Getting out of Canadian Oil Sands, Adding Global Funds

As part of my ongoing portfolio rationalization I need to sell Canadian Oil Sands (COS.TO) and iShares Core S&P 500 ETF (IVV).  I also need to move my gold holdings to another account – I will sell it here and buy it again later (gold is falling).

This is the account that I plan to use for global equities, and I have selected two ETF: iShares MSCI Emerging Markets Index Fund (XEM.TO) and iShares MSCI EAFE Index Fund (CAD-Hedged) (XIN.TO).

XEM is a three-star rated ETF with high liquidity that  holds emerging markets equities.  The ETF holds over 800 stocks – the top five are Samsung, Taiwan Semiconductor, China Mobile, China Construction Bank, and Gazprom.

XIN is a three-star rated ETF with high liquidity that  holds equities from Europe, Australasia and the Far East.  The ETF holds over 900 stocks – the top five are Nestle, HSBC, Novartis, Roche and BP.

  • Sell COS.TO @ $20.52
  • Sell IVV @ $150.94
  • Sell PHY-U.TO @ $13.26
  • Buy XEM.TO @ $24.74
  • Buy XIN.TO @ $18.73


The trades described above are part of a broad portfolio rationalization that includes many trades.  I have performed a single postmortem to cover all of these trades.  The postmortem is here.

Portfolio Update – Up 1.86% in January 2013

My portfolio balances at close of trading on 31st January were:

Ticker Price (C$) Price Change Percentage Industry
T.TO $ 67.39 3.52% 4.9% Telecommunications
COS.TO $ 20.99 4.07% 5.6% Energy
PHY-U.TO $ 14.24 1.39% 5.3% Gold
POW.TO $ 26.23 3.35% 4.9% Financials
BMO.TO $ 62.99 3.50% 0.0% Financials
AAPL $ 454.44 -13.40% 5.9% Information Technology
INTC $ 20.99 3.24% 3.6% Information Technology
IVV $ 150.11 6.35% 9.0% US Equity Fund
XIU.TO $ 18.31 2.18% 6.2% Canadian Equity Fund
S&P Fund $ 126.65 5.49% 10.3% US Equity Fund
EAFE Fund $ 98.23 5.58% 11.1% Global Equity Fund
Bond Fund $ 223.00 -0.75% 24.4% Bond Fund
Cash 8.6% Cash
Total 100.0%

Overall my portfolio is up 1.86% since last month.  For comparison my TI Index is up 2.09%, the DOW is up 5.77% and the TSX is up 2.02%.

My investments have performed slightly less well than these indices.  Winners this month include Telus (T.TO) up 3.52%, Canadian Oil Sands (COS.TO) up 4.07%, Power Corp (POW.TO) up 3.35%, Bank of Montreal (BMO.TO) up 3.50%, Intel (INTC) up 3.24%, and my index funds which are up 3-6%.  Losers include Apple (AAPL) down 13.40% and Bonds which are down 0.75%.

My bond holdings are at 24.4%, which is a little lower than my target of 25%. I will rebalance.

Portfolio Update – Down 0.28% in November 2012

My portfolio balances at close of trading on 30th November were:

Ticker Price (C$) Price Change Percentage Industry
T.TO $ 64.84 0.00% 4.8% Telecommunications
COS.TO $ 20.16 -4.91% 5.5% Energy
PHY-U.TO $ 14.50 -1.73% 5.5% Gold
POW.TO $ 25.00 3.18% 4.8% Financials
BMO.TO $ 59.67 1.10% 6.3% Financials
AAPL $ 581.10 -2.40% 7.7% Information Technology
INTC $ 19.43 -10.18% 3.4% Information Technology
IVV $ 141.55 0.04% 8.7% US Equity Fund
XIU.TO $ 17.58 -1.68% 6.1% Canadian Equity Fund
S&P Fund $ 118.72 -0.06% 9.9% US Equity Fund
EAFE Fund $ 89.96 1.76% 10.3% Global Equity Fund
Bond Fund $ 225.03 0.61% 25.1% Bond Fund
Cash 1.8% Cash
Total 100.0%

Overall my portfolio is up 1.23% since last month.  Without cash contributions the portfolio would have been down 0.28%. For comparison my TI Index is down 0.37%, the DOW is down 0.54% and the TSX is down 1.48%.

My investments have done well compared with most indices. Winners this month include Power Corp (POW.TO) up 3.18% and my EAFE fund up 1.76%. Losers include Canadian Oil Sands (COS.TO) down a whopping 4.91% and Intel (INTC) down 10.18%.

My bond holdings are at 25.1%, which is acceptably close to my target of 25%. No rebalancing is required this month.

What we have here is a failure to communicate

I wrote recently about my failure to stick to my own Investment Process by failing to take profits on Canadian Oil Sands (COS.TO) when the price rose.  Well, I had an opportunity to redress this failure when the price rose again yesterday. I had most recently bought COS at $18.25.  I was able to sell yesterday at $20.27 (an 11% increase).

  • SELL COS @ $20.27

There was another problem though.  I instructed my Financial Adviser to sell around 30% of my holdings (my strategy is to trade around a core position, the core being the 70% that I did not plan to sell).  My Financial Adviser sold the entire position (oops!).  I take some responsibility for the communication breakdown because I did not emphasize the fact that I wanted to sell only a portion of my holdings.  However, I did communicate the number of shares to be sold in an e-mail and again in a follow-up conversation.  Mistakes happen, but not the same mistake twice.  We will not repeat this.

So, should I undo the error right away and jump back into COS?  Maybe not.  Before I assume that I need to rebuild my core position I need to do a little fundamental analysis to ensure this is the best energy stock for me.  Perhaps this error provides an opportunity.  Plus, I was always a little leery of the former income trusts, like COS and Enerplus (ERF.TO).  Maybe I should look at Husky (HSE.TO) or Suncor (SU.TO).


Over the weekend I took a look at all the major Canadian oil companies and Canadian Oil Sands is still the best value in terms of IRR and dividend yield.  I felt that the stock was likely to take a dip after last week’s run up so I asked my Financial Adviser to place a buy order at $19.70.  The price did indeed fall on Monday and I was able to buy back my core position for $0.57 less than I sold it for.  A profit (or, more accurately, an avoided loss) of almost 3%!

  • BUY COS.TO @ $19.70

For added luck, the stock rose again after my trade was executed, closing at $20.57, for a further profit of over 4%.  If we had never sold the core position we would have made only 1.5% today.

Sticking to the Investment Process

When I established my Investment Process back in May 2012 I decided to trade around my core positions.  I recently added to my Canadian Oil Sands position but when it quickly rose over 12% I failed to sell some of my position.  The stock has since fallen.

Why did I not sell?  Well, because the 12% rise was so fast that it seemed silly to sell so quickly.  Let me rephrase that: I made a profit so quickly that I failed to lock it in.  This is foolish and is an example of letting my emotions get in the way of my strategy.  This is a mistake that I shall not repeat.

I am recording this as a bad call even though it was not a trade.  Sometimes failure to trade can be just as bad as a bad trade.