‘The Tweed Update’ by Roger Tweed

Guest Author Roger Tweed

Guest Author Roger Tweed

Out in Front – Our 2014 Portfolio jumped ahead of the S&P 500 over the past five weeks.  Strong showings from Facebook (FB) and Goodyear (GT) overcame selling in Bank of America (BAC) and flat performance from Hewlett-Packard (HPQ), JetBlue Airways (JBLU), and LinnCo, LLC (LNCO) to record a gain of 2.6% since January 17.  The S&P 500 lost 0.1% in that time period.  Since its January 9 inception, our portfolio has gained 2.43% while the S&P 500 has lost 0.06%.

Facebook was our best performer, gaining almost 22%.  After reporting stellar fourth quarter earnings and revenues on January 29, the shares continued higher despite the February 20 announcement of the controversial $16 billion acquisition of mobile messaging app WhatsApp.  Although Facebook is paying a huge price, the acquisition is further evidence that the company intends to dominate the mobile space.

Goodyear gained 8% after the company reported that fourth quarter earnings nearly doubled from the year earlier.  Goodyear also estimated that annual earnings growth would be 13% through 2016.  Anadarko Petroleum (APC) gained 2% despite reporting a fourth quarter loss on higher than anticipated costs associated with the Tronox (TROX) litigation and divestitures.  Investors understand that even though the litigation involves potentially billions in liabilities, it is a side show to Anadarko’s drilling and production businesses.

Bank of America was our biggest loser, dropping over 4% despite the finalization (after more than 2 years) of its $8.5 billion settlement of claims against Countrywide Financial for selling faulty mortgage-backed securities prior to the financial crisis.  Bank of America acquired Countrywide in 2008.  Financials, like Bank of America and Fifth Third Bancorp (FITB), were expected to be market leaders in 2014, but lower interest rates due to poor employment and housing reports have cooled investor enthusiasm so far.

Interestingly, Hewlett-Packard, JetBlue, and LinnCo all closed on February 21 within one cent of their closing prices on January 17.  This is indicative of stocks maintaining their pattern of selling off in the 5-6% range and then snapping back.

While it is still early in the year, I am very happy that in a period when an investment in an S&P 500 index fund would have lost money, our portfolio has made money, and nine of our 13 stock, ETF and REIT positions show gains.

2014 MODEL PORTFOLIO(As of February 21)

Stock Amount Change Index Amount Change
FITB $    836.16 (0.9%) FB $    891.67 17.8%
IP $    786.56 0.2% JBLU $    814.45 0.6%
BAC $    798.21 (3.7%) FUN $    318.18 2%
APC $    823.10 4.1% VGK $    774.28 1.7%
GT $    822.74 2.3% VTR $    848.68 3.7%
LNCO $    819.00 (1.3%) HTZ $    797.50 (1.3%)
HPQ $    863.91 6.3%
STOCK TOTAL $ 8,253.30 REIT/ETF TOTAL $ 1,941.14 CASH TOTAL $  48.14
GRAND TOTAL $  10,242.58 GAIN/LOSS since 1/9/14 2.43%
S&P 500 Index GAIN/LOSS since 1/9/14  (0.06%)