Portfolio Update – Up 0.55% in April 2014

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

Ticker

Price (C$)

Price Change

Percentage

Industry

DII-B.TO $39.28

6.19%

8.3%

Consumer Cyclical, Home Furnishing
JPM $61.37

-8.58%

9.0%

Finance, Financial Services – Diversified
CCA.TO $60.00

4.62%

0.0%

Consumer Cyclical, Broadcasting
LB.TO $47.08

-0.30%

8.5%

Finance, Financial Services – Diversified
BRK-B $141.25

2.22%

0.0%

Finance, Insurance – Property and Casualty
POW.TO $30.86 n/a

9.1%

Finance, Insurance – Life and Health
XUS $25.79

-0.04%

19.2%

S&P500 ETF
XBB $30.57

0.20%

19.3%

Bond ETF
Cash

26.5%

Cash
Total

100.0%

Overall my portfolio is up 2.93% since last month. Not including cash contributions my portfolio is up 0.55%.   For comparison my TI Index is up 1.04%, the DOW is up 0.75% and the TSX is up 2.21%.

My investments are up but performed poorly against the TI Index, DOW, and TSX.

Winners this month include up Cogeco (CCA.TO) which is up 4.62% and Dorel (DII-B.TO) up 6.19%.

Losers this month include JPMorgan (JPM) down 8.58%.

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Portfolio Update – Up 2.07% in March 2014

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

Ticker

Price (C$)

Price Change

Percentage

Industry

DII-B.TO $36.99

-0.16%

8.9%

Consumer Cyclical, Home Furnishing
JPM $67.13

6.74%

10.2%

Finance, Insurance – Property and Casualty
CCA.TO $57.35

6.22%

9.0%

Consumer Cyclical, Broadcasting
LB.TO $47.22

2.10%

8.8%

Finance, Financial Services – Diversified
BRK-B $138.18

7.99%

10.2%

Finance, Insurance – Property and Casualty
XUS $25.80 n/a

19.8%

S&P500 ETF
XBB $30.51 n/a

19.8%

Bond ETF
Cash

13.3%

Cash
Total

100.0%

 

Overall my portfolio is up 3.64% since last month. Not including cash contributions my portfolio is up 2.07%.   For comparison my TI Index is down 0.04%, the DOW is up 0.83% and the TSX is up 0.88%.

My investments are up and performed very well against the TI Index, DOW, and TSX.

Winners this month include JPMorgan (JPM) up 6.74%, Cogeco (CCA.TO) which is up 6.22% and Berkshire Hathaway (BRK) up 7.99%.

There were no losers.

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Adding JP Morgan

Screen Shot 2014-01-02 at 9.15.05 AMJP Morgan Chase (JPM.TO) meets my screening criteria.

JPMorgan is a global financial services firm and a banking institution in the United States, with global operations.  The Company is engaged in investment banking, financial services for consumers and small businesses, commercial banking, financial transaction processing, asset management and private equity.

I analyzed the stock using my usual procedures. The results are as follows.

Screen Shot 2014-01-02 at 9.06.51 AM

  • The P/E Ratio is 13.21, which is a little higher than the average historical P/E of 10.25, and the Graham Number is $72.96
  • The Dividend Yield is only 2.61%, which is low, but the coverage is 290% which supports a future dividend raise
  • Forecast Growth Rate is good at 8.93%, compared with 35.33% historically
  • The Gordon Return (Dividend + Growth) is 11.54%, which is quite high

The Margin of Safety at current prices is -9.35%. This is low but I think the price is fair given the growth prospects.  I believe that the stock is fairly priced here.

  • Buy LB.TO @ $58.20

A Bad Day for JP Morgan, A Good Day for Volcker?

Only three days ago I wrote about the hubris of trying to eliminate risk with clever hedging.  Today we got the best possible example: a massively failed hedge from the world’s best bank.

JP Morgan Chase (JPM) announced yesterday that it has trading losses of $2B.  The losses were sustained in its Central Investment Office in London.  Apparently they had taken certain positions as hedges against other positions, and these hedges had cause losses.

Aside from the impact to the stock, which is down 9% today, the other impact could be to regulation.  Jamie Dimon (JP Morgan’s CEO) has been a vocal critic of the Volcker Rule.  The Volcker Rule seeks to prevent banks from speculating with their own money and, thereby, jeopardizing their customers deposits.  Now that JP Morgan has suffered a huge loss in trading (indeed in hedges that are supposed to reduce risk) it will be hard to argue that the Volcker Rule is not effective.

I have no way of knowing if Black Scholes was used in JP Morgan’s hedging methodology, but this proves once again that there is not such thing as a risk-free trade.