Individual Stocks January 2018

This is an update to the collection of individual stocks in my active account. The last review was published in early October 2017. These stocks are all held in taxable accounts as I have reserved any tax-advantaged space under the active account for CEFs and to a lesser extent, some PM miners and trading 3X leveraged ETFs. Within my active account they have a targe allocation of 60% and an actual allocation of 55.1%, making them the single largest slice in my total portfolio.

My long-term goal is to have 25-30 stocks each of which can be considered a “permanent holding”. This is similar to Buffet’s 20 ticket punch card idea. With this many stocks, I’m giving up on some diversification benefits. In return, I get the advantage of very low cost, tax loss harvesting, lower current tax by selecting low dividend-payout stocks, and income generation from selling option premium. The current list is below:

There are only 26 stocks vs. 30 in October. I sold Cheveron ($CVX) and Exxon ($XOM) as I was planning on getting out of the energy sector altogether; Philip Morris ($PM) and Kimerly Clark ($KMB) for tax loss harvesting; and finally Gilead ($GILD) to dial down the exposure to healthcare. The only new stock in the current list is Activision Blizzard ($ATVI). Activision got a recent boost from their launching of the Overwatch eSports league, but I could have just as easily bought Take Two ($TTWO), owner of the Grand Theft Auto franchise. I also added to the following existing positions: Tencent ($TCEHY), Johnson & Johnson ($JNJ), BYD ($BYDDF), Eli Lily ($LLY) and Aqua America ($WTR).

P&L is calculateds as market value over cost basis. Every single stock is up. Most have see nice price appreciation in the last quarter along with the rest of the market. From April to December this group was +3.71% over $SPY. The weighted dividend payout is down to 1.1% which keeps a lid on current taxes. In the table red fonts denote a “high-conviction” holding. All but three positions are red right now. In other words, there likely won’t be much change to this portfolio going forward.

I do keep track of the sector weights as more of a check than trying to adhere to any specifict weights. The portfolio is light on consumer staples. Indeed, there are two stocks in that sector that I have been watching. I’m in no hurry though, as value is likely to continue lagging in the current environment.

None of the above is investment advice, the standard disclaimer applies.