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June, 2013: 1 9 15 29
Disclaimer - IMPORTANT - Read this first!
| Investor's Journal is a diary focused strictly on investments and personal finance issues, primarily from a contrarian and retiree point of view. Follow along with an average guy's failures and successes as he learns, by trial and error, the fine art of value investing. |
6/1/13-Following the last entry, our Low Price to Book Value (Low P/Bk) portfolio stock, ENH, purchased on 5/10/11, was sold on 5/31/13 for a net gain of 14.79% (taking into account commissions but not regular dividends). Although ENH had not provided our target performance of 50% or greater, it met our alternate low price to book value asset sell criterion, having been held for at least two years. ENH has been deleted from our open positions record for Low P/Bk assets, and its closed position info for 5/10/11 through 5/31/13 has been added to our spreadsheet record of the portfolio's redemptions and mergers.
Alphabetically, though in no particular order of merit, my current top-five low price to book value stocks are: AEG; AOSL; CNTY; MSN; and VOXX.
My new featured Low Price to Book Value equity is Century Casinos, Inc. (CNTY) (recent price $3.40). CNTY meets Benjamin Graham's bargain stock value and safety criteria.
Century Casinos, Inc. will be added to our nest egg at its market price in early morning trading on Monday, 6/3/13.
6/9/13-Following the last entry, our Low Price to Book Value (Low P/Bk) portfolio stock, BHE, purchased on 11/7/11, was sold on 6/7/13 for a net gain of 40.46%. Unfortunately, the sale of BHE at this time was simply an error. One of the records of the security's purchase date had been wrong, "6/7/11," making it appear the shares had been held for two years and so met one of our low price to book value asset sell criteria. Still, as mistakes go, this was not terrible. The round trip trading of BHE provided a net annualized performance (including commissions but not dividends) of 27.10%. BHE has been deleted from our open positions record for Low P/Bk assets, and its closed position info for 11/7/11 through 6/7/13 has been added to our portfolio spreadsheet for low price to book value redemptions and mergers.
Alphabetically, though in no particular order of merit, my current top-five low price to book value stocks are: AOSL; CDE; CNTY; MSN; and SSRI.
My new featured Low Price to Book Value equity is Coeur Mining, Inc. (CDE) (recent price $13.78). CDE meets Benjamin Graham's bargain stock value and safety criteria.
Coeur Mining, Inc. will be added to our nest egg at its market price in early morning trading on Monday, 6/10/13.
In addition to our low price to book value picks, we find the following assets attractive as Dividend Value stocks: BP; ESV; IAG; NTT; and STO.
From among them we are choosing IAMGOLD Corp. (IAG) (recent price $5.29) as our current dividend value equity to feature. It also meets Ben Graham bargain stock criteria and will be added to our nest egg at its market price in early trading on 6/10/13.
6/15/13-Happy Father's Day weekend, everyone!
Following the last entry, our Low Price to Book Value (Low P/Bk) portfolio stock, CSWC, purchased on 6/13/11, was sold on 6/13/13 for a net gain (including commissions but not any dividends) of 48.37%. Although CSWC did not achieve a 50% or greater profit, it did meet our other sell criterion, being held for two years since purchase. CSWC has been deleted from our open positions record for Low P/Bk assets, and its closed position info for 6/13/11 through 6/13/13 has been added to our portfolio spreadsheet for low price to book value redemptions and mergers.
Alphabetically, though in no particular order of merit, my current top-five low price to book value stocks are: CNTY; HNR; IAG; MSN; and SSRI.
My new featured Low Price to Book Value equity is Silver Standard Resources, Inc. (SSRI) (recent price $7.26). SSRI meets Benjamin Graham's bargain stock value and safety criteria.
Silver Standard Resources, Inc. will be added to our nest egg at its market price in early morning trading on Monday, 6/17/13.
In addition to our low price to book value picks, we find the following assets attractive as Dividend Value stocks: EC; LUKOY; MANT; NTT; and STO.
From among them we are choosing ManTech International Corp. (MANT) (recent price $26.61) as our current dividend value equity to feature. It also meets Ben Graham bargain stock criteria and will be added to our nest egg at its market price in early trading on 6/17/13.
6/29/13-Hope everyone is keeping cool. Where we are, it is well into the 100s F, with a heat index of about 110 degrees. Time to chill out and relax.
Following the last entry, our Low Price to Book Value (Low P/Bk) portfolio stock, RCKY, purchased on 6/20/11, was sold on 6/28/13 for a net gain (including commissions but not any dividends) of 32.51%. Although RCKY did not achieve a 50% or greater profit, it did meet our other sell criterion, being held for at least two years since purchase. RCKY has been deleted from our open positions record for Low P/Bk assets, and its closed position info for 6/20/11 through 6/28/13 has been added to our portfolio spreadsheet for low price to book value redemptions and mergers.
Alphabetically, though in no particular order of merit, my current top-five low price to book value stocks are: AIZ; CNA; IAG; PPP; and TGX.
My new featured Low Price to Book Value equity is CNA Financial Group (CNA) (recent price $32.62). CNA meets Benjamin Graham's bargain stock value and safety criteria.
CNA Financial Group will be added to our nest egg at its market price in early morning trading on Monday, 7/1/13.
In addition to our low price to book value picks, we find the following assets attractive as Dividend Value stocks: EC; IAG; MANT; INTC; and TOT.
From among them we are choosing Ecopetrol, SA (EC) (recent price $42.06) as our current dividend value equity to feature. It also meets Ben Graham bargain stock criteria and will be added to our nest egg at its market price in early trading on 7/1/13.
The following is my regular quarterly summary (statistics through 6/30/13) of the asset approaches followed here:
| Portfolio or Market Index | Date Began Monitoring | Average Asset Hold Period | Average Change | Annualized Performance |
|---|---|---|---|---|
| Berkshire Hathaway, Class B | 6/3/05 | 1.80 years | 39.70% | 20.41% |
| Dividend Value | 5/20/11 | 1.12 years | 10.92% | 9.65% |
| Low Price to Book Value | 5/14/09 | 1.12 year | 20.42% | 18.11% |
| S&P 500 Index (SPX) | 5/14/09 | 4.13 years | 79.84% | 15.27% |
Observations:
That the hold period for both Dividend Value and Low Price to Book portfolio assets averaged 1.12 years stands out as a possible error for one or the other. However, all figures involved were double-checked, and though the open and closed position hold durations are different for both portfolios, the combined interval comes to 1.1249 for Dividend Value and 1.1166 for Low Price to Book, in each case rounding to 1.12.
Despite this month being on balance a negative one for the major averages, advances again beat declines for the just ending quarter. I redeemed a number of securities as they achieved one or more of their sell criteria. And I have continued to purchase low price to book value and/or relatively high dividend value stocks with which to replace them. With year-end targets for total dividends and total book value of $17,706 and $885,300, respectively, our nest egg's dividends now stand at $21,214 a year, and book value for our equity holdings is up to $790,547 (was $713,778 at the end of the first quarter of 2013). Thus we are on target to achieve our dividend and book value goals for the end of December. However, what with the market sell-offs in June and our having reduced equities to increase our reserves, my wife's and my total net asset value is now up just 5.97% for the first half of 2013.
Since their market value is now mostly higher, the total price to book value for our equities remains a little too high for my liking, at 1.02 (preferring it to be about 0.9 or below). Thus, I remain inclined to sell assets that have relatively high price to value and to purchase ones with low price to value in the months ahead.
My wife and I had average combined annual earnings of $37,500 prior to retirement, but were fortunate to be able to keep expenses low and, using Ben Graham investing principles, to build up a comfortable nest egg before joining the Life of Riley set. I ceased work in early December, 2001, and my wife followed suit in early May, 2002. Despite major recessions and sell-offs of stocks since retiring, our net assets have more than doubled. I still have much to learn about value investing, but the evidence in our case supports the notion of Ben Graham's in The Intelligent Investor that an amateur who chooses to do a little research on his or her own can manage well enough in stocks and still enjoy lower than market risk.
At this time, all of our approaches, Berkshire Hathaway, Dividend Value (now a combination of our previous Ben Graham Dividend With Value, Love 'Em and Leave 'Em, and Six Percent Plus Portfolio portfolios), and Low Price to Book Value, are doing better than the average buy and hold investment in the S&P 500 (roughly 9.8% annually) would have.
While this is not immediately apparent for Dividend Value (averaging an annualized performance of 9.65%), the combined open plus closed positions for Dividend Value has had average yields of over 6%. Dividend Value's annual total return through June, 2013, is 15-16%. This is in spite of my picking higher dividend stocks that have more safety features than usual, for instance, lower debt to equity, positive income, and lower dividend payout ratios.
Given that we have experienced a generally bullish market for awhile now, I suspect that the results noted above for the three approaches followed here are somewhat better than will turn out to be our long-term record. Time will tell, yet, barring unforeseen misadventures, it appears reasonable to expect continued superiority for our nest egg compared with the DJIA, S&P 500 Index, or Nasdaq.
Happy investing to you, and may we all enjoy a richly meaningful and safe Independence Day Weekend (7/4-7/7)!
Disclaimer and Disclosure Statement
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.