4/1/15-Since the prior entry, the following assets have been sold from the Low Price to Book Value portfolio:
SGMA, bought on 2/24/13, was sold on 3/31/15 for a net gain of 27.98%. SGMA had been held over two years and was profitable.
PTGCY, bought on 9/15/14, was sold on 3/31/15 for a net loss of 72.18%. Our former holding, PT, became PTGCY in a merger during the first quarter of 2015. The stock was sold at this time since it had had a one day surge of over 11%, but it's long-term prospects remained dismal following recent overseas economic and political developments.
The buy and sell dates plus results for these sets of round-trip trades have been added to our spreadsheet for Low Price to Book Value closed positions and are incorporated in the stats for the latest performance report (just below).
The following is my regular summary of quarterly results (statistics through 3/31/15) for the asset approaches followed here:
Once again the superior recent record of the S&P 500 Index stands out. Considering the work and time involved in researching individual securities and maintaining good records on various investments and strategies, it is hard to argue, given the results for the past several years, that the average investor should do anything but invest via dollar-cost-averaging in one or two inexpensive index funds that mirror the equity markets writ large (for example VFINX or VTSMX), possibly for diversification with some assets as well in a low-cost intermediate-term bond fund (such as VBIIX) or, since domestic bond funds are likely to head south when interest rates go up, in a good global bond fund (for instance, GIM), rebalancing annually between the two asset classes, stocks and bonds, to maintain one's desired allocation percentages.
We can hope it is not merely wishful thinking to believe that our overall active investing record as value investors will beat that of the indexes, but as yet there is not much objective evidence to support such optimism.
We note that our Berkshire Hathaway holdings have not kept up with the S&P 500 Index either. I am encouraged, though, both for our eventual tortoise vs. the hare winning of the long-term race with the indexes and that of our BRK/B shares, to have read recently that, in spite of his company's market value having not over the past 6 years kept pace with the S&P 500, nonetheless Warren Buffett's record of increasing Berkshire Hathaway book value by around 19%+ or so annually is intact. (In fact, since Buffett took over Berkshire Hathaway, its per share price has increased on average over 21% a year.) Pundits smarter than I forecast that in time that book value out-performance will as usual lead to significantly higher per share BRK/B prices compared with the value Mr. Market is placing on them currently, relative to the S&P 500.
While our nest egg equities have not shown Berkshire Hathaway's level of average annual book value enhancement, we are continuing our policy of each year raising our stocks' total book value by 13.5% or more while maintaining a dividend yield on that book value of at least 2% annually, a combined increase in total value of over 15% a year. Indeed, for the most recently completed quarter, we are not only on track to achieve current target level growth of total book value and yield but way ahead of these goals.
Meanwhile, however, our nest egg as a whole (equities, reserves, real estate value, collectibles, etc.) has fallen slightly (less than $2000) since the prior quarterly report, while the S&P 500 has increased a bit in total return over the just elapsed three-month period.
Taking the longer view, it is worth noting that our nest egg was down only about 20% during the late September, 2008, to early March, 2009, financial debacle, while the riskier S&P 500 dropped 44% between September 26, 2008, and March 9, 2009. It stands to reason that the latter, having farther to go to return to mean performance levels, will have been rising faster in the intervening years.
For our holding periods, a one-third each blend of the basic value investments cited here, bargain dividend stocks, bargain low price to book stocks, and Berkshire Hathaway, would have provided an average gain of 10.45% per year before dividends, about 12.82% with dividends included.
As previously indicated, I take more seriously the closed position returns. Stocks that are still invested will have their ups and downs, yet in many cases may be simply held till the right time to sell comes along.
Here are the closed position returns for our basic Ben Graham type strategies: a. Low Price to Book Value assets have had average annual gains of +20.96% (about 22.84% with dividends included); b. Dividend Value assets have had average annual gains of +17.15% (about 22.40% with dividends included).
Our total equities' average per share book value continues to exceed their average per share market price.
These are the present Low Price to Book Value portfolio open positions: ACAS; AEG; AEL; AEY; AGII; AHL; AIG; ANAT; AOSL; AUQ; BIF; CDE; CLF; CNA; CSH; CUO; ELP; EZPW; FORTY; FVE; GBLI; GENC; GGB; GTE; GURE; HDNG; HIG; HMY; HP; IAG; IOT; ISH; KBAL; KCLI; KELYA; LQDT; LUKOY; MANT; MT; NE; NTT; NWLI; PBR; PFIN; PGH; PKX; PRE; QCCO; REGI; SCX; SSRI; STLY; STRL; SYA; TATT; TCK; TDS; TGA; TX; UMC; VOD; VOXX; VOYA; and WILC. I may add to some of these positions from time to time.
And here are our current Dividend Value portfolio holdings: AP; BGCP; BRKS; CCUR; COP; CSPI; DEST; EC; ESV; GME; IAG, IQNT; PETS; PSEC; RDS/A; RGR; SSL; STO; SUP; T; TEO; TGA; TICC; TNH; TX; UVV; VIV; and WSTG. I may also add to some of these positions from time to time. (As mentioned at the end of the last quarter, I realize IAG no longer provides a dividend, but it is off considerably from when it was purchased for this portfolio. Am holding it in hopes that it may later have a better performance. Meanwhile, it continues to have a good low price to book value ratio, at 0.27.)
May we all have a rewarding second quarter and not need to dispense too much of our prior gains to Uncle Sam.
4/18/15-Since the prior entry the following assets have been sold from the Low Price to Book Value portfolio:
PFIN, bought on 2/5/13, was sold on 4/6/15 for a net loss of 8.65%
HMY, bought on 3/5/13, was sold on 4/7/15 for a net loss of 68.68%.
LUKOY, bought on 3/22/13, was sold on 4/9/15 for a net loss of 18.50%.
Each of the above assets had been held for at least two years. It was felt that, though they might eventually prove to be good holdings, they were probably not superior to new equities that currently meet Ben Graham buy criteria.
The buy and sell dates plus results for these three sets of round-trip trades have been added to our spreadsheet for Low Price to Book Value closed positions and will be incorporated in the stats for the next and subsequent quarterly reports.
Alphabetically, my current top-five Low Price to Book Value equities are: FRD; GLPW; L; TX; and WILC.
My new featured Low Price to Book Value security is Global Power Equipment Group, Inc. (GLPW) (recent price $11.84). GLPW meets Benjamin Graham's bargain stock value and safety criteria.
Global Power Equipment Group, Inc. will be added to our nest egg at its market price in early morning trading on Monday, 4/20/15.
Alphabetically, my current top-five Dividend Value equities are: CA; ETN; MRK; NOV; and UFS.
My new featured Dividend Value security is National Oilwell Varco, Inc. (NOV) (recent price $54.59). NOV meets Benjamin Graham's bargain stock value and safety criteria.
National Oilwell Varco, Inc. will also be added to our nest egg at its market price in early morning trading on Monday, 4/20/15.
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Neither I nor Investor's Journal will be responsible for losses by anyone who obtained ideas from this site.
This diary is intended for personal interest and general information only. You are advised to do your own research (as well as to consult highly compensated professionals) before spending money on anything.
I know of no reason anyone should take my financial musings seriously. At best I am a dedicated amateur providing a bit of investment-related insight and entertainment, at worst an amusing diversion.
My wife, Fran, and I may at times own shares of some of the assets mentioned here. But neither of us receive any benefit from reference to them, unless you count the mutual misery when we get it wrong, or the opportunity to gloat when we get it right.