I now introduce you all to the Retire In Peace portfolio, or the R.I.P. portfolio for short, which is one of my family portfolios. Yes, this is real money. This is not our main retirement portfolio, but it is a portfolio that will greatly contribute to a stress free and relaxing retirement.
These updates will allow commentators on Seeking Alpha to evaluate the portfolio's performance, as these holdings are the stocks that I write about here on SA. I want to share this portfolio to allow my followers to track the performance of the stocks that I write about in addition to allowing them to see what adjustments I make on a monthly basis. Also, I hope that allowing everyone to see my purchases and sales will lead to constructive discussions about the company's that I consider "core holdings". I learn on a daily basis from others on SA, so these updates will also benefit me.
Below you will find the portfolio and its performance, as well as my thoughts on each of my core holdings.
|Company||Stock||# of shares||Cost Basis||Cost Value||12/4/2015||Value||Weighting||Gain (loss)||Gain (Loss)||Performance||On Cost||Yield||Income|
|Bank of America||BAC||515.77||$16.06||8,284.49||17.80||9,180.71||17%||896||-||896||1.2%||1.1%||103|
|Bank of America Warrants||BACWSA||303.00||$6.43||1,948.29||6.33||1,917.99||4%||(30)||-||(30)||0.0%||0.0%||-|
|Johnson & Johnson||JNJ||23.00||$93.15||2,142.45||102.95||2,367.85||5%||225||-||225||3.2%||2.9%||69|
|American International Group||AIG||86.68||$56.04||4,857.74||63.99||5,546.65||11%||689||-||689||2.0%||1.8%||97|
|Xinyuan Real Estate||XIN||189.33||$3.88||733.95||3.49||660.74||1%||(73)||-||(73)||5.2%||5.7%||38|
General Electric (NYSE:GE) - This large conglomerate is a core holding, and it currently represents my largest position. GE shares are up big on a YTD basis, and I believe that the story is just beginning. GE is selling off GE Capital assets and the company is re-committing to its industrial roots, which will bode well for shareholders. I may add to my position if management continues to make shareholder-friendly moves.
Short-term Catalysts - Buybacks, GE Capital asset sales, improving earnings
Long-term Catalysts - Buybacks, increasing dividend, focus on industrial businesses, integration of Alstom assets, energy demand, internet of things ("IoT")
AT&T (NYSE:T) - This telecom is a core holding, and I plan to add to my position when shares drop below $32. This company is not in my portfolio for capital gains, but instead for the income. The current dividend yield is ~5.6% and the dividend will likely continue to be raised in the years ahead. The DirecTV and Latin America acquisitions are long-term catalysts that just may lead to stellar top-line growth over the next five-to-ten years.
Short-term Catalysts - Improving cash flow from DirecTV acquisition, increasing dividend
Long-term Catalysts - Cross-selling capabilities, foreign expansion, cost synergies, connected devices ("IoT")
Walt Disney (NYSE:DIS) - This well diversified company is a core holding, and I would love to add to my position around the $105 range. I am up big since purchasing this company a few years ago, but I believe that the future is still bright. The Star Wars movies will not only be big hits in the theaters but the consumer products division will greatly benefit too. ESPN is a concern with the unbundling trend, but I fully believe that DIS will find a way to make tons of money in the unbundled format because content is king. Lastly, Shanghai Disney is also a tremendous long-term catalyst. As you can tell, I am a big fan of this company.
Short-term Catalysts - Star Wars (movies and products), increasing dividend, buybacks
Long-term Catalysts - Shanghai Disney, benefiting from unbundling, Marvel and Star Wars movies
Bank Of America (NYSE:BAC) and warrants - This bank is a core holding, and it currently represents my second largest position. BAC is a long-term value play and also a play on the growing dividend. Some investors are worried that banks will be the new-aged utilities with all of the newly implemented regulations, but I am okay with a safer (more capitalized) bank that is paying a large dividend. However, new regulations must come to an end at some point or the investment thesis may change. I believe that BAC will be fairly valued in the mid-$20's based on current earnings, but would not be surprised to see BAC in the $30's within the next two-to-three years.
Short-term Catalysts - Increasing dividend, buybacks, rising rate environment
Long-term Catalysts - Increasing dividend, buybacks, rising rate environment, breaking up the company (unlikely, but would unlock significant shareholder value)
Synchrony Financial (NYSE:SYF) - This consumer financial services company is a core holding, and I wish that I purchased more shares after the IPO. This unique company is a play on the consumer, as its main business is private label credit cards. The company has long-term partnerships with Wal-Mart (NYSE:WMT), Amazon (NASDAQ:AMZN), etc. I also anticipate for this company to significantly grow its dividend over the next few years.
Short-term Catalysts - Increasing dividend, buybacks
Long-term Catalysts - Increasing dividend, buybacks, making accretive acquisitions
Johnson & Johnson (NYSE:JNJ) - This large healthcare company is core holding, and is a safe income play. I hold this company for a slow growing dividend but I do not anticipate large capital gains in the short-term. Also, a long-term catalyst is management eventually breaking up the company and unlocking shareholder value.
Short-term Catalysts - Increasing dividend, buybacks
Long-term Catalysts - Increasing dividend, buybacks, breaking up the company (spin-offs or asset sales)
American International Group (NYSE:AIG) and warrants - This global insurance company is a deep-value play as it currently trades significantly under book value. The earnings results have been poor for awhile now, but I believe that the reward far outweighs the risk. Management has been making shareholder-friendly moves (dividend was recently increased by 124% and the company has repurchased $8.1 billion in shares in 2015), and it appears that the board (and management) is committed to continuing this trend. At some point, management will be replaced for not improving earnings results or the company will be split up like the activists are recommending.
Short-term Catalysts - Increasing dividend, buybacks, selling non-core assets, additional moves to appease the activist (Carl Icahn & John Paulson)
Long-term Catalysts - Increasing dividend, buybacks, breaking up the company, improving earnings
Full Disclosure: This portfolio is being built for our retirement, so I have 30+ years to make adjustments. I track the portfolio monthly but I do not get caught up in the monthly volatility. The core holdings noted are not necessarily the shares that I plan to hold for the next 30 years, but instead the shares that I would like to hold for that period of time. I will closely monitor these holdings and will trim, add to, or eliminate positions if the company's story drastically changes. Anyone that would like to know more about my thoughts on these company's can review my previous articles located on my profile.
I look forward to reading everyone's thoughts on this portfolio, as I believe that sometimes the best investment advice is constructive criticism. I try to contribute ~$1,000 a month to this portfolio, but sometimes it is a little more or less. I will attempt to provide monthly updates but I may miss some months. Lastly, I will still write about these companies on a regular basis so stayed tuned.
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Disclaimer: This article is not a recommendation to buy or sell any stock mentioned. These are only my personal opinions. Every investor must do his/her own due diligence before making any investment decision.
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Disclosure: I am/we are long GE, T, DIS, BAC, SYF, JNJ, AIG. 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.