Adams Express: A Long-Term Quality Holding

Mar. 6.13 | About: The Adams (ADX)

Adams Express Company is a closed end investment company that is more than 75 years old, trading on the New York Stock Exchange under the symbol ADX. I have written before about ADX and recently wrote about its sister fund, Petroleum and Resources (NYSE:PEO).

ADX buys and holds quality large-cap stocks and maintains a very stable portfolio, with minimal trading. It presently sells at over a 13% discount from net asset value, which only makes it more appealing. You could use ADX to replace the large-cap section of your portfolio.

It should be noted that Erik K. Bergstrom, who has no affiliation with the fund, has owned 9.2% of the outstanding shares. ADX owns in excess of 8% of the shares of its sister fund, Petroleum and Resources .

As of December 31, 2013, its 10 largest holdings constituted 23.3% of its total portfolio. These holdings are as follows:

Petroleum & Resources 4.5%
Apple 4.3
JP Morgan Chase 2.3
QUALCOMM 2.2
Lowe's 1.8
IBM 1.7
Wells Fargo 1.7
Microsoft 1.6
AT & T 1.6
Google 1.6
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As of December 31, 2012, ADX had assets of $1,155,997,037. with leverage of 0.3% and almost no short-term assets. ADX is involved in an option writing and selling program which constitutes about 1.5% of assets. ADX had a cost basis in its common stock holdings of $1,010,947,838 which had a market value of $1,153,761,081. ADX has a broadly diversified portfolio.

The 5 year ratios show a fund with decent performance, a very low expense ratio, decent income and moderate turnover. These figures are as follow:

Market Price Return NAV Return Expense Ratio Income Turnover
2012 16.9% 14.7% 0.65% 1.54% 27.40%
2011 (4.2) (2.8) 0.55 1.25 21.50
2010 11.5 11.2 0.58 1.29 16.15
2009 32.1 30.6 0.90 1.30 15.05
2008 (38.9) (34.4) 0.48 1.82 18.00
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The fund, like its sister PEO, has a managed distribution program of 6% of net assets annually. Management feels that its long-term shareholders require a steady source of income. Many individual families can trace their ownership of ADX back five generations.

This a quality fund which should be part of everyone's portfolio, especially when purchased at a substantial discount.

Disclosure: I am long ADX. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.