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John Cofran
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John Cofran is a professional investor and money manager with 20+ years experience, and over $15,000,000 in assets under management. He is a former CPA applicant with degrees in Finance, Accounting and Economics from Boston College. In addition to building several highly successful private... More
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  • January 2012 Portfolio Recap
    So far, 2012 is off to a strong start. Through February 2, 2012 the S&P 500 (NYSEARCA:SPY) is up over 5.3%, handily beating 2011's full-year performance. Impressively, the Nasdaq is up over 9.7% year-to-date. So, with January's impressive performance, the question remains: Where to from here?

    Turning to 2011, we saw a similar 4% rise in the S&P 500 through Feb 3rd. An impressive 28% run-up between late August 2010 and mid February 2011 was halted on February 18, 2011. Five months of sideways action was followed by a stock market collapse in the Summer of 2011. Despite a 20.6% run in the S&P since October 1, 2011, we have yet to reclaim the highs of February 2011.

    Fortunately, extremely low valuations in many blue-chips combined with necessary December 2011 tax-loss reallocations within the portfolio have yielded superb results. Through February 2, 2011 our portfolio has produced a 10.5% return, doubling the performance of the S&P. That performance is made even more impressive considering nearly 20% of the fund is invested in bond ETFs.

    Thus far, the strategic shift discussed in my December 2011 Instablog post has paid off handily:

    "As we have approached year-end, I have been aggressively selling losers to offset trading gains recorded earlier in the year. In addition, to achieve greater tax efficiency going forward, I have repositioned the portfolio for lower yield and greater dividend growth. I will be less active in capturing dividends in 2012 and more active adding to core positions on weakness. Currently the portfolio yields 6.84%, down from 8%+ through most of the year."

    To help protect January's impressive portfolio gains, I have been actively selling long-dated out-of-the-money covered calls. Currently 39% of the portfolio has been hedged with covered calls, and the overall portfolio is hedged against a 3.6% market decline. I will continue hedging activities as the market rises and individual stocks in the portfolio demonstrate significant outperformance.

    While seasonal bullishness is likely to continue in the short-term, I see significant headwinds as we approach the 1,350 level on the S&P. I expect a prolonged period of consolidation, and a possible 5% pull-back once the 1,350 area is reached. Longer-term, I maintain my 1,440 target price in the S&P.

    Overall Sentiment: Neutral.
    Portfolio Yield: 4.93%
    Projection: Seasonal bullishness. S&P resistance at 1,350.

    Top 5 Positions:

    1. iShares High Yield Corporate Bond (HYG)- 15.6%
    2. Apple (NASDAQ:AAPL)- 4.7%
    3. Microsoft (NASDAQ:MSFT)- 4.7%
    4. Teekay LNG Partners (TGP)- 3.9%
    5. Omega Healthcare Investors (OHI)- 3.3%

    Disclosure: I am long HYG, AAPL, MSFT, TGP, OHI.

    Feb 03 8:41 AM | Link | Comment!
  • December 30, 2011 Portfolio Composition
    Below is my year-end portfolio composition. After wholesale changes in the last two weeks to minimize current and future tax liabilities, the portfolio no longer has high concentrations of high and ultra-high yield stocks and ETFs with little to no growth.

    The portfolio now has a greater slant towards value and growth, as I see 2012 as a potential break-out year. The current yield sits at 4.80%, however several planned moves in early January will lift the portfolio yield to 5.70%. I expect dividend growth of 6.0% in 2012 as well as capital appreciation from this group in the neighborhood of 8.0% - 12.0%, for a total projected portfolio return of 14% - 18%. Factoring in expected trading gains, I expect a total return in 2012 of 20%- 24% before taxes.

    My target allocations are as follows:

    High Yield Bonds- 22%
    Energy- 12%
    Consumer- 12%
    Tech- 10%
    Trades- 10%
    Industrial- 10%
    Preferred Stocks- 8%
    Telecom- 7%
    REITs- 6%
    Financials- 6%
    Pharma- 4%
    Utilities- 4%
    Services- 4%
    Mortgage REITs- 4%
    Basic Materials- 4%
    Medical Technology- 4%
    Business Development Companies- 3%
    Cash- (30%)



    Weight Yield



    HYG 16.75% 7.18%
    AAPL 4.60% 0.00%
    STJ 4.15% 2.43%
    TGP 3.77% 7.59%
    T 3.44% 5.81%
    OHI 3.34% 8.15%
    JNK 3.26% 7.65%
    CLI 3.04% 6.72%
    MSFT 2.96% 3.06%
    PEP 2.83% 3.09%
    WAG 2.82% 2.72%
    NYB 2.81% 8.08%
    INTC 2.77% 3.44%
    PFF 2.74% 6.19%
    EMR 2.67% 3.40%
    ITW 2.67% 3.06%
    ORCL 2.64% 0.93%
    CAT 2.59% 2.02%
    GE 2.55% 3.78%
    HAS 2.54% 3.75%
    FE 2.53% 4.93%
    CMI 2.52% 1.80%
    CSX 2.52% 2.27%
    NTAP 2.50% 0.00%
    QCOM 2.49% 1.57%
    CVX 2.43% 3.02%
    IFF 2.39% 2.36%
    DECK 2.18% 0.00%
    BBEP 2.16% 9.13%
    FTR 1.97% 14.07%
    JPM 1.88% 3.02%
    BMC 1.87% 0.00%
    ZMH 1.37% 1.34%
    WM 1.30% 4.34%
    BRCM 1.17% 1.22%
    CSCO 1.03% 1.32%
    SYMC 1.01% 0.00%
    MSFT17.5Calls 0.48% 0.00%
    CIM 0.34% 20.55%
    MSLP 0.13% 0.00%
    Cash -9.25% 0.00%




    100.00% 4.80%
    Dec 30 2:55 PM | Link | Comment!
  • December 22 Portfolio Recap
    2011 has seen one of the most volatile stock markets in history. To date, there have been 94 trading days resulting in a daily gain or loss of more than 1.0% from the previous trading day. Additionally, 2011 has produced 21 days of losses of 2.0% or more.

    If there were ever a model year for "sell in May and go away", then 2011 was it. Had investors sold at the close on the last day of May and bought back into the market prior to the close on September 2nd, losses of 12.7% could have been avoided.

    Unfortunately, I failed to take my own advice and went away without selling in May. My portfolio peaked on exactly May 31, 2011. What happened next was not pretty. From June 1st through August 10th, the portfolio fell by 16.6%.

    Whether it was the debt cieling debacle or the European crisis, the last 6 - 7 months has been challenging to say the least. In the end, I have managed to claw back to a 2% gain through December 21st, outpacing the market slightly.

    As we have approached year-end, I have been aggressively selling losers to offset trading gains recorded earlier in the year. In addition, to achieve greater tax efficiency going forward, I have repositioned the portfolio for lower yeild and greater dividend growth. I will be less active in capturing dividends in 2012 and more active adding to core positions on weakness. Currently the portfolio yields 6.84%, down from 8%+ through most of the year.

    As we enter 2012, I expect more of the same; essentially a repeat of 2011. We may see seasonal strength in the first quarter, however the European debt crisis still looms. Expect increased volatility as we head into election season. We will have to pay close attention to the power struggle in Washington as the market's performance will be linked to the election outcomes.

    Barring the unforseen (like the unforseen staying in hiding is even a possibility), I see the S&P testing the 1,440 level during 2012 and finding support around 1,260. Should the global political/economic picture take a turn for the worse, I see us bouncing between 1,330 and 1,080.

    Overall Sentiment:  Cautious.
    Portfolio Yield: 6.84%
    Projection: Seasonal bullishness. S&P to 1,440 in next 12 months. Risk to 1,080.

    Top 5 Positions:
    1. iShares High Yield Corporate Bond (NYSEARCA:HYG)- 11.7%
    2. SPDR Barclays Capital High Yield Bond (NYSEARCA:JNK)- 8.4%
    3. iShares S&P U.S. Preferred Stock Index (PFF)- 7.28%
    4. New York Community Bank (NYB)- 5.55%
    5. Annaly Capital (NYSE:NLY)- 5.01%
    Dec 22 9:39 AM | Link | Comment!
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