The 30+1 Portfolio: An Average Investor's Reasoning For Buying A Stock

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Includes: AAPL, ABBV, ABT, AFL, AIMT, AMZN, APLE, BABA, BAC, CNP, DBX, FB, FCAU, GLW, KHC, LDOS, LVS, MAIN, MO, O, PGNX, RDS.A, RF, RSG, SQ, STOR, TCEHY, TLRD, TWX, VGR, WEN
by: Sleeps Well At Night
Summary

This is a first look and, just as importantly, first attempt at writing an ongoing series on my rollover IRA.

I am hoping that investors much smarter and more informed than myself will provide feedback, good or bad.

An even better outcome will be if anyone reading, including myself, walks away with one or more ideas for further research or thought.

Editor's note: Seeking Alpha is proud to welcome Sleeps Well At Night as a new contributor. It's easy to become a Seeking Alpha contributor and earn money for your best investment ideas. Active contributors also get free access to the SA PRO archive. Click here to find out more »

They say the first sentence is the hardest. Now that that is out of the way, let's take an initial look at my portfolio by first getting to know what I'm about.

I am a 53-year old who wasn't really serious about finances until ten years ago when I realized I was way behind the curve in terms of my financial future. Funny how that revelation hit me right around the time my little kiddo was born. At that point, I buckled down, paid off all my credit card debt, and started implementing a short and long-term plan for myself and my next generation. I have no formal financial training except for my college degree which was in Economics. I don't even know if Economics counts.

I have a company-sponsored 401(k) with 100% company match up to 4%. Currently, total monthly contributions, including the company match equals 15% with two-thirds going into a traditional 401(k) and one-third going into a Roth 401(k). Even though it is a larger account dollar wise, all it consists of is 75% stock index funds and 25% bond index fund. It's so boring I think I just nodded off typing that sentence.

Also, since I have a HDHP at work, I have just started a HSA with mutual fund investment options. Again index funds... BORING.

"The Rollover"

Now, the good stuff. I have a rollover IRA which will be the main focus of this and future articles. I actively manage this and, unfortunately, do look at it every day. It, along with my investing style, has morphed over the years. Like Bruce Lee said...

(Source)

In other words, I am not married to one type of investing style (value or growth). I'm just looking for investments I feel comfortable with. They can be cheap, they can be expensive. I don't care. However, they can't make me feel squinky. I do diligence. However, I usually don't do due diligence.

Part of my investing style is feel. I cannot wait to get grilled in the comments section for this sentence :)

I do have a couple of spec plays in my current portfolio. If this was a craps table, they would be my five dollar yo's.

I am buy and hold... mostly. My exit strategy is to review a stock that has fallen 25% from its highest price from the day I entered the position. At that point, I'll decide whether to sell, hold, or buy more.

The one thing I will always do is DRIP. I DRIP more than an eight-year-old with a runny nose.

Time for the big reveal

Below are the holdings in my rollover IRA as of 05.14.18

Symbol Quantity Cost Basis/Sh Cost Basis Total Current Value Total + / - Dollars Total + / - %
AAPL 271.624 $6.17 $1,675.70 $51,106.05 $49,430.36 2949.83%
ABBV 51.318 $68.97 $3,539.25 $5,434.06 $1,894.81 53.54%
ABT 104.018 $37.88 $3,939.95 $6,451.19 $2,511.25 63.74%
AFL 100 $44.94 $4,493.61 $4,524.00 $30.39 0.68%
AIMT 200 $31.56 $6,312.96 $6,028.00 ($284.96) -4.51%
AMZN 50 $666.59 $33,329.36 $80,077.00 $46,747.64 140.26%
APLE 100.569 $17.03 $1,712.95 $1,847.45 $134.50 7.85%
BABA 50 $154.43 $7,721.54 $9,932.00 $2,210.46 28.63%
BAC 100.814 $23.13 $2,331.45 $3,137.33 $805.88 34.57%
CNP 100 $26.56 $2,656.15 $2,649.00 ($7.15) -0.27%
DBX 100 $30.05 $3,004.95 $2,996.00 ($8.95) -0.30%
FB 50 $148.12 $7,406.11 $9,332.00 $1,925.89 26.00%
FCAU 100 $14.93 $1,492.50 $2,255.00 $762.50 51.09%
GLW 127.705 $15.45 $1,973.13 $3,584.67 $1,611.55 81.67%
KHC 100 $58.68 $5,867.95 $5,928.00 $60.05 1.02%
LDOS 101.538 $51.50 $5,229.45 $6,325.81 $1,096.37 20.97%
LVS 101.059 $72.03 $7,279.23 $7,831.06 $551.83 7.58%
MAIN 478.712 $9.88 $4,730.78 $18,468.70 $13,737.93 290.39%
MO 552.108 $18.92 $10,445.82 $30,376.98 $19,931.16 190.81%
O 100.211 $50.70 $5,080.95 $5,289.13 $208.19 4.10%
PGNX 200 $6.31 $1,261.47 $1,488.00 $226.53 17.96%
RDSA 104.078 $53.85 $5,604.91 $7,508.18 $1,903.28 33.96%
RF 104.577 $7.60 $794.45 $2,007.87 $1,213.43 152.74%
RSG 104.446 $44.34 $4,631.60 $7,079.34 $2,447.75 52.85%
SQ 125 $30.19 $3,774.21 $6,785.00 $3,010.79 79.77%
STOR 101.256 $24.25 $2,455.95 $2,612.40 $156.45 6.37%
TCEHY 100 $34.96 $3,496.45 $5,235.00 $1,738.55 49.72%
TLRD 100 $21.78 $2,178.30 $3,448.00 $1,269.70 58.29%
TWX 108.96 $55.72 $6,071.36 $10,283.64 $4,212.28 69.38%
VGR 214.312 $15.37 $3,294.20 $4,114.79 $820.59 24.91%
WEN 115.913 $6.88 $798.03 $1,885.90 $1,087.87 136.32%
TOTAL $154,584.72 $316,021.55 $161,436.92 104.43%

Now that I have bared my soul to the Seeking Alpha community, let's take a look at the first stock in my portfolio and the easiest one for me to justify owning from my perspective.

Apple

(Source)

Remember this? I bought Apple (NASDAQ:AAPL) stock back in September of 2005 solely for the above reason. There was no technical analysis, no number crunching, no diligence let alone due diligence. I was younger with no clue. I just liked the iPod. Since I have a 2,950% gain since buying it, I can pretty much guarantee I would be hard-pressed to ever sell this position. However, I'm assuming that if you're still reading this, you would like to know whether it is still a buy in today's market. Below would be my reasoning for buying the stock today.

  • It's cheap - Everyone loves a bargain. Apple's current P/E ratio is 18.24. The S&P 500 current P/E ratio is 24.85. I'm not a math geek, but this stock in today's market is cheaper than Valentine's Day candy on February 15th compared to the rest of the candy aisle.
  • Straight cash homie - I love cash. I especially love cash when someone gives it to me every three months for doing nothing but clicking a computer mouse 144 months ago. Let's look at the below table to see what Apple has given back to shareholders in the form of dividends and/or share buybacks from FY 2012 through Q1 2017.

(Source)

That's a ton of cash that Apple has given back to shareholders in the past five years. That's Jeff Bezos' couch cushion cash. Personally, I prefer increased dividends versus stock buybacks because dividends are cash straight back to me. Dripping my original 230 shares have accounted for an additional 41 shares that are mine until they pry them from my cold dead hands. While I can appreciate stock buybacks, I don't know how a company redistributes any stock they buyback. It could be in the form of increased dividends, increased stock options to employees, et al. Also, depending on timing, the buy might not be the most beneficial or efficient use of capital (I'm looking at you General Electric (NYSE:GE)).

Too many iPhone sales are a problem?

iPhone sales Image Source

So, why are increasing iPhone sales from 1.39M to 216.76M in a decade a bad thing? A good case could be made that too much dependence on one product line is not good for a company long term.

Polaroid Land Camera (Source)

I say that's not necessarily true.

(Source)

Anyway, while the majority of its revenue comes from the iPhone, Apple is more than that. As examples, in the latest quarter, Apple's Services Division accounted for $9.2B in revenue for Q218 which was 31% higher than Q217 ($7.0B) and 8% higher than Q118 ($8.5B). Also, even though Apple didn't break out Apple Watch revenue and lumped it in with other products, the increase in sales revenue was 38% from Q217 to Q218 ($2.8B vs. $3.9B).

While the iPhone will continue to be a huge driver of Apple revenue, the company is more than a one trick pony.

Bringing it all together

So, there it is. My first attempt at a) writing an article for a website of any kind, b) sharing my current rollover IRA account holdings and performance and c) explaining and making a strong case as to why I bought and am holding these specific companies to more seasoned and much smarter investors than myself. Future articles will focus mainly on the rest of the holdings in this portfolio and my reasons being an average individual investor for buying, selling, and/or holding them.

In the meantime, any thoughts and feedback good or bad is always welcomed and appreciated. I promise my response won't be

Excuse me. Next. Boring, bonehead questions are not cool. Next?

Good hunting.

Disclosure: I am/we are long AAPL, ALL STOCKS IN ABOVE TABLE.

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.

Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.