bit tired, a lot actually, we can see the end, but not quite…

Personal life saw a rather nasty back pain, which I am trying to sort out doing exercises and more sport. Covid forced me at home doing very little (no football, very little activity) and now it’s time to go back to doing some sport, despite the fact that I hate running or doing exercises, I find this rather boring…

Either than that no other news… Let’s see what the portfolio has done…

LH FUND

Explanation of terminology and graphs is HERE.

Let’s see the numbers:

MonthTRYTERNYYoCForex
31 Dec 20140.00%0.00%0.00%0.00%
31 Dec 2015-3.33%1.22%-0.13%-1.00%
31 Dec 20167.06%1.14%1.16%-4.35%
31 Dec 20179.94%1.04%2.64%-5.94%
31 Dec 20183.28%1.24%2.70%-3.53%
31 Dec 201923.50%1.35%2.72%-1.40%
31 Dec 202015.76%1.28%2.70%-7.60%
Jan 202115.52%1.27%2.71%-7.03%
Feb 202117.42%1.26%2.71%-6.69%

TR is increasing (vs. previous month) – Not at the record highs of 2019, but close enough. Markets are going well, so if I was to sell everything today I’d come out on top…

YTER is decreasing (vs. previous month) – Slight decrease of 1BPS, nothing major, but we’ll that everything we can!

Net Yearly YoC is stable (vs. previous month) – Gosh it seems so hard to grow this metric, need to be strong and resolute, soon…

Forex is getting better (vs. previous month) – Still riding very strong the Euro has a big effect on TR for the PF. The pound is getting stronger though, so the currency effect has decreased a little..

Dividends and Options

December income was 1339 Euro

Dividends accounted for 977 Euro (-0.19% vs 2020) and Options ended up with a 362 Euro score (+69% vs 2020).

Dividends

I have to be honest, I gave February for dead this year, meaning that I thought that I was going to post YET another negative month in the YoY comparison. As the portfolio lives on growing dividends, losing one month it’s fine, but losing two in a row it’s not that great. Technically dividends were lower, but just by 1 euro, I can live with that…

Options

Very good month, all options did well and I managed to pass the 200 euro target that I have on each month. Need to be alert though, all it takes is a bad month for all the good efforts to go away, options are a wild beast, and I still have 3 very sore positions that will come and say hello soon…

DCA/Increased Positions

Nothing to report

New Positions – Sold Position

Sold 100 BIT:SFER @ 16.04 EUR

Ferragamo is a company that I love, I love their products and history. But they are not going to pay dividends this year as well and the luxury field, which is poised for a good recovery in the near future, it’s still under the mess that COVID created. As they are not paying and I am trying to raise cash I’ve decided to sell the stock.

Bought 100 BME:REE @ 14.75 EUR

Red Electrica was in the portfolio many years ago, and I regretted having sold it at the time. It’s a farly “basic” utility, but it’s also the owner of the grid in Spain and a bunch of other activities too (satellite communications are among those). Utilities are down a bit everywhere, thanks to rising interest rates, Spain seems to have paid a rather hefty toll, but if we overlook the high debt (which is normal in these companies) there is a lot to like about REE. Oh it’s a dividend payer with very long history too…

Bought 100 LON:GSK @ 12.70 GBP

Added a portion in my Glaxo holdings, I like the company, I like the fact that they are going to spinoff consumer healthcare, and love the fact that they are leaders in all vaccines produced in the world, apart from covid. Sooner or later we’ll be back to our standard way of living, and also prevention and vaccinations will resume in full swing.

The Financial Conclusions

February broke the spell of me not finding anything to buy!

Not buying stocks it’s a double problem for this investing strategy because the only way to improve on dividends earnings is to increase the portfolio of paying companies. Of course if they raise their distribution is also a great way, but the stocks that I invest in are rather conservative or even stuck under that point of view so I can’t expect a huge increase from raising dividends. By buying more stocks I increase the payments and of course the famous (or shall we say infamous) snowball effect gets underway.

So 2 buys and 1 sell mean that the markets are finally going back to more normal valuations and all? Not at all. The market is still pretty high in my opinion, some sectors have reached levels that were unthinkable pre-crisis, but that doesn’t mean that on difficult earnings some stocks might go back to interesting valuations.

All in all it seems that 2021 is paved with good news “only”. We have a stimulus package being voted in the US (free money), we have the end of the pandemic which will arrive sooner or later thanks to the vaccines, we have a surge in economic activity that surely will hit the countries that “made it” out of covid.

But I STILL think that the markets are too high for what happened during last year, and I am slowly increasing my cash holdings to prepare for a possible (and forgive me for saying this) “much awaited” market crash/correction. I still believe that inflation will be the culprit of possible future falls, but not in 2021, maybe in 2022.

Too many people are on the inflation wagon, so, as it normally happens if a crash/bear market is to happen it might be triggered by something that we are not seeing right now…

2 thoughts on “February 2021

  1. Unfortunately, REE is planning to cut the dividend. Moreover the political environment in Spain is not that inviting…. Having said that REE still make sense, the dividend after cut gonna be higher than the vast majority of its peers

    Liked by 1 person

    1. Ciao Nic,

      You’re totally right, I forgot to mention that they plan to lower the MINIMUM CAP of the dividend from 1 euro to 0.80 euro (if I remember correctly). I guess that it will translate in a dividend cut, but we’ll have ot wait 2023 to see how that plays out. Politically Spain might have issues, but this is a greid/utility company, whatever colour runs the show will have to use energy to do it. Of course price caps to retail energy can be enforced, but that’s part of the investment risk I guess…

      Like

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