Portfolio Update – Down 0.82% in January 2015

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

Ticker

Price (C$)

Price Change

Percentage

AGU.TO $ 135.57

23.25%

4.8%

BBD.B $ 2.90

-30.12%

2.6%

BCE.TO $ 58.36

9.53%

4.1%

BMO.TO $ 72.93

-11.26%

3.6%

CM.TO $ 88.18

-11.68%

3.1%

CSU.TO $ 352.09

1.93%

3.6%

CVE.TO $ 24.07

0.42%

3.0%

ENB.TO $ 61.55

3.03%

4.1%

FTS $ 41.91

7.57%

4.6%

HSE $ 27.35

-0.55%

2.7%

MFC.TO $ 20.38

-8.12%

3.7%

NA $ 44.21

-10.58%

3.4%

POT.TO $ 46.26

12.64%

4.1%

POW $ 30.64

-3.53%

3.7%

RCI.B $ 45.18

0.02%

3.5%

RY.TO $ 71.74

-10.59%

3.5%

SJR.B $ 29.34

-6.41%

3.8%

SLF.TO $ 38.86

-7.30%

3.8%

SU.TO $ 37.90

2.71%

3.2%

T.TO $ 43.59

4.06%

3.9%

TCK.B $ 16.45

3.59%

2.4%

SCTY $ 61.69

-0.74%

2.2%

TRP.TO $ 56.54

-0.98%

4.0%

XBB $ 32.84

4.39%

8.1%

XSP $ 22.98

-3.20%

7.1%

Cash

3.2%

Total

100.0%

Overall my portfolio is down 0.82% since last month. There were no cash contributions. For comparison my TI Index is up 0.62%, the DOW is down 3.69% and the TSX is up 0.28%. My investments are down and performed poorly against the TSX.

Winners this month include Agrium (AGU.TO) up 23.25%, BCE (BCE.TO) up 9.53%, Fortis (FTS.TO) up 7.57%, Potash (POT.TO) up 12.64%.

Losers include Bombardier (BBD-B.TO) down 30.12%, CIBC (CM.TO) down 11.68%, Bank of Montreal (BMO.TO) down 11.26%, National Bank (NA.TO) down 10.58%, Royal Bank (RY.TO) down 10.59%, Shaw (SJR-B.TO) down 6.41% and Sun Life (SLF.TO) down 7.30%.

It was a very volatile month with many stocks experiencing big gains and many experiencing big losses.  The banks are all down 10% or more.

Screen Shot 2015-02-01 at 7.40.21 PM

Advertisements

Portfolio Update – Up 2.98% in July 2014

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

Ticker

Price (C$)

Price Change

Percentage

AGU.TO $ 99.40

1.69%

3.9%

BBD.B $ 3.73

-1.06%

3.8%

BCE.TO $ 49.38

2.02%

3.9%

BMO.TO $ 81.27

3.42%

4.5%

BNS.TO $ 74.01

4.03%

0.0%

CM.TO $ 101.21

4.23%

4.0%

CSU.TO $ 259.00

-4.77%

3.8%

ENB.TO $ 53.45

5.57%

4.0%

FTS $ 33.55

3.33%

4.1%

HSE $ 33.17

-3.74%

3.7%

L.TO $ 53.63

12.62%

4.7%

MFC.TO $ 22.28

5.04%

4.5%

NA $ 48.80

7.82%

4.2%

POT.TO $ 38.71

-4.61%

3.8%

POW $ 32.08

8.20%

4.3%

RCI.B $ 42.58

-0.84%

3.7%

RY.TO $ 80.47

5.49%

4.5%

SJR.B $ 26.72

-2.34%

3.9%

SLF.TO $ 41.57

5.99%

4.6%

SU.TO $ 44.77

-1.60%

4.3%

T.TO $ 38.06

-4.30%

3.8%

TCK.B $ 26.13

7.27%

4.2%

TD.TO $ 57.02

3.80%

0.0%

TRP.TO $ 54.70

7.40%

4.3%

XBB $ 30.96

0.23%

8.6%

Cash

0.8%

Total

100.0%

Overall my portfolio is up 2.98% since last month. There were no cash contributions. For comparison my TI Index is up 0.13%, the DOW is down 1.56% and the TSX is up 1.22%.

My investments are up and performed very well against all indexes.

Winners this month include Bank of Montreal (BMO.TO) up 3.42%, CIBC (CM.TO) up 4.23%, Enbridge (ENB.TO) up 5.57%, Fortis (FTS.TO) up 3.33%, Loblaws (L.TO) up 12.62%, Manulife (MFC.TO) up 5.04%, National Bank (NA.TO) 7.82%, Power Corp (POW.TO) 8.20%, Royal Bank (RY.TO) up 5.49%, Sun Life (SLF.TO) up 5.99, and TransCanada (TRP.TO) up 7.40%.

Losers this month include Constellation Software (CSU.TO) down 4.77%, Husky (HSE.TO) down 3.74%, Potash (POT.TO) down 4.61%, and Telus (T.TO) down 4.30%.

Screen Shot 2014-08-10 at 1.04.30 AM

Beating the TSX in 2013

Back in March 2012 I performed an analysis of the Beating the TSX portfolio. I thought it might be time to take another look.  Here is the methodology:

  • Begin with the TSX60 stocks.
  • Remove any stocks with a dividend of less than 3%. This minimizes the number of stocks I need to analyze.
  • Remove any stocks that might have an unsustainable dividend. For this I remove any stock with a payout ratio above 1.2 (equivalent to a coverage of less than 83%). I also remove any former trusts.
  • Finally, select the ten stocks with the highest dividends.

The analysis looks like this:

Screen Shot 2013-02-07 at 7.52.59 PM

The resulting list is as follows.

  1. BCE Inc.
  2. Bank of Montreal
  3. Canadian Imperial Bank Of Commerce
  4. Power Corporation of Canada
  5. National Bank of Canada
  6. Shaw Communications Inc.
  7. Bank of Nova Scotia (The)
  8. Husky Energy Inc.
  9. Royal Bank of Canada
  10. TELUS Corporation

Interestingly, four of the companies on the earlier list have fallen off as they no longer have a sustainable payout ratio.  These decliners are:

  • Manulife Financial Corporation
  • Sun Life Financial Inc.
  • TransAlta Corporation
  • Thomson Reuters Corporation

Portfolio Update – Up 0.75% in March 2012

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

Ticker Price (C$) Price Change Percentage Industry
BCE.TO $ 39.94 -1.48% 0.0% Telecommunications
T.TO $ 57.88 0.52% 5.8% Telecommunications
COS.TO $ 21.04 -10.96% 4.6% Energy
ERF.TO $ 22.34 -6.68% 4.0% Energy
PHY-U.TO $ 14.44 -1.01% 5.7% Gold
RY.TO $ 57.81 3.83% 0.0% Financials
POW.TO $ 26.44 5.76% 4.5% Financials
SJR-B.TO $ 21.11 3.94% 3.9% Consumer Discretionary
SLF.TO $ 23.67 8.83% 0.0% Financials
TA.TO $ 18.70 -10.48% 3.4% Utilities
TRP.TO $ 42.83 -1.70% 4.4% Energy
AAPL $ 598.77 11.61% 4.9% Information Technology
S&P Fund $ 117.12 4.79% 14.4% US Equity Fund
Bond Fund $ 216.60 -0.33% 27.9% Bond Fund
Cash     16.5% Cash
Total     100.0%  

Overall my portfolio is up 2.80% since last month, including cash contributions. Without these cash contributions the portfolio would be up 0.75%.

For comparison my TI Index is down 0.18%, the DOW is up 2.01% and the TSX is down 1.99%.

My investments have done quite well compared with the TI Index and the TSX, but not as well as the DOW. Winners this month include Apple (AAPL) and Sun Life (SLF.TO). Losers were TransAlta (TA.TO) Canadian Oil Sands (COS.TO) and Enerplus (ERF.TO).

My bond holdings are at 27.9%. I will rebalance to 30%.

Raising Cash – Sell in May and Go Away

In the past two years the market has performed well in the first three months of the year, and poorly in the summer. This is referred to as sell in May and go away. I discussed this in May 2011, but did not act upon it. In the first 3 months of 2012 we have seen the TSX rise by 3.8% and the DOW by 7.6%. These are heathy gains.

In both 2010 and 2011 the market turned down in mid to late April. I want to reduce my exposure now by selling stocks and raising cash. So, which stocks should I sell?

I began my assessment with two basic principles (based upon my investment policy):

  • Fundamentals: I assessed earnings and earning growth (based upon analyst estimates for 2012-2014), dividend yield and coverage, PE Ratio, PEG Ratio and the Gordon Return.
  • Diversification: I don’t want to hold too many stocks in one sector, e.g. Finance (Banking and Insurance), Energy (Oil and Pipeline), Telco, etc.

Image

Assessment of Energy Stocks:

  • Enerplus looks good. Dividend yield is strong at 9.6% (with coverage of 141%). HOLD
  • Canadian Oil Sands looks OK, but earnings growth is quite low (less than 6%) and the dividend is smaller than Enerplus’ dividend. HOLD
  • TransCanada has marginal earnings growth of around 7%, a high PE Ratio of 18.2, and a high PEG Ratio of 2.6. It looks overpriced. SELL

Assessment of Financial Stocks:

  • PowerCorp has great growth of around 12%, a decent dividend of 4.4% and a PEG under 0.9. It looks good. HOLD
  • Sun Life has low earnings growth of 5%, and a PEG of 1.8. Power is better in every measure. SELL
  • Royal Bank has a low dividend (under 4%, but with excellent coverage over 200% – needs to pay out more), marginal growth around 7%, and a high PEG of 1.6. SELL

Assessment of Telcos:

  • Telus has decent growth of over 9% and the other fundamentals are good (PEG is a bit high). HOLD
  • BCE has low growth of under 4% and a PEG of 3.3, which is highest in the portfolio. SELL

Other Stocks:

  • Shaw is another low growth (5%) and high PEG (2.38) stock, like BCE. It will lose revenue as people switch from cable TV to internet TV (e.g., Netflix, AppleTV, other internet TV services) but should compensate with its cable-based high-speed internet services and telephone. HOLD
  • TransAlta is the only stock with a dividend coverage of under 100% (it’s 95%) but it has decent earnings growth of 9%. Price is down recently, making it good value at this point. HOLD
  • Apple is scary due to high price increase, but fundamentals are good: 14% growth, PEG under 1, and a dividend announced. HOLD but watch for price to fall back into long-term channel.

Other assets:

  • Gold is around 5.7% of the portfolio. This is fine. HOLD

After discussion with my financial advisor I decided to sell TransCanada Pipeline, Royal Bank, Sun Life and BCE.

  • Sell SLF.TO @ $23.78
  • Sell RY.TO @ $58.13
  • Sell BCE.TO @ $40.00
  • Sell TRP.TO @ $43.00

Note: Three of these four sell orders were processed on 29th March. The TRP order did not process until 2nd April (it was a limit order). So, TRP appears in the March month-end holdings.

I also decided to increase my holdings of TransAlta. The business is very stable and the dividend yield is over 6%, making this a better place to park my cash than in cash. This purchase also happened after the month end.

  • Buy TA.TO @ $18.45

The net result of these trades is that my asset allocation will be:

  • 25% cash
  • 30% bonds
  • 6% gold
  • 39% stocks

POSTMORTEM

Writing one month later, on 27th April 2012, this trade has seen mixed results. Since selling on 29th March the TSX (^GSPTSE) has gone down 1.5%, so my call was good.

But the stocks I sold are up 0.2% on average, so my call was bad?  Let’s wait to see how things go over the summer before we make a final judgement.

Ticker Sell price Current price Change
TRP.TO $43 $43.19 0.44%
SLF.TO $23.78 $24.36 2.44%
BCE.TO $40 $39.93 -0.18%
RY.TO $58.13 $57.03 -1.89%
Average 0.20%

I also bought more TransAlta (TA.TO) stock, which is down 12% during the month. This was a bad call!  Very candidly, I did not want to buy more TransAlta but was persuaded to do so by my financial adviser.  I need to listen to my intuition more, and push back.

UPDATE

Writing today, 28th May, the decision to raise cash is looking better and better.  North American markets continue lower on European Debt worries.  The stocks I sold are now down an average of 6.34%, led by financials.

Ticker Sell price Current price Change
TRP.TO $43 42.01 -2.30%
SLF.TO $23.78 21.15 -11.06%
BCE.TO $40 40.5 1.25%
RY.TO $58.13 50.43 -13.25%
Average -6.34%

UPDATE

Writing today, 10th July, this decision is still looking good.  The stocks are still down an average of 2.22% and I think there could be more trouble ahead (August was horrible last year).

Ticker Sell price Current price Change
TRP.TO $43 43.34 0.79%
SLF.TO $23.78 22.14 -6.90%
BCE.TO $40 42.64 6.60%
RY.TO $58.13 52.69 -9.36%
-2.22%

Beating the TSX in 2012: Sun Life Out and Rogers In?

Back in August 2011 I adopted a modified Beating the TSX method for selecting my stocks. Out of curiosity I decided to take a look at which stocks might make up the BTSX portfolio if I was just starting today. Here is the analysis.

  • Begin with the TSX60 stocks.
  • Remove any stocks with a dividend of less than 3%. This minimizes the number of stocks I need to analyze.
  • Remove any stocks that might have an unsustainable dividend. For this I remove any stock with a payout ratio above 1.2 (equivalent to a coverage of less than 83%). I also remove any former trusts.
  • Finally, select the ten stocks with the highest dividends.

The analysis looks like this:

Screen Shot 2013-02-13 at 10.20.08 AM
So, according to my analysis the stocks would be:
  • BCE Inc.
  • Bank of Montreal
  • Canadian Imperial Bank Of Commerce
  • Husky Energy Inc.
  • Power Corporation of Canada
  • Rogers Communications Inc.
  • Shaw Communications Inc.
  • TELUS Corporation
  • TransAlta Corporation
  • TransCanada Corporation

There is only one change since 2011: Sun Life is out and Rogers is in. Sun Life had no earnings in 2011 after surprise losses in European investments, so its dividend coverage is now unacceptable. It pays a great dividend of 6.22% but could be a value trap. Analysts estimates are strong for 2012 onward, suggesting that losses are now behind us. Additionally, I already own Telus and BCE, so adding Rogers might make my portfolio too Telco-heavy. I will hold Sun Life.

Portfolio Update – Up 0.97% in February 2012

My portfolio balances at close of trading on 29th February were:

Ticker Price (C$) Price Change Percentage Industry
BCE.TO $ 40.54 -0.83% 5.9% Telecommunications
T.TO $ 57.58 1.88% 6.0% Telecommunications
COS.TO $ 23.63 -4.95% 5.3% Energy
ERF.TO $ 23.94 0.17% 4.4% Energy
PHY-U.TO $ 14.59 -3.85% 5.9% Gold
BMO.TO $ 58.08 -0.36% 0.0% Financials
RY.TO $ 55.68 n/a 5.8% Financials
POW.TO $ 25.00 2.54% 4.4% Financials
SJR-B.TO $ 20.31 2.06% 3.9% Consumer Discretionary
SLF.TO $ 21.75 8.26% 3.8% Financials
TA.TO $ 20.89 2.60% 3.9% Utilities
TRP.TO $ 43.57 5.62% 4.6% Energy
AAPL $ 536.49 n/a 4.5% Information Technology
S&P Fund $ 111.76 2.45% 12.8% US Equity Fund
Bond Fund $ 217.32 -0.40% 28.2% Bond Fund
Cash     0.8% Cash
Total     100.0%  

Overall my portfolio is up 6.80% since last month, including a further year-end cash contribution. Without this cash contribution the portfolio would be up 0.97%.

For comparison my TI Index is up 1.25%, the DOW is up 2.53% and the TSX is up 1.54%.

My investments have not done quite as well as the benchmark TI Index, the Dow or the TSX. Winners this month include Sun Life (SLF.TO) and TransCanada (TRP.TO), whose stock continues to be buffeted by US political winds relating to Keystone XL.

The additional cash contribution, which was used to buy stocks, has diluted my bond holdings down to 28.2%. This is a little below my target of 30%, but I am not going to rebalance because I feel that equities will perform better next month. I’ll revisit this balance next month.