Brown Bag Portfolio April 2020 Review
Summary
- The market's improving, but we still have a long way to go.
- I continued to buy throughout the month.
- How the BBP performed during April.
My son commented the other day that one day he’ll tell his children about the great pandemic of 2020 and describe being holed up in his apartment for 2-3 months while he worked remotely. I commented that I’ll be telling my grandchildren that I went to work. As an “essential worker” life hasn’t changed much for me, although now I’m wearing gloves and a mask as I go about my day. The company that I work for isn’t paying us bonuses, or granting us hazard pay or doing much of anything in order to support the technicians that generate most of their revenue. However, I’m grateful that I’m still working while so many others are not. Perhaps when this crisis is over, I’ll find a better position with a different employer. Perhaps not, we’ll all have to wait and see how quickly the economy recovers and what the new landscape looks like.
Things will change, I’m sure of that. Over the next several months I expect to see companies reopening, but with new protocols in place. I’d expect that we’ll all be wearing masks for some time, temperature checks before entering facilities, and that we may see periodic flare ups of the virus and tremendous strains on some of our supply chains. Hopefully, critical industries such as biopharma will move factories and sourcing out of China and back to the United States as it becomes more and more obvious that outsourcing our manufacturing capabilities to an authoritarian nation that has been credibly accused of utilizing slave labor, religious persecution, and ethnic cleansing, isn’t a smart long term economic plan, even if it does save a few dollars along the way.
However, whether or not the Defense Protection Act is used to order companies to return to the US or whether those companies will see the benefits or returning on their own will most likely take much longer than it should. Politics has devolved into tribal warfare where both sides attempt to defeat the other rather than work together for the benefit of all. You’d think something a momentous as a pandemic would force Democrats and Republicans to work together to craft sound policy, unfortunately, that isn’t the case. Unless one side resoundingly defeats the other in November, I’d expect the partisanship to continue and actually increase. The effects this will have on the country and our economy as a whole are unknown, but don’t look good.
It’s enough to make investors horde their money and wait and see, but I personally don’t see that as the wisest course. I’ve been investing throughout the last two months, slowly pecking at holdings that I felt had been oversold, and making what I hope to be wise decisions, even if it may take several years before I see the results. I’ve made twenty-five buys since March 1, most of them nibbles of 5 shares at a time in order to capture prices that I felt were too good to pass up. Fifteen of those buys were in March, ten in April, and I expect to make 3-5 additional buys in May.
Other than shoring up my current positions and concentrating on bringing the average share price down, I also purchased 30 shares of Pennsylvania Power and Light (PPL), initiating a position in the Utility space. I’m looking at adding another 20-30 shares in May if I can get shares under $25.00 and then stringing out purchases throughout the rest of the year until I own about 100 shares. Once I’ve filled my position in PPL, I’ll most likely add another utility, although I haven’t decided which at this time. With May in the rearview, I’ll look at Abbvie (ABBV) or Glaxo-Smith-Kline (GSK) to get some healthcare exposure and look at buying 5-10 shares a month for the rest of the year.
Once I’ve reached a half position in healthcare, I think I’ll be looking at something in the consumer staples space. At least that’s the plan for now, but everything is subject to change as we look at how the recovery goes.
The Brown Bag Portfolio improved during April, but it still has a long way to go just to get back to even. That’s probably not too bad compared to some others, at least I had several years of positive returns before this crisis hit. I expect that things will continue to improve over the next several months and I’m hoping that I will have returned to even by the end of the year. However, I will continue to buy into the teeth of this crisis. Since I’m generally optimistic towards the future of this economy, I’m looking at present prices as good entry points. We’ll see in a couple of years whether that was solid or wishful thinking.
Brown Bag Portfolio | April 2020 | |||||
Name | Ticker | Shares | Value | %Return | Div/Shr | Annual Div |
DOW Inc | 84.63 | $3,104.93 | -23.47% | $2.80 | $236.95 | |
Blackstone Mort | 61.46 | $1,446.06 | 26.10% | $2.48 | $152.41 | |
Enterprise Partners | 296.30 | $5,202.99 | -29.79% | $1.78 | $527.41 | |
AT&T | 113.48 | $3,457.58 | -11.42% | $2.08 | $236.03 | |
EPR Properties | 96.16 | $2,829.03 | -50.18% | $4.59 | $441.37 | |
Main Street Capital | 116.88 | $3,048.10 | -24.30% | $2.46 | $287.51 | |
British Petroleum | 74.21 | $1,766.08 | -39.59% | $2.52 | $187.00 | |
Newtek Bus Srv | 53.10 | $796.43 | -31.60% | $1.76 | $93.45 | |
Penn Pwr Lgt | 30.00 | $762.60 | 4.39% | $1.66 | $49.80 | |
Eagle Point Credit | 56.25 | $359.99 | -58.82% | $0.96 | $54.00 | |
Oxford Lane Capital | 210.19 | $1,044.65 | -47.74% | $1.62 | $340.51 | |
NB RE Sec | 202.93 | $698.08 | -19.06% | $0.48 | $97.41 | |
Clough Global Op | 124.50 | $986.05 | -8.65% | $1.07 | $133.22 | |
Ivy High Income Op | 77.19 | $807.36 | -15.65% | $1.20 | $92.62 | |
Nuveen Credit Strategies | 101.68 | $599.93 | -20.91% | $1.10 | $111.85 | |
Total | $26909.85 | -28.22% | $3,041.54 | |||
Div Goal | % Goal | BBP Yield % | 8.92% | |||
$16,800.00 | 18.10% | |||||
Div Goal 2020 | % Goal | |||||
$3,360.00 | 90.52% | |||||
Lifetime Returns | ||||||
Symbol | OOP $ | OOP Shares | Shares frm Div | Div Received | Current Value | Total Rtrn |
DOW | $3,985.55 | 82 | 2.626 | $71.58 | $3,104.93 | -22.10% |
BXMT | $1,115.75 | 60 | 1.456 | $31.00 | $1,446.06 | 29.60% |
EPD | $6,328.87 | 256 | 40.298 | $1,076.77 | $5,202.99 | -17.79% |
T | $3,453.42 | 100 | 13.475 | $450.02 | $3,457.58 | 0.12% |
EPR | $5,098.00 | 86 | 10.160 | $579.83 | $2,829.03 | -44.51% |
MAIN | $3,610.95 | 106 | 10.875 | $404.63 | $3,048.10 | -15.59% |
BP | $2,791.50 | 70 | 4.205 | $155.34 | $1,766.08 | -36.73% |
NEWT | $1,109.50 | 50 | 3.095 | $28.40 | $796.43 | -28.22% |
PPL | $730.50 | 30 | 0.000 | $0.00 | $762.60 | 4.39% |
ECC | $801.00 | 50 | 6.249 | $73.02 | $359.99 | -55.06% |
OXLC | $1,572.00 | 160 | 50.191 | $427.88 | $1,044.65 | -33.55% |
NRO | $788.25 | 200 | 2.931 | $12.09 | $698.08 | -11.44% |
GLO | $1,040.00 | 120 | 4.501 | $39.78 | $986.05 | -5.19% |
IVH | $929.00 | 75 | 2.185 | $27.97 | $807.36 | -13.09% |
JQC | $749.50 | 100 | 1.683 | $9.20 | $599.93 | -19.96% |
Total: | $34103.79 | $3,378.31 | $26,909.85 | -21.09% | ||
The only good thing I can say about the present crisis is that it has allowed me to increase my dividends ahead of schedule. I think that I’ll meet my year goal about four months early and continue to grow that stream. Eagle Point Credit (ECC) did cut their dividend, but even at the present state it’s paying 15%+. I’m continuing the drip on that holding, but I’m not actively adding. I want to see how it plays out over the next couple of months before I commit any fresh money to that one. Oxford Lane Capital (OXLC) hasn’t announced a cut yet, but I expect one soon. Whether or not they cut, I’ll be holding and continuing to DRIP, but I won’t be actively adding. Nor will I be actively adding to Nuveen Credit (JQC), but I will add to the other funds opportunistically as they seem to be performing fairly well, all things considered.
Well, that’s it for this month. Unless something completely unforeseen happens (again), I’ll stick to the plan I outlined above and keep nibbling. Good luck and good investing to all of you.
This article was written by
Analyst’s Disclosure: I am/we are long DOW, BXMT, EPD, T, EPR, MAIN, BP, NEWT, PPL, ECC, OXLC, NRO, GLO, IVH, JQC. 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.
Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.
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