Q2 2012 Portfolio Review: We're Halfway Home

Includes: ABB, GG, RDS.B, VOD
by: Old Trader

I've been putting together quarterly reviews of my retirement portfolio since Q1 2011, following a steady stream of inquiries from readers relating to my holdings. These reviews show the weightings of the holdings in my real-life retirement portfolio, as well as changes in weightings, and any position changes.

In the first quarter, I had added ABB, Ltd. (NYSE:ABB), Vodafone Group plc (NASDAQ:VOD), and Royal Dutch Shell plc (NYSE:RDS.B). All three are intended to be core holdings, rather than short-term trades. In addition, as I noted towards the end of the Q1 review, since I was notably underweighted in precious metal related holdings, I added to my position in Goldcorp Inc. (NYSE:GG).

Here are the portfolio holdings, weightings, and changes in weighting as of the end of Q2:

  • GIM (Templeton Global Income) 16.80% (-0.20%)
  • MMP (Magellan Midstream Part.) 7.40% (-0.04%)
  • GG (Goldcorp) 6.98% (+3.02%)
  • TOO (Teekay Offshore Part.) 6.92% (-0.08%)
  • MO (Altria) 6.84% (+0.82%)
  • ABB (ABB, Ltd.) 6.44% (+2.73%)
  • PBA (Pembina Pipeline Corp.) 5.78% (-0.51%)
  • JNJ (Johnson & Johnson) 5.69% (+0.20%)
  • KMR (Kinder Morgan Mgmt.) 5.35% (-0.08%)
  • STO (Statoil) 4.83% (+0.26%)
  • HIX (Western High Income) 3.89% (+0.74%)
  • RDS.B (Royal Dutch Shell) 3.80% (unchanged)
  • BIP (Brookfield Infrastruct. Part.) 3.73% (-0.47%)
  • SDS (ProShares 2XShort S& P500) 3.61% (-0.12%)
  • VOD (Vodafone Group) 3.57% (+0.12%)
  • TEI (Templeton Emerg. Mkt. Inc.) 3.46% (-0.67%)
  • FTE (France Telecom) 1.87% (-0.47%)
  • O (Realty Income) 1.62% (-0.67%)
  • OTC:ESCOF (Enel SpA) 1.22% (-0.35%)
  • Cash 0.20% (-4.70%)

Starting with the bad news first, I was premature with my addition of ABB. At least, I didn't go all in, buying half the position, and then adding the second half as it dropped. Even averaging down, the position was down by 14.16% by the end of Q2.

Along with the somewhat disappointing numbers the company posted for the first quarter because of weakness in southern EU, as well as China, I believe there was additional negative effect on the share price, given that the Swiss National Bank has been active in the currency markets, trying to weaken the Swiss Franc to maintain at least a rough equilibrium with the euro.

The news on Royal Dutch Shell was better. Even with the overall weakness exhibited by energy, the position only eased by 1.63%, confirming my feeling that the shares had become oversold.

Vodafone performed just as one would expect a telecom to perform. Nothing terribly flashy; just a respectable performance with a 2.41% gain. I'm looking forward to getting my first dividend from Vodafone - which is to be paid on August 1, 2012.

I guess I wasn't the only investor that was "disappointed" by the cut in expected production numbers by Goldcorp. The fact that precious metal miners were already under notable pressure certainly wasn't terribly helpful. Despite all of that, that position gained 2.23%. The factors that were behind Goldcorp's projected cut in production are, in my opinion, short term in nature, and so do not cause me to question the wisdom of continuing to hold shares in the firm.

Overall, from the end of Q1 to the end of Q2, the portfolio suffered a loss of 1.61%, while remaining positive by 2.11% on a year-to-date basis.

Disclosure: I am long GIM, MO, JNJ, ABB, VOD, GG, RDS.B.

Additional disclosure: Long all securities mentioned.