Portfolio Update – Up 2.23% in July 2013

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

Ticker Price (C$) Price Change Percentage Industry
POW.TO $ 29.53 4.64% 6.9% Finance, Specialty
FTT.TO $ 22.10 2.08% 6.6% Industrial Services and Supplies
TCK-B.TO $ 24.06 7.08% 6.6% Basic Materials
DII-B.TO $ 37.59 2.43% 6.4% Consumer Cyclical
IFC.TO $ 60.41 1.96% 7.0% Finance, Insurance
LB.TO $ 45.05 2.53% 6.8% Finance, Diversified
XRX $ 9.97 4.49% 0.0% Technology
S&P Fund $ 148.10 2.40% 13.4% US Equities
Bond Fund $ 221.09 0.17% 32.8% Bonds
Cash 13.4% Cash
Total 100.0%

Overall my portfolio is up 2.23% since last month.  There were no cash contributions. For comparison my TI Index is up 3.33%, the DOW is up 3.96% and the TSX is up 2.95%.

Although my investments are up modestly, they performed poorly against the TI Index, DOW and TSX, which are all up markedly.

Winners this month include Xerox (XRX) which is up 4.49% (and which I sold during the month at an even higher price), Power Corp (POW.TO) up 4.64%, and Teck Resources (TCK-B.TO) up 7.08%.

There are no real losers.  Bonds are flat.

Let’s take a look at my value stock portfolio.

Ticker Cost Basis 6/28/2013 Price Now Gain This Month Gain – Total
TCK.B $27.03 $22.47 $24.06 7.08% -10.99%
POW.TO $26.20 $28.22 $29.53 4.64% 12.71%
IFC.TO $58.60 $59.25 $60.41 1.96% 3.09%
LB.TO $44.30 $43.94 $45.05 2.53% 1.69%
FTT.TO $22.89 $21.65 $22.10 2.08% -3.45%
XRX $8.90 $9.07 $9.80 8.05% 10.11%
DII.B $41.01 $36.70 $37.59 2.43% -8.34%
Average 4.11% 0.69%

In summary, my value stocks are up 0.69% since purchase, and up 4.11% this month. This montly gain is greater than the TSX and the DOW, which is pleasing.

My bond holdings are at 32.8%, which is close to my target of 33.5% so no rebalancing is required.  I have 13.4% cash which I can use to add new positions if prices fall.

Screen Shot 2013-07-31 at 8.43.46 PM

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Taking profits on Xerox

Xerox (XRX) has been a great investment – up 10% since I purchased it on 31st May.  As part of my quarterly review I have reassessed Xerox and decided to sell it because it does not meet my criteria.  Specifically, the dividend is now 2.35%, which is below my threshold of 2.5%.  This is a good thing – it indicates that I chose a great stock at a great price and profited from the venture.  Now it’s time to take my profits and invest elsewhere.

  • Sell XRX @ $9.80

I purchased Xerox for $8.90, for a gain of 90c.  The stock also paid a dividend of 5.8c.  This is a total gain of 10.8% in less than two months.  This was a good call.

Portfolio Update – Down 2.80% in June 2013

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

Ticker Price (C$) Price Change Percentage Industry
POW.TO $ 28.22 -3.02% 6.8% Finance, Specialty
FTT.TO $ 21.65 -4.46% 6.6% Industrial Services and Supplies
TCK-B.TO $ 22.47 -18.85% 6.8% Basic Materials
DII-B.TO $ 36.70 -11.03% 7.0% Consumer Cyclical
IFC.TO $ 59.25 -3.42% 7.0% Finance, Insurance
LB.TO $ 43.94 -0.48% 6.8% Finance, Diversified
XRX $ 9.54 4.68% 7.4% Technology
S&P Fund $ 144.63 0.69% 13.4% US Equities
Bond Fund $ 220.71 -2.06% 33.5% Bonds
Cash 4.8% Cash
Total 100.0%

Overall my portfolio is down 2.80% since last month. There were no cash contributions. For comparison my TI Index is down 3.63%, the DOW is down 1.36% and the TSX is down 4.12%.

My investments have performed well against the TI Index, which was dragged down by gold and prices, and the TSX, which was dragged down by commodity price sensitive stocks (e.g., miners). It did not perform as well against the DOW.

Winners this month include Xerox (XRX) which is up 4.68% (partially due to a strengthening US dollar) and my S&P fund (again due to strong US Dollar).

Losers are manifold and include Teck Resources (TCK-B.TO) which is down 18.85%, Dorel (DII-B.TO) down 11.03% on poor bicycle sales, Finning (FTT.TO) down 4.46%, Power Corp (POW.TO) down 3.02%, and Intact Financial (IFC.TO) down 3.42%.  Also, Bonds are down 2.06% on fears that the US will reduce fiscal stimulus (i.e., bond buying).

Let’s take a look at my value stock portfolio.

Ticker Cost Basis 5/31/2013 Price Now Gain This Month Gain – Total
TCK.B $27.03 $27.69 $22.47 -18.85% -16.87%
POW.TO $26.20 $29.10 $28.22 -3.02% 7.71%
IFC.TO $58.60 $61.35 $59.25 -3.42% 1.11%
LB.TO $44.30 $44.15 $43.94 -0.48% -0.81%
FTT.TO $22.89 $22.66 $21.65 -4.46% -5.42%
XRX $8.90 $8.79 $9.07 3.19% 1.91%
DII.B $41.01 $41.25 $36.70 -11.03% -10.51%
Average -5.44% -3.27%

In summary, my value stocks have lost 3.27% since purchase, and lost 5.44% this month.  This monthly loss is greater than the 4.12% that the TSX lost, which is worrying.  However, I am a patient investor and this is a good time to add to my positions (using some of my remaining cash).

My bond holdings are at 33.5%, which is right on my target of 33.5%. I have 4.8% cash which I can use to add another new position if prices fall.

Screen Shot 2013-06-29 at 11.39.06 AM

Portfolio Update – Up 1.00% in May 2013

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

Ticker Price (C$) Price Change Percentage Industry
POW.TO $ 29.10 7.26% 6.8% Finance, Specialty
FTT.TO $ 22.66 n/a 6.7% Industrial Services and Supplies
TCK-B.TO $ 27.69 3.32% 6.5% Basic Materials
DII-B.TO $ 41.25 n/a 6.4% Consumer Cyclical
IFC.TO $ 61.35 n/a 7.1% Finance, Insurance
LB.TO $ 44.15 n/a 6.6% Finance, Diversified
XRX $ 9.11 n/a 6.9% Technology
S&P Fund $ 143.64 5.14% 12.9% US Equities
Bond Fund $ 225.35 -1.48% 33.3% Bonds
Cash 6.9% Cash
Total 100.0%

Overall my portfolio is up 1.00% since last month.  There were no cash contributions.  For comparison my TI Index is up 0.48%, the DOW is up 1.86% and the TSX is up 1.56%.

My investments have performed well against the TI Index, which was dragged down by gold and bond prices, but not so well against the pure equities indexes: the TSX and Dow. This is to be expected: it was a good month for equities but not for bonds.

The two value stocks that I bought last month did very well: Teck Resources (TCK-B.TO) is up 7.26% and Power Corp (POW.TO) is up 3.32%.  My S&P Fund is up 5.14%.  My bonds are down 1.48%.

The table above does not show the performance of stocks that were bought during the month (it only shows month-on-month performance).  I bought quite a few stocks this month so I am including an additional table to analyze their performance, as follows.

Ticker Cost basis Price today Gain (Loss)
TCK.B $27.03 $27.69 2.44%
POW.TO $26.20 $29.10 11.07%
IFC.TO $58.60 $61.35 4.69%
LB.TO $44.30 $44.15 -0.34%
FTT.TO $22.89 $22.66 -1.00%
XRX $8.90 $8.79 -1.24%
DII.B $41.01 $41.25 0.59%
Average 2.32%

In summary, my value stocks have gained 2.32% since buying them.  Performance would have been much better were it not for a sudden downturn in the two hours of trading today, during which the TSX fell 0.5% and the Dow fell 1%.  I bought Xerox (XRX) and Laurential Bank (LB.TO) today, and both are down materially!

My bond holdings are at 33.3%, which is very close to my target of 33.5%.  I have 6.9% cash which I can use to add another new position if prices fall.

Screen Shot 2013-06-01 at 11.40.21 AM

Adding Xerox as a Core Position

ImageXerox is another stock that meets my screening criteria.  The stock pulled back 1% today, creating a nice entry-point.

Xerox is a household name and one of the most reconizable brands in the world.  It belongs to an exclusive group of brands whose names have become verbs (“hey, can you Xerox this document for me?”).  But therein lies the problem: can a brand that is synonymous with photocopying, which is an outdated technology, remain relevent and grow its earnings?  Xerox is trying.

Xerox is slowing transforming itself from a photocopier and ink company to a service company.  It remains to be seen if this transformation will be successful, making this a slighhtly speculative investment.  However, the fundamentals and growth estimates are strong, so I have bough the stock.

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

  • The P/E Ratio is 8.24, which is much lower than the average historical P/E of 13.58, and the Graham Number is $15.35
  • The Dividend Yield is 2.58%, and the coverage is 470%.  I’d prefer a bigger yield, but Xerox does tend to increase its dividend over time.
  • Forecast Growth Rate is marginal at 7.51%, which is likely why the P/E Ratio is lower than the average.  A successful transformation will increase growth considerably, and boost the price.
  • The Gordon Return (Dividend + Growth) is 10.1%
  • The Margin of Safety at current prices is 34%.  This is very high, and this gives me confidence to take the risk of buying the stock.

I believe that the stock is fairly priced here.

  • Buy XRX @ $8.90