A General Overview
So December arrived, bringing Leonardo’s birthday, several festivities (both Italian and Russian) and the much dreaded end of school.
This year Leo seems more into Christmas, well I guess growing up means that he realizes more and more what Christmas actually is (for a baby perspective of course, meaning “presents”).
The renovations were delayed massively in December, and we actually finished the “first leg” only close to the holiday season, it was quite stressful to stay at home with part of the house under reconstruction. In reality the work is not done, we have a second leg planned in January, but this time I HOPE I managed to organize the several professionals in a better way. Time will tell.
It was a very tiring December for us, having Leonardo full time at home proved to be quite hard, not because of anything special, it’s just that he’s always asking for the presence of someone whatever he does or wants to do. Add the tantrums, the cries, the “everything” that a 3 y.o. puts on the table and you have the perfect recipe for disaster.
Fortunately we managed to go to the hospital ONLY once (on the 25th, Christmas day), considering that literally every month we had to visit the ER for various reasons, “only once” is perfectly on average…
Either than that, I have started working late at night to write my coming lectures, I can’t find any time during the day, and I am very much behind schedule. It has been a long time since I had to write a new course and I realize now how rusty I am. Let’s hope also that thing goes well.
Last but not least, COVID is back in Italy too, and we now realize that nothing was done by the government to try to address a potential new wave. Long story short, contagion started rising again, more lock-downs are needed, restrictions and so on and so forth. It’s all quite boring, if you ask me, I’ve stopped watching TV and news because the debates are mono-thematic and very boring, but despite the fact that COVID exists and vaccines help, I believe that the “infodemic” that we are going through is much more serious and damaging than the virus itself…
Explanation of terminology and graphs is HERE.
Let’s see the numbers:
|31 Dec 2014||0.00%||0.00%||0.00%||0.00%|
|31 Dec 2015||-3.33%||1.22%||-0.13%||-1.00%|
|31 Dec 2016||7.06%||1.14%||1.16%||-4.35%|
|31 Dec 2017||9.94%||1.04%||2.64%||-5.94%|
|31 Dec 2018||3.28%||1.24%||2.70%||-3.53%|
|31 Dec 2019||23.50%||1.35%||2.72%||-1.40%|
|31 Dec 2020||15.76%||1.28%||2.70%||-7.60%|
TR is increasing (vs. previous month) – 2021 closed with a record month (yet still), hence TR rises to update new records for the portfolio!
YTER is stable (vs. previous month) – No increase is good, so let’s keep it green!
Net Yearly YoC is increasing (vs. previous month) – 4 BPS growth is great, could have been better, but hey, let’s not complain too much….
Forex is getting better (vs. previous month) – Very little movement here, but in the right direction, sometimes I wonder if the PF will ever see this metric going positive again…
Dividends and Options
Income this month was 2518 Euro
Dividends accounted for 2176 Euro (+63% vs 2020) and Options ended up with a 342 Euro score (-75% vs 2020).
The best December ever for the Long Haul PF, nothing much to say about it. It might be hard to replicate in the future but hey, I’ll worry next year!
Could have been a better result, but I’ve tried something that I might do in the future and that costed some gain on the option side (more on that in the economic conclusions underneath)
Bought 100 CWCO @ 10.7 USD
Price was within my “re-entry” parameters, company didn’t have any major signs of troubles since I last checked, yes not a super rosy situation but I felt it was ok to increase my position here.
New Positions – Sold Position
Bought 100 FRA:BAYN @ 44.3 EUR
Bayer is probably one of the few DGI stocks that it’s undervalued. Mind you, it’s not down for market inefficiencies, but for serious legal issues in the US. Still I see a lot more value in this company and finally, after a series of potions sold, I’ve decided to buy my first position.
Bought 500 BIT:ENEL @ 6.5 EUR
Major electricity provider in Italy and in many other countries, was missing from my “utilities” collection. Bought it on spot of weakness that brought it into “buy” territory.
Bought 100 AMCR @ 10 USD
If you follow AMCR (advanced packaging company) you know that in December it never touched 10 USD as a quotation. Well, this was possible thanks to some option dealing for me, more specifically by buying a call at 10 and calling it right away. More on this later.
Sold 200 EPA:MMB @ 24.20 Euro
Lagardere is subject to a takeover proposal from Vivendi. They offered 24 Euro for it, it’s likely to happen and anyhow no dividend will be paid. Shame to see it go, but there is no reason to hold it anymore for me.
Sold 100 AMS:AD @ 24.00 Euro
AD was a stock that I’ve bought to do a buy/write last year, so in December when the call option expired I did not try to roll it. Just closed the trade.
Sold 250 BIT:SRI @ 2.1 Euro
SRI was a bit of a disaster, unfortunately. With Covid and the fact that it’s an Italian smallcap lot of bad things happened among which the cancellation of the dividend. I see no real prospect for this company and needed some minuses to compensate this year’s capital gains, so out it went.
The Financial Conclusions
December was a great month for stocks, after the usual fake crash at the beginning of the month, quotations kept going up higher and higher. To me, if you follow this blog, this is total madness.
All information that we have point towards a cooling down of the economic activity, mostly driven by increasing rates and inflation going up, but the market doesn’t seem to care. Irrational exuberance, they call it…
Anyhow, my December was great, record set on dividends and few trades on stocks that I was eyeing since quite a bit. I’ve managed to raise some cash, clear out some minuses that I’ve made last year and sell some stocks in which I had no confidence anymore.
On the “financial engineering” side, I’ve made a test trade on AMCR, buying a call DITM (deep in the money) and exercising immediately the right to buy the stocks. This created a minus today (I have to “pay” for the call), but got me a stock at a price around 20% cheaper than it is today.
The rationale behind this trade is that in the future I can use the gains made with options to evaluate possible entries in stocks that I am interested in at lower prices that maybe are good entry points in my opinion. I will have higher yields from dividends, I will clear out capital gains in the year (so I don’t have to pay taxes on those gains), and I can add companies that I really like, but that are not “there” quite yet with the evaluations.
Clearly if everything crashes it would have been better to wait, but this is valid of almost every action you take in the markets, so it’s not something I am thinking too much about.
I still believe that we are in for a serious drop in the markets, and because of that I am cooling the activity a little, but that doesn’t mean standing still and doing nothing, that would be wrong.
So this is it, see you all later with the “year end review”!