2014 Goals. How did I do?

Almost one year ago I laid out my goals for 2014. With only a few weeks left I look to see how I did...

Total Portfolio: $30,000 ACHIEVED.
This portfolio has been going on for quite a few years in several iterations. To hit the $30,000 mark I would have to more than double the account in just 1 year.
To do that I would have to tighten up the budget. I have always been pretty good but it was time to kick this into overdrive. While I did splurge here and there, especially recently with a new high end computer, I kept true to my goal.

The Investing and Lending Club portions only add up to $29,600 as of the day I am writing this. What is less recorded on the spreadsheet is the $1,500 I threw at the Real Estate Portfolio's mortgage and I have one more deposit for the year coming in. Regardless if the market continues to go down and drops me below my goal level, I am considering this one achieved.

Total Dividends received: $1,000 ACHIEVED.
I find it fitting that while much of the investing community is calling IBM dead and looking at their revenues dropping as reason to be short, that it was IBM's dividend that pumped me over my limit this week.

Average Monthly Dividends: $100 ACHIEVED
This one looked to have been in danger of not be completed for the year. I hit it earlier on in the year but then started taking profit in positions. I'm at 40% cash and have a $105 average expected monthly income amount.

Revisit Lending Club: ACHIEVED
This one was a rather easy goal and I knocked it out early. Not only that but it has become a cornerstone of this portfolio's strategy. With its higher yield vs bonds and equities, I am able to keep a high level of income and free up capital for capital gains positions.

Continuing Education: ACHIEVED
I started, and ahem slacked off on, reading the Warren Buffett letters
Read Capital in the 21st Century by Thomas Piketty
Read a book on Bonds.
Started reading Barron's Economics, and Finance. These are textbook like and I have to warn anyone.. very dry.
Education can be measured in more then just reading. Lending Club gave me new insights into how debt works and with Capital the 21 Century, how wealth transfers from 1 group to another.

All in all 2014 was a great year for me. I'm already thinking about the goals I want to set for myself in 2015.

How about you? Have you achieved what you set out to do in 2014?


Disclaimer: The investments and trades discussed are not recommendations for others. I am not a financial planner, financial adviser, accountant, or tax adviser. The financial actions I talk about are for my own portfolio and money and only suited for my own risk tolerance, strategy, and ideas. Copying another person's financial moves can lead to large losses. Each person needs to do their due diligence in researching and planning their own actions in the financial markets.

Why I am holding off on BHP Billiton (BBL)

One of the nice things about the retail investing community is you can get ideas for companies to research from each other. We often will get a "Dividend Flavor of the Month" type scenario where a good company is found and their valuations are excellent. Someone writes about it and it spreads like wildfire. I know I've found great ideas from others and I've passed a few on myself with PETM, ROST, and RKT.

Recently I've seen people jump on board with BHP Billiton (BBL) and at first glance I can see why. Its come up on numerous screens of mine for several months this year. I've commented on BBL in many comment streams in articles but have yet to write about it myself. I aim to change that today especially with it hitting my low $40s price I have told other bloggers about. As a way of disclaimer I admit that I have not done my normal intensive research on BBL as I usually do. That will come later when I am near a time to buy.

BHP Billiton is a raw natural resource company. Oil, Aluminum, Diamonds, Iron, Manganese, Coal. They are getting into the Potash business too with a large mine in Canada being worked on. At a 5.18 EPS they now have a 8.37 P/E vs their historic 10 year average of 12. A 5.6% yield is great for a corporation and a 20% dividend growth rate is also impressive. My problem though is with their future.

Over at Sharpe Trade I talked about my thoughts on why the price of oil is dropping. The price of iron ore isn't doing very well either. Together they have cause a forward EPS estimate of 2.8... almost half of what it is now. While they have had a 20% dividend growth rate their EPS growth rate has been rather terrible at 2.5% a year. BBL started with a dividend payout ratio of 20% and grew the dividend faster then they grew the actual company. Now at a 47% payout ratio they don't have much more room to grow and if next years EPS estimates are close... we are looking at a potential 80% payout ratio. I wouldn't be surprised if there would be a dividend cut at the end of 2015 or early 2016.

The last bit of concern I have with BBL is that its spinning off assets into another company. Details haven't been revealed so who knows which of their 9 departments will go where and what that will do for growth. I don't like uncertainty with my potential new positions.

My new price target is $30. That is based on 2.8 EPS at a 12 average P/E ratio. This is NOT a market call as far as I am saying BBL WILL go down that low. I think thats a foolish game to get into. BBL could well take off as it has had a very big pullback. No, my $30 price target means that IF BBL gets that low I would consider a buy. If it doesn't it doesn't and there are plenty of other opportunities out there. One thing I have learned the hard way over the years is not to jump on something just because it has had a pullback.

I wish good luck to all the BHP Billiton longs out there. I have no stake at this time and hope it turns out well for you. I'm just going to sit this one out for now.

Disclaimer: The investments and trades discussed are not recommendations for others. I am not a financial planner, financial adviser, accountant, or tax adviser. The financial actions I talk about are for my own portfolio and money and only suited for my own risk tolerance, strategy, and ideas. Copying another person's financial moves can lead to large losses. Each person needs to do their due diligence in researching and planning their own actions in the financial markets.

Monthly Update: November 2014

Another solid month...

Portfolio Acitivities

Bought 7.6861 BLV @ $91.60

Bought 13.1062 JNK @ $40.14

Bought 34.4178 PCY @ $28.94
Bought 6.129 IBM @ $162.52
Bought 17.7930 RKT @ $55.98
Sold WHZ @ $11.59Sold ROST @ $89.10

$500 Deposited into Investing Account
$250 Deposited into Lending Club

Portfolio Income
Dividends ($28.24)
     BLV: $2.61
     JNK: 4.56
     PEMT: $3.51
     RKT: $7.50     
     PCY: $5.84     
     Interest from Cash: $2.21
Lending Club     
     Interest: $49.74
Rental Income     Townhouse 1: $950

Lots of Activity: As I mentioned last month, I needed to deploy my cash. I had been sitting on the sidelines thinking that the recent dip in equities was going to be more. It wasn't and with the Christmas rally underway seasonally, its time to go shopping. I initiated no new positions. Just added to existing ones. 

I sold WHZ before it collapsed. I had expected as much because everything else dealing with oil had dropped and it had not at that point.
I sold ROST for a very nice gain. I am mostly a dividend investor but I do take capital gain trades when they look to have sufficient value built beneath their share price. ROST has a 0.88% yield I sure didn't buy it for income.

Income a lot lower: My monthly average income has dropped due to my selling spree. The vast majority of my sales were for capital gains profit or correctly avoiding big losses. However that does leave me with a 40% cash position which is not contributing income. That is a temporary setback that I will gladly take as I gained or avoided the loss of about 4 years of my current portfolios monthly dividends.

Lending Club finally pulling its weight: I purchase LC notes on the secondary market. My strategy is to wait 10 months after a loan has been issued and if they are never late, have a rising credit score, and have 20% or less of their income going to servicing their debt then I buy the note. Because it is a secondary market most sellers will have a mark up fee to make a little profit. Usually this turns out to be 3 months worth of interest. My big deposits over the spring and summer have been in my portfolio long enough that I'm getting profit now. About 1% a month. 

Ideally I want my LC position big enough that it will give my entire portfolio +0.33% to +0.5% just in interest. That will give my an annualized. 4%-6% gain before my company dividends and capital gains. 

Sharpe Trade Launches: This month the Sharpe Trade website launched. Its been something I and some others have been working on. Currently we have two content contributors. Myself and Dan Shy from NoNonsense Trading. With their help I should be able to reach more people and offer more features with my content than I would be able to do on my own.

It has been one of the main reasons for the slow activity here on my blog. My main writing will shift to Sharpe Trade but I will continue this blog and its portfolio's journey. A good portion of Sharpe Trade's content that I will be creating will be free so all will be able to continue following me.



Disclaimer: The investments and trades discussed are not recommendations for others. I am not a financial planner, financial adviser, accountant, or tax adviser. The financial actions I talk about are for my own portfolio and money and only suited for my own risk tolerance, strategy, and ideas. Copying another person's financial moves can lead to large losses. Each person needs to do their due diligence in researching and planning their own actions in the financial markets.

Sold Whiting Trust II (WHZ)

Earlier this month I sold Whiting Trust II (WHZ). I had been busy working with the folks over at Sharpe Trade that I didn't post it here and to be honest, I hadn't planned on mentioning it. However with its above average price drop I feel its important to address it now.

As with my ARCP sale, to prevent anyone thinking I am using hindsight bias here is the trade confirmation.

I ended up breaking even on this position. While I had a large loss when I sold, I had received 20% dividends for a couple years which ended up making these be a wash. This trade was certainly not one to brag about.

I sold for two reasons. The price of oil has plummeted from well above $100 down to $80. WHZ has costs they have to pay for the extraction of the oil and those costs do not go down with the price of oil. Their profit will take more than a 20% hit. I have seen many other oil companies take large hits in share price and WHZ seemed to not have been affected by it. However the history of WHZ is that it drops by a lot at ex-dividend date and then recovers over the quarter. This time due to the downward pressure of oil prices on the share price, I do not expect it to recover this time. This is a short term reason but an important one.

The second reason is more long term in scope and I expect it to last for the duration of the trust's life. Investors weren't pushing the share price up to a high level. Most trusts will have the share price rise as investors look at high yields and push it up. BPT, GNI, WHX are all examples of this and I had hoped that WHZ would follow suit. They did not. I had pressumed that would be the worst case scenario and that I would break even due to having a minimum amount paid out.

Royalty land trusts are fairly easy to estimate what they will pay out. They list the estimated amount of energy they expect to extra and you pick a reasonable price for the commodity it produces. Specifics will vary as these are estimates but you can come close. The bigger variable is how the market will react. You have a floor on your losses and gains because of the distributions paid out. Sometimes it works out like it did for me in BPT years ago, sometimes it doesn't like here with WHZ.

With WHZ losing about 8% of its production a year its best years are front loaded. The last years of a trust's life pay very little. With oil this low and who knows when it will recover I felt it best to move on.

As I post this, WHZ is traditionally at its point where it bottoms out and starts recovering for the quarter after its last distribution. If that happens this quarter or not I do not know. The odds are against it I think and that's what trading is to me. Only being in positions that have a high probability of being successful. I don't do the crap shoot investments.



Disclaimer: The investments and trades discussed are not recommendations for others. I am not a financial planner, financial adviser, accountant, or tax adviser. The financial actions I talk about are for my own portfolio and money and only suited for my own risk tolerance, strategy, and ideas. Copying another person's financial moves can lead to large losses. Each person needs to do their due diligence in researching and planning their own actions in the financial markets.

ARCP discussion in the Week in Review Podcast at Sharpe Trade

The first of many "Week in review" podcasts is now up on Sharpe Trade.

Some of you also follow Dan Shy from NoNonsenseTrading and might be familiar with his Week in Review podcast he puts out. That is something we wanted to continue on with Sharpe Trade and so far its been well received. I think we really did did a good job for our first podcast. But of course I am biased. What did you think of it?

I discussed quite a bit of my thoughts on ARCP but time restraints kept me from speaking everything I wanted to say. A lot of investors got into ARCP and are still in it. As I mentioned, I was it in it for awhile and sold on Oct 11. I didn't mention it at the time and don't want to be accused of making up history so here is the trade confirmation.

I see a lot of people discuss that out there that nobody could have seen the accounting scandal coming ahead of time and could have prevented avoiding the loss. I disagree strongly. While you could not know the accounting scandal specifically was going to happen, an investor could know that at some point something was going to happen due to management making poor decisions.

As I mention in the podcast, ARCP was a series of bad choices by management that were in their favor not shareholders. The board of directors is supposed to be looking out for us but they were along for the ride.

It isn't only retail that missed a lot of warning signs with ARCP. Goldman Sacs has a top 50 favorite stocks researched from 775 hedge funds and they looked at the top 10 holdings of these funds. ARCP is in the list as being a favorite.. of the professionals... who charge money for their picks and have teams of researches working for them. If you missed the warning signs then don't feel bad at all.

If you are a fellow blogger who is still in ARCP please note I am not "calling out" anyone or trying to point at others losing investments. Lord knows I have been in many myself and will once again in the future. I've been burned by this exact thing, poor management,.What happened to ARCP is a great learning experience if one can get past the denial game of "nobody could see it coming" and dig into the public data that was always available.


Disclaimer: The investments and trades discussed are not recommendations for others. I am not a financial planner, financial adviser, accountant, or tax adviser. The financial actions I talk about are for my own portfolio and money and only suited for my own risk tolerance, strategy, and ideas. Copying another person's financial moves can lead to large losses. Each person needs to do their due diligence in researching and planning their own actions in the financial markets.

Introducing Sharpe Trade

You may have noticed I've been rather quiet recently. There is a good reason for that. I've been rather busy on a new project...

I'd like to introduce you to Sharpe Trade. What it is and how it came about.

When I first started out on Youtube and with this blog years ago, I had a mission. I wanted to help people learn about the capital markets and avoid all the dumb mistakes I had made for years and learned the hard way on my own. I vowed that when I got my act together I would try to help others avoid the mistakes that I made.

Then I ran into Dan Shy, aka Aileron of No Nonsense Trading. He had been blogging and had his own Youtube channel for a number of years before me. We and some others got to talking and got to know each other.

The biggest problem we all noticed is how newcomers to the markets were being tricked. Financial news media and institutional fund managers would push their own agendas while other newcomers to the markets would act like they knew what they were talking about. You had a case of blind leading the blind. What they did have though is emotion. Anger and frustration from what happened to them with the Financial Crisis of 2008. They caused more harm than good. Long time readers might recall my thoughts on the precious metal community.

But its not just a gold or silver thing and I now see the same thing happening with equities. People who started their financial education after 2009 have only known a bull market. Buy anything with a yield without regard to price and wait for decades to live off your income. There is so much more to investing than that. I fear that the first real correction we get will be a rude awakening to many. My primary goal is as it always has been... to have open dialogue with rational reasonable human beings to learn about the markets together.

On Sharpe Trade both Dan, myself, and others will be talking about the markets on podcasts, videos, and plenty of text entries. The level and depth we will offer is far more than what I have offered here. I'm really excited for where its going.

So what happens to this blog? It will remain. It is a progress portfolio blog and I've grown fond of the name Pully. But its also time I step forward and talk more openly and directly.

My name is Brad Bradford and I'm an investor who wants to cut through the B.S. and ignorance of these markets that is far too common.



Disclaimer: The investments and trades discussed are not recommendations for others. I am not a financial planner, financial adviser, accountant, or tax adviser. The financial actions I talk about are for my own portfolio and money and only suited for my own risk tolerance, strategy, and ideas. Copying another person's financial moves can lead to large losses. Each person needs to do their due diligence in researching and planning their own actions in the financial markets.

Monthly Update: October 2014

I'm continuing to get myself caught up from my absence...

Portfolio Acitivities
Sold CPA @ $99.24
Sold AAPL @ $97.76
Sold ARCP @ $11.70
$750 deposit into Investing.

Portfolio Income
Dividends ($22.48)
     AFSI: $4.64     
     ARCP: $6.35
     BLV: $2.55
     JNK: 4.64
     PCY: $1.90
     Interest from Cash: $1.91
Lending Club
     Interest: $49.74
Rental Income
     Townhouse 1: $950

Market pullback: October showed a market pullback. Was it going to be a dip, pullback, downturn, correction, crash? You can never tell going into them and I was in a very defensive mindset. I placed several stops and AAPL, and CPA got triggered for sales. ROST and PETM had stops but were not hit and I am still long those two.

Painfully low dividends: I haven't had this low of a month income wise in a long time. Not only was it the smallest one traditionally of the quarter but I had several sales and am sitting on 45% cash right now while I was waiting out the market downturn.

Low deposits: Real life events prevented me from contributing as much as I would have liked. I'm ok with that because of how I run my accounts. I put some into savings, I pay my bills, then the rest goes into my various accounts. By its nature it will be variable. I prefer this to a static deposit rate which I think is unrealistic. Life itself isn't static. 

Sold ARCP: I sold ARCP early on in the month. It was when I was inactive and because it was for a great price compared to now I want to post a screen capture of the sale least I be accused of revisionist history. Your trust is very important to me...

I have quite a bit to say on ARCP. Why I sold and why I think it collapsed in price. It had become a popular investment in the dividend community and it warrants discussion. I saw a lot of people buying it in October and I made a few comments on a few blogs but I am kicking myself for not saying anything more. The loss imo was complete avoidable but more on that in the next day or two...

Disclaimer: The investments and trades discussed are not recommendations for others. I am not a financial planner, financial adviser, accountant, or tax adviser. The financial actions I talk about are for my own portfolio and money and only suited for my own risk tolerance, strategy, and ideas. Copying another person's financial moves can lead to large losses. Each person needs to do their due diligence in researching and planning their own actions in the financial markets.

Why I sold Whiting USA Trust II (WHZ)

Yesterday I sold my royalty land trust, Whiting USA Trust II (WHZ). The price was $11.59 and when you add in distributions for total return, I broke even.

Royalty land trusts are companies that give you access to the sale of a natural resource but only for a limited duration of time. Then they expire and your units that you hold in the trust go to $0. You do not own the land the trust operates on; you only get access to the oil, natural gas, iron, timber, or whatever resource is on or under the land.

Knowing that an asset will go to $0 and expire makes a royalty land trust a lot like musical chairs. Its great while the music is playing and you can easily get 10%, 15% or 20% yields. But when the music stops, it REALLY stops. The trick is to take a few turns around the room but walk away before you are left without a chair.

Trusts have a termination clause that states when they will end so for the observant, there is no surprise. Its in their quarterly reports. But lets be honest here. How many investors know about quarterly reports let alone read them? Trust investors most often have no idea what they are invested in.

Case in point is Great Northern Iron Ore Properties (GNI). They terminate in a few years and the price will go to $0. The only value out of it is the quarterly distribution. Its quite simple actually, you add up all the remaining payments and that is the fair value of trust. Take a look at January 2014. When it was in the $70s. Clear example of trust investors having no clue what they hold.
I and many others warned them that fair value was in the $20s and sooner or later the music will stop. "But it has a 10% yield its too good to pass up!" Those investors lost the equivalent of 5 years of distributions on an asset that ends in about 2. They will never get their money back.

Back to WHZ and why I sold yesterday. I had expected it to hold its share price steady like most trusts do and collect a 20% yield for a few years then move on. The market though has kept it pretty close to its estimated fair value and it always drifted lower after each distribution. Obviously oil prices will rise and fall and the remaining payments will only be estimates so fair value is also an estimate. We've recently seen oil fall from the $110s down to the $80s. That's going to cut into future distribution payments from WHZ. In fact the most recent distribution is lower and I expect it to drop more next quarter.

However the share price however has not yet adjusted down like so many other oil companies. I'm expecting WHZ share price to fall sharply in the next 1-2 weeks. WHZ has a history of dropping when the distribution is paid and then recovers. This time I am not so sure it will recover.

It certainly might. I am not making prediction. I'm just saying I'm stepping away while the music is still playing...

Disclaimer: The investments and trades discussed are not recommendations for others. I am not a financial planner, financial adviser, accountant, or tax adviser. The financial actions I talk about are for my own portfolio and money and only suited for my own risk tolerance, strategy, and ideas. Copying another person's financial moves can lead to large losses. Each person needs to do their due diligence in researching and planning their own actions in the financial markets.

My old blog posts are back

Back during my Rebirth entry when I revamped my blog I decided to hide all my old posts. I had wanted to shutdown my Youtube channel and videos and that meant that a lot of content I created here on the blog was going to make absolutely no sense. I wanted a cleaner experience for you.

However it did cause a problem. The history of what I had said publicly was hidden from view. The things I say and write about now have less context and as a reader you have less understanding of where I am coming from. And that's important when judging a person in determining if you should believe what they have to say, especially when it comes to something as important as finance.

Additionally, hiding old content could be viewed as covering up past mistakes, bad market calls, and losing investments. I've been public with my view on that and repeat it here.
I HATE people who cover up their mistakes.
Its pointless because its how human beings learn. You experience something new and have limited information to make decisions yet at times you have to make a decision. It will be a terrible choice. The wrong choice. One you learn to never make again. And you move on like an adult.

You probably know the type of who I am talking about. The Youtuber who learns a few financial terms and spouts off nonsense. I and others call them out for the frauds they are and then amazingly that video or their entire channel just vanishes. Replaced with a new channel trying to start over.
Or a blogger who moves to a new site and takes down their old blog. They are seem great at the markets with a whole new perspective. They of course sit there hoping people won't notice.

Now that is not to say everyone who starts a new venture has something to hide. New opportunities come up. Plenty of my fellow bloggers start off on blogspot and then move on to their own site. A social media content creator gets better with time and wants to improve. Nothing wrong with that at all. The difference is in the intent.

So my old blog entries are back. The correct calls like the gold and silver community losing their minds, as well as my incorrect calls like my postion in Enerplus (ERF). I've certainly made mistakes in the past. Not only should I be more open about that I embrace them.

One disclaimer though. The videos remain hidden, for now at least. This means that many entries will not make sense or be incomplete. I don't plan to go back and redo them as its 4 years and nearly 400 entries. If there are any questions or comments though I will certainly expand on the ones people have interest over.

Otherwise my time will be better served with new content and new ventures...



Disclaimer: The investments and trades discussed are not recommendations for others. I am not a financial planner, financial adviser, accountant, or tax adviser. The financial actions I talk about are for my own portfolio and money and only suited for my own risk tolerance, strategy, and ideas. Copying another person's financial moves can lead to large losses. Each person needs to do their due diligence in researching and planning their own actions in the financial markets.

Monthly Update: September 2014

A September portfolio update in November? Gadzooks am I that far behind? Apparently so but there is no time like the present to get back on track...


Portfolio Activities
$1,000 deposited into the Investing Account
Bought 7.9481 CPA @ $125.32
Bought 4 AAPL @ $99.11
Bought 5 IBM @ $192.65
$250 deposited into Lending Club
$1,500 extra paid to Townhouse 1

Portfolio Income
Dividends ($79.72)
     AFL: $5.97
     IBM: $6.04
     ROST: $2.99    
     ARCP: $6.35
     PSEC: $12.06
     PSEC: $11.94
     TCPC: $22.42
     NDRO: $1.17
     BLV: $2.43
     JNK: 4.51
     PCY: $1.93
     Interest from Cash: $1.91
Lending Club
     Interest: $46.90
Rental Income
     Townhouse 1: $950

Planning to refinance: My main focus this month was paying down the mortgage on my rental. I am very close to not being underwater anymore which means I am eligible for refinancing. I must have talked to half a dozen lenders and the first thing they asked was whats the home worth and whats left on the mortgage. Nobody would talk to me
As I bought the unit before the housing crisis I have over a 6% mortgage and reducing that would free up some cash flow.

Several purchases: The beginning of the month was quite active with purchases in a new company. Copa Holdings (CPA) is a Panamanian airliner. Never let it be said that I stick to conventional U.S. blue chip companies. I also added to Apple (AAPL) and IBM (IBM)


Disclaimer: The investments and trades discussed are not recommendations for others. I am not a financial planner, financial adviser, accountant, or tax adviser. The financial actions I talk about are for my own portfolio and money and only suited for my own risk tolerance, strategy, and ideas. Copying another person's financial moves can lead to large losses. Each person needs to do their due diligence in researching and planning their own actions in the financial markets.

Still alive... and a new opportunity.

The markets have had a crazy October with sentiment changing from "this bull will never end!" to "Sell everything its the beginning of 2008 all over again!".

I was defensive going into this downturn and was heavy cash. I was up to 45% cash at one point. Several stops were hit and I could see the potential of it becoming worse even as it turned up. Now though we have a lot going for us in the equities markets to be long.

Seasonally, the Christmas rally begins now. The next 6 months traditionally gives the greatest amount of returns for the year.
The U.S. economy continues to recover. Perhaps not as strong as some would like and the jobs being created aren't the best paying but it is A recovery. That's better than no recovery. I'll be looking to deploy my cash in November.

As you may have noticed I've been pretty silent here for the past couple months. Most often that means a blogger has given up and walked away. In my case I have certainly not been idle.
I'm happy to share that I have a new writing opportunity to work with some others. When I am able to share details I will but I think its going to be an exciting new chapter for me.

With that in mind, this blog will not be going away. I've grown fond of the self directed retail investing community and have no plans to leave it. Its always a pleasure to read monthly updates and see people working on their goals and sharing stories of their accomplishments. With the popularity of fear sites like ZeroHedge out there, that sort of mentality is critical in this day. I want to continue contributing to that message.


Disclaimer: The investments and trades discussed are not recommendations for others. I am not a financial planner, financial adviser, accountant, or tax adviser. The financial actions I talk about are for my own portfolio and money and only suited for my own risk tolerance, strategy, and ideas. Copying another person's financial moves can lead to large losses. Each person needs to do their due diligence in researching and planning their own actions in the financial markets.

Monthly Update: August 2014

Portfolio Acitivities
$750 deposited into the Investing Account
Sold PSEC @ $10.44
$750 deposited into Lending Club

Portfolio Income
Dividends ($103.05)
     APPL: $3.29
     PETM: $3.51
     POT: $10.84
     RKT: $7.00
     STX: $8.31
     ARCP: $6.35
     PSEC: $11.93
     NDRO: $3.23
     WHZ: $37.67
     BLV: $2.64
     JNK: 4.68
     PCY: $1.97
     Interest from Cash: $1.38
Lending Club
     Interest: $41.90
Rental Income
     Townhouse 1: $950

New monthly income record: $144.95 was generated this month giving me an all time high. Lending Club, WHZ, and CIG have given me huge gains the past several months and my quarterly average has been high. 

Sold PSEC: I discussed in my previous entry, I sold PSEC. Their lack of dividend coverage is getting worse and I feel we'll see a dividend cut before the end of the year. I'll have an entry out shortly on that as I expect the drop to be significant but I'll be back in afterwards.

Focusing on C grade Lending Club loans: I'm finding the D, E, and F quality loans are starting to get higher markups in the secondary market. 4%-5% is about as low as I can find. C level I can get regularly for 2% or less. This lowers my lag time of when I start seeing a profit. At 4% I am needing 3 or so months of interest to recoup my losses through the markup fee. That has caused me to have an overall portfolio loss so far. I expect the next month or two to change that though as the majority of my loans will be 3 months old and I should hit profitability here on out.

Heavy cash position: Currently I am sitting at 38% cash. I'm definitely itchy to deploy that unused money. Cash doesn't have a yield nor capital gains. However it does give opportunity benefits. I have to be careful not to buy something just for the sake of buying it. Luckily its a new month and I'll be screening for a new investment today.

Close to no net loss on my rental: I am getting very close to no longer being underwater with my rental which means I should be able to refinance soon. I'm sitting at 6.12% and would really like to get that down. Nobody would talk to me though while I had a net loss. I might make that my priority this month and get it down further.


Disclaimer: The investments and trades discussed are not recommendations for others. I am not a financial planner, financial adviser, accountant, or tax adviser. The financial actions I talk about are for my own portfolio and money and only suited for my own risk tolerance, strategy, and ideas. Copying another person's financial moves can lead to large losses. Each person needs to do their due diligence in researching and planning their own actions in the financial markets.

Defensive on Prospect Capital (PSEC)

I'm going over the recent earnings conference call and I'm not liking what I am seeing. Once again they have not covered their dividend with Net Interest Income (NII). For a business development company, NII is the amount of income they make off their loans. Consider it their revenue and sales that you would judge a corporation by. They haven't made enough for several quarters now.

How they have gotten by is through origination fees, the fees charged for issuing debt. They have been churning out a good deal of debt over the past year but how long can they keep it up?

In the dividend growth investing community speculation on price movement isn't often done. However I have said in the past that its critical to know what you are holding in a portfolio. PSEC is not a dividend growth stock. They do not raise dividends each year. They are not growing the company on a per share basis. They are all about high yield right now, not high yield on cost years from now. That's fine because that is what I bought them for. My two business development company positions, 1 is high yield and 1 has growth so I get the best of both. The market has priced PSEC at a 12.5% yield for a reason. Likewise the market has priced Main Street Capital (MAIN) at a 6% yield for a reason too. They grow the company on a per share basis and give dividend raises.

I prefer strong companies whose biggest problem is they are making so much money they have to give a special dividend like TCP Capital does (TCPC). PSEC's problem on the other hand is taking on more leverage, issuing riskier debt to maintain their yields, or cutting the dividend.

If its one thing I have learned from high yield investments its to not get greedy. Just look at GNI, BPT, WHX. You do not play musical chairs until the very end trying to get one more dividend or distribution.

I have a stop loss order in for PSEC @ $10.44.
EDIT: Out @ $10.44 same day.

Disclaimer: The investments and trades discussed are not recommendations for others. I am not a financial planner, financial adviser, accountant, or tax adviser. The financial actions I talk about are for my own portfolio and money and only suited for my own risk tolerance, strategy, and ideas. Copying another person's financial moves can lead to large losses. Each person needs to do their due diligence in researching and planning their own actions in the financial markets.

Monthly Update: July 2014

Portfolio Acitivities
$1,500 deposited into the Investing Account
Sold MDT @ $63.45
Sold COP @ $84.20
Sold POT @ $36.11
Sold KO @ $39.50
Bought 14.9726 shares of ROST @ $66.52
Bought 10 shares of RKT @ $103.10
$450 deposited into Lending Club

Portfolio Income
Dividends ($105.52)
     AFSI: $2.31
     CIG: $66.55
     KO: $3.69
     MDT: $1.63
     ARCP: $6.35
     PSEC: $11.93
     NDRO: $2.35
     BLV: $2.69
     JNK: 4.65
     PCY: $1.99
     Interest from Cash: $1.38
Lending Club
     Interest: $31.35
Rental Income
     Townhouse 1: $950

Switching to a Total Return Strategy: I know this is sacrilegious in the dividend growth investing community but I am focusing on total returns these days. Lending Club is giving enough income to allow me to move into some positions that have lower yield but higher returns. So far this year it is working very well for me as I have 8.17% return vs S&P is at 5.01%
This is with a 5.01% forward yield on the portfolio with 28.5% cash.
Due to the massive deposits I am doing this year I am not posting or trumpeting my horn with the total return numbers as its a bit skewed with deposits.
At the end of the day though I am still an income guy. The capital gains are intended to buy more income producing assets.

Lots of activity: Lot of selling occurred this month as many of my stops were hit. Is this the beginning of the correction in equities everyone has been expecting? Who knows. All I did was look at what was overvalued and put stops on them. 
I don't like to be this cash heavy but with whats going on in Ukraine and Iraq I'm not exactly eager to deploy capital. Even with this cash heavy a position I am on pace to hitting my income goal for 2014.

Record Income: For the second month in a row I have hit a new record for income thanks mostly to CIG paying their annual dividend. I still would have done better then previous quarter but the January/April/July/October months are always my lowest.

Market seems to be aged: Its not like I am purposefully avoiding the standard dividend income positions. Its that they seem overvalued. Lots of them have hit high valuations over their own historic P/E ratios.
I don't know about anyone else but I am finding it hard to find many undervalued positions to deploy cash to. 

Anyone else out there finding it hard to deploy cash or is your style more finding whatever is cheapest on your watch list and deploying it asap?

Disclaimer: The investments and trades discussed are not recommendations for others. I am not a financial planner, financial adviser, accountant, or tax adviser. The financial actions I talk about are for my own portfolio and money and only suited for my own risk tolerance, strategy, and ideas. Copying another person's financial moves can lead to large losses. Each person needs to do their due diligence in researching and planning their own actions in the financial markets.

Company Review: Ross Stores (ROST)

I purchased ROST a couple weeks ago. It has solid numbers but appears to be falling recently. The story there is that ROST is predicting "only" an 8%-10% growth rate long term and everyone had been enjoying the high double digits. It still seems undervalued despite that.

ROSS STORES INC (ROST)

Last Updated: Q2 2014

Description: Ross Stores, Inc. is an off-price apparel and home fashion chain in the United States. The Company operates two brands of off-price retail apparel and home fashion stores: Ross Dress for Less (Ross) and dd’s DISCOUNTS. Ross offers designer apparel, accessories, footwear, and home fashions for the entire family at everyday savings of 20% to 60% off department and specialty store regular prices. Its merchandise offerings also include, but are not limited to, small furniture and furniture accents, educational toys and games, luggage, gourmet food and cookware, watches, and sporting goods.

How do they make money: Selling apparel and accessories that are slightly damaged or stitched wrong at a huge discount.

Key Brands: None company wide but sell many name brand clothes.

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Company Overview

Ross also owns a chain of discount stores called dd’s Discounts. Unsure of the % mix

Best category: Juniors

Best geographic region: Texas

Strong buyback culture: Every year since 1993

Risks

Brick and Mortor store vs online: Their average sale is $10 which is hard to cover for shipping and handling. With returns, shipping etc that is hard to do online. Since Ross sells name brands at half off for their regular price there is less margin difference between them and online retailers.

Competitors

The TJ Companies (TJX)

The Steinmart (SMRT)

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Company Fundamentals

Fastgraphs.com shows that its average P/E ratio is actually its support in the past 3 years. 

Company Stats	2005	2006	2007	2008	2009	2010	2011	2012	2013	2014e	5y Avg	10y Avg
Share Price	$11.33	$14.65	$12.79	$14.87	$21.36	$31.63	$47.53	$54.09	$74.93	$81.03	$57.84	$36.42
EPS	0.85	0.95	1.17	1.77	2.31	2.86	3.53	3.88	3.88	4.21	3.67	2.54
EPS Growth	-	11.76%	23.16%	51.28%	30.51%	23.81%	23.43%	9.92%	0.00%	8.51%	13.13%	20.26%
P/E	13.33	15.42	10.93	8.40	9.25	11.06	13.46	13.94	19.31	19.25	15.40	13.44
P/B	5.5	3.9	4.1	3.3	2.2	2.8	4	5	6.3	5	4.62	4.21

EPS growth for a retailer is very high and fairly consistent.

EPS growth has slowed from previous years causing a hit to share price but long term growth projection of the company is still good.

Dividend Stats	2005	2006	2007	2008	2009	2010	2011	2012	2013	2014e	5y Avg	10y Avg
Dividend	$0.13	$0.16	$0.20	$0.24	$0.35	$0.47	$0.59	$0.71	$0.80	$0.92	$0.70	$0.46
Dividend Yield	1.15%	1.09%	1.56%	1.61%	1.64%	1.49%	1.24%	1.31%	1.07%	1.14%	1.25%	1.33%
Share buyback %	2.73%	3.17%	3.65%	4.18%	5.20%	4.17%	4.35%	3.14%	3.24%	-	3.73%	3.76%
Div Growth	-	23.08%	25.00%	20.00%	45.83%	34.29%	25.53%	20.34%	12.68%	15.00%	21.57%	24.64%
EPS Payout Ratio	15.29%	16.84%	17.09%	13.56%	15.15%	16.43%	16.71%	18.30%	20.62%	21.85%	18.78%	17.19%

Dividend growth has been slightly higher than the EPS growth but payout ratio is still very low allowing for large future dividend growth. Even with the lower projected growth rate there is a lot of room for dividend raises.

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Earning Report Notes

Q1 2014

EPS: $1.15 (+7% Y/Y)

Sales: +6%

Operating Margin: 14.6% (very high for a retailer)

26 Ross stores and 7 Discount stores opened in quarter (75 Ross and 25 Discount stores planned for the year)

Share buyback plan: $550 million a year (~3.5% a year)

Estimate $4.15 EPS for the year.

Q4 2013

EPS: $1.02

Sales: +2%

Full Year

EPS: $3.88 (+13%)

Sales: +3%

Operating Margin: 13.1%

Barbara Rentler new CEO June 1st.

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Company and Industry specific commonly used acronyms and terms
None

Resources

Company Website: http://www.rossstores.com/#

Investor Relations: http://phx.corporate-ir.net/phoenix.zhtml?c=64847&p=irol-stockQuote

Morningstar: http://quotes.morningstar.com/stock/rost/s?t=rost

Transcripts: http://seekingalpha.com/symbol/ROST/transcripts

Disclaimer: The investments and trades discussed are not recommendations for others. I am not a financial planner, financial adviser, accountant, or tax adviser. The financial actions I talk about are for my own portfolio and money and only suited for my own risk tolerance, strategy, and ideas. Copying another person's financial moves can lead to large losses. Each person needs to do their due diligence in researching and planning their own actions in the financial markets.