OUR 2014 PORTFOLIO
Through the Ringer – Our 2014 Portfolio rode the same roller coaster as the markets over the past four weeks, with individual positions falling brutally for one or two days followed by sharp advances in many cases. An 18% advance in the shares of Anadarko Petroleum (APC) was completely negated by sell-offs in Facebook (FB), Fifth Third Bancorp (FITB), and Bank of America (BAC). But a 9% advance in medical REIT Ventas (VTR) combined with dividend payments and other share price gains to drive the portfolio to a gain of 0.3% since March 21. The S&P 500 lost 0.1% during that time period. Since our portfolio’s January 9 inception, it has risen 2.74% while the S&P 500 has gained 1.49%.
Anadarko is now our best performing position with a total gain of 25%. Traders saw as a positive development the April 3 announcement that the company would pay $5.1 billion to settle waste clean-up claims against Tronox, which was spun out of Kerr-McGee shortly before Anadarko acquired Kerr in 2006. $5.1 billion was seen as the low end of Anadarko’s potential clean-up liability.
Facebook lost 12% as the company fell a total of 20% from its $72 high before recovering, and then pulling back again. High growth/high PE companies have been sold off by traders over the past six weeks, and Facebook has seen its share of profit taking. My feeling is that this pattern will be broken if Facebook reports good earnings and revenue numbers in its quarterly report on April 23. Fifth Third Bancorp lost 10% as the company missed first quarter earnings due to legal costs and lower non-interest revenues. However, loan growth and deposits both grew in the quarter. Bank of America fell 8% as large financials have reported mixed first quarter results. The company reported a loss due to legal costs, but is performing well in its Merrill Lynch brokerage division, and reported higher wealth management, mortgage loan, deposit and loan numbers, along with improved credit quality. Litigation risk still exists, but taking that into consideration, the shares are undervalued.
Ventas’ gain came about because its price had become too cheap for a REIT with 25% earnings growth, 11% revenue growth, and a 4.6% yield. Hertz Global (HTZ) gained 2% as the company prepared to buy 10 Advantage Car Rental locations out of bankruptcy. Hertz had to divest itself of the Advantage chain as a condition of its acquisition of Dollar Thrifty.
I am very pleased that our portfolio was able to show gains in a very tough period for stocks. I believe that the Facebook earnings report will lead a breakout for the portfolio.
2014 MODEL PORTFOLIO
(As of April 17)
|FITB||$ 817.05||(3.1%)||FB||$ 766.22||1.2%|
|IP||$ 727.36||(7.3%)||JBLU||$ 784.42||(3.1%)|
|BAC||$ 791.35||(4.5%)||FUN||$ 312.06||—|
|APC||$ 989.60||25.1%||VGK||$ 770.12||1.2%|
|GT||$ 837.00||4%||VTR||$ 911.82||11.5%|
|LNCO||$ 725.14||(12.6%)||HTZ||$ 814.03||0.7%|
|STOCK TOTAL – $ 8,178.14; REIT/ETF TOTAL – $ 1,994.00; CASH TOTAL – $ 101.47|
|GAIN/LOSS since 1/9/14||2.74%|
|GRAND TOTAL $ 10,273.61S&P 500 Index||GAIN/LOSS since 1/9/14||1.49%|