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Chowder
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PRIMARY OBJECTIVE: ... Income Replacement! Escape velocity is the speed that an object needs to be traveling to break free of the planet's gravitational pull and leave it without further propulsion. This portfolio is looking for the point where the income being generated can allow the holder of... More
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  • Investment Manager Purchases In Q4

    I was reading an updated Value Line Survey and saw the latest purchases made by Investment Managers and thought it might be interesting to share with others.

    Here's who the leaders were:

    KO ... IBM ... PG ... FB ... ACT ... USB ... WMT ... XOM ... GE ... MSFT ... BAC ... BLK ... C ... V ... DVA ... CSCO ... WBA ... JPM ... DTV ... TSLA.

    Here's who they were selling:

    ABBV ... GILD ... MON ... MSI ... BIDU ... DOW ... VOD ... AIG ... HPQ ... HD ... INTC ... NOC ... VMW ... MO ... NOK ... TRV ... BP ... EBAY ... GSK ... HCA.

    A side note:

    VL owns INTC in their Portfolio IV and have it on the bench for potential sale.

    Their list titled; Stocks for Dividend Growth with Low Risk:

    BAX ... D ... ETN ... ENB.TO ... ES ... MMP ... NA.TO ... NEE ... OXY ... T.TO ... TD.TO ... WEC ... XLNX

    Take it for what it's worth, I'm simply supplying information and potential food for thought.

    Mar 23 8:24 PM | Link | 10 Comments
  • 2014 Watch-List

    At the beginning of each year, I update the companies I would like to own and then track their share price throughout the year to see if any of them pull back into a buy zone.

    The reason they are on the watch-list as opposed to being in my portfolio is because they were/are overvalued.

    I won't purchase every company on the watch-list, for example I have several railroads listed but I only wish to purchase one. So when the time comes that one qualifies and gets purchased, the other railroads will come off the list.

    Those of you who have been reading my comments over the last few years know that I'm a very big proponent of strength. I believe that the strong often stronger, and because I know that is often the case, I don't allow companies selling at 52 week highs to prevent me from buying them if they pass my stock selection process. Not all companies at 52 weeks highs pass, and for those that don't, I will wait them out.

    I think most of us would agree that valuations are very important for long-term success, but I find it interesting to see that overvalued companies usually beat the S&P 500 Index easily in shorter time frames. At least the ones that make my list do. ... Ha!

    I'm not going to chase overvalued companies and this instablog is certainly not suggesting that others do either, I simply wanted to show how in the short term, momentum companies continue to show upside momentum.

    I may use this concept in the future when selecting growth oriented companies.

    Anyway, the following list shows price appreciation only for 2014, and they are not equally weighted. They were all based on the same number of shares, the number doesn't matter since all I was tracking was share price appreciation.

    I wouldn't apply the same concept in the portfolio because there I would be looking for total return and it's relation to the other positions, but for a watch-list, all I'm measuring is price action since I'm waiting on my price to open a position.

    Again, this wasn't or isn't a study or an attempt to prove anything. It is simply an exercise on value in the short-term and I couldn't think of a better example than my own watch-list.

    Here are the numbers: (Jan 1 through Dec 15)

    AMP ..... up 11.56%

    BAX ..... up 4.42%

    BDX ..... up 23.10%

    CAT ..... dn <1.17%>

    CB ...... up 5.28%

    CNI ..... up 12.12%

    COST ... up 16.76%

    CSX ..... up 20.02%

    CVS .... up 25.57%

    DNKN .. dn <3.69%>

    DNP .... up 8.81%

    EMR .... dn <16.72%>

    FL ...... up 40.46%

    GE ..... dn <10.03%>

    GPC ... up 22.19%

    HD ..... up 23.55%

    ITW .... up 10.37%

    LOW ... up 31.83%

    MA ..... up 1.41%

    MKC ... up 4.25%

    MMM ... up 11.84%

    NSC .... up 9.52%

    SBUX .. up 3.18%

    SWK ... up 16.13%

    TGT .... up 15.36%

    TJX ..... up 4.05%

    TPZ .... dn <0.70%>

    ULTA .. up 32.97%

    UNP ... up 33.74%

    UTX ... dn <1.66%>

    V ...... up 15.28%

    VFC ... up 16.39%

    WAG .. up 27.86%

    WMT ... up 6.88%

    This portfolio was up 12.80% on share price alone. It would be much higher if dividends were added and some of the positions showing negative above would actually be slightly positive if dividends were included.

    S&P 500 (NYSEARCA:SPY) ... up 8.40%

    Dec 16 6:14 AM | Link | 36 Comments
  • Project $3 Million - KMI

    This month's cash contribution should be posted in the account on Monday or Tuesday. There will be enough cash to make an add-on purchase. That purchase is going to be KMI.

    Kinder Morgan Inc. - KMI has recently completed a deal to consolidate the other Kinder companies, KMP, KMR and EPB. KMI is now one of the largest energy companies on the continent. With their size and scale, their diversification and track record of growth throughout market cycles, it becomes one of the best offensive and defensive plays in the midstream space.

    KMI now has the scale where there isn't a project on the continent they can't bid on. KMI now has the economy of scale where they can go on an acquisition spree and continue to grow the business.

    Institutional Investors have shown they approve of this deal. In an environment where oil prices are dropping and other midstream companies are seeing significant price corrections, KMI is only down 7% from it's all-time high. That's a sign of strength and I buy strength!

    Richard Kinder has said they expect to grow the dividend at a rate of 10% per year for the next 5 years. When you add the current 4.4% yield, that makes KMI an ideal dividend growth prospect at this time. The Chowder Rule number is 14.4 and that certainly confirms a good dividend growth prospect.

    I am purchasing KMI as a Core position and I am willing to pay up to 3 to 5 percent above fair value for a Core. Morningstar says KMI is selling at a 2.0% discount to fair value and S&P says it is selling at a 2.2% premium. So, it qualifies as fair value.

    Jefferson Research says KMI has an Earnings Quality rating of STRONG. They have a Cash Flow Quality rating of STRONGEST. They have an Operating Efficiency rating of STRONGEST.

    Bulls Say
     
    With the consolidation in the rear-view mirror, Kinder Morgan is starting a new chapter as the largest midstream firm in North America.
     
    We agree with management's expectations of 10% dividend growth through 2020, providing a solid outlook for both income and growth.
     
    Kinder Morgan is poised to be a consolidator, and Chairman Rich Kinder has already signaled his intent to hunt for accretive acquisitions. Over time this will help propel Kinder's growth.
     

      
    Bears Say
     
    With lower oil prices, there's a new headwind facing project development. It may become harder to keep project backlogs full, threatening longer-term organic growth.
     
    The TransMountain expansion is meeting with increasing opposition. Pipeline politics are playing out, moving the project from a sure thing to a maybe, pushing out likely in-service dates, and driving up project costs.
     
    It's unclear how the consolidated Kinder Morgan will fund new growth--will it raise equity capital like KMP did, and will markets tolerate that from a c-corp?

    The risk level is rising with weak oil prices, and share price could start falling, following the other midstream companies, but I'm willing to accept this risk given the strong earnings and cash flow ratings. KMI has the financial strength to survive an oil bust cycle.

    So there it is! As soon as the cash shows up in the brokerage account, KMI will be the next purchase.

    Dec 14 10:25 PM | Link | 36 Comments
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