I first published an article on Seeking Alpha in mid-December 2013, meaning I have been writing for a quarter now. As I am an individual investor without a blog or a public record as a financial analyst, I decided to write a "Quarterly Report of Performance". While this won't be nearly as informative or illuminating as one of Martin Whitman's or Warren Buffet's letters, it will serve to consolidate my recommendations in one place-both for accountability but also to help my thought process. By looking at the articles, the results and my other portfolios, some well-needed analysis and re-allocation should occur. Hopefully this will give you some ideas as well. I'm putting myself out there in this article since there is no other accountability function, so here goes.
|Stock||Date||Price||Current Price||Div||Total Return||% Ret||Rec Type|
Note: All initial prices are date of publication or first trading date after publication from Yahoo! finance. For articles that mention writing covered calls, call premiums are omitted as trade dates and premiums fluctuate. My personal trading returns may be slightly higher due to call premiums.
A quick review of the table shows some recommendations worked out exactly as written, one has been fairly disastrous after initially being positive and most are winning but not in a spectacular fashion. This is reassuring-both as I hope to add value as a contributor but also reinforces my personal goal to "hit singles and doubles" over my remaining investing career. Earning a few percentage points a quarter over and over while avoiding catastrophic losses is the most logical approach I have found. Sure it'd be great to hold only 10-baggers, but that is a fool's errand in my opinion.
My first article and a follow-on article stated that Groupon (NASDAQ:GRPN) was overvalued and was setting up to be an investment trap. While Groupon is diversifying, has a large cash hoard and has established high brand recognition, the company disappointed when they announced earnings. The stock fell below $8, destroying billions in value overnight. I have nothing against Groupon as a company but as a stock this warning has been my best advice to date, and although much of the froth has been taken out of Groupon, I still don't see the value in purchasing the stock at these valuations.
My worst article (and current holding) is Big Five Sporting Goods (NASDAQ:BGFV). Big Five is expanding and modernizing their stores and belatedly moving to e-commerce. The stock was on a tear throughout 2013 and I was cautiously optimistic when writing on the company on December 23, 2013. I also write covered calls on BGFV and while some trades have been profitable, over-all tough year over year comparisons, poor results, and tough retail conditions in general have depressed BGFV. A straight "buy and hold" investment would have lost 18% to date, including one dividend payment after initially being positive. I am considering entering a protective stop loss order on my position and would recommend the same or even exiting the position for fellow stockholders.
Realty Income Trust (NYSE:O) is a long time holding as a REIT that is headquartered near my home. The company promotes it's monthly dividend and continues to be a leading REIT. Total return since my review of the stock and preferred stocks has been 10.2%, which may have the stock slightly overbought. I wouldn't recommend selling, especially for the income investor as O continues to increase the dividend at least quarterly.
My comparison articles on Harley-Davidson (NYSE:HOG) and Polaris (NYSE:PII) are holding true if not spectacular. Two items of interest are the roll-out of Harley-Davidson's new Street motorcycles (smaller water-cooled cruisers) this quarter and Polaris's results from Indian motorcycle sales, which initially have been positive. I do have to admit I thought I had cursed Polaris-they have had 5 years of successful growth and positive stock increases and immediately suffered about a 7% pullback when I wrote on them! The stock has recovered since and continued rewarding the company for strong diversified product growth/market share growth. My recommendation is to watch HDI carefully but consider Polaris as a steady diversified company.
Both my article on Hersha Hospitality Trust (NYSE:HT) preferred stock and Nordic American Tanker (NYSE:NAT) are primarily yield plays with some hope for appreciation. The HT preferred class C shares have been fairly stable and the only return to date is the high yielding dividend. NAT has been on a wild ride, getting as high as $12.39 on news of Iranian sanctions being eased and temporarily inflated spot tanker rates. Other good news affecting NAT stock price is the well-received start-up of Nordic American Offshore, including adding 2 additional offshore service vessels bringing the total fleet to 8. I still think NAT is a good stock with a good yield and the opportunity to write covered calls to enhance total return. HT-PC still has a yield to call approaching 9% per year as it trades at a discount to par.
One of my investing role models is Martin Whitman, and in a turn-around from my quarterly eager reading of his Letter to Shareholders, I wrote a short synopsis of the Third Avenue Funds Annual Report. I am a long-term investor in the Third Avenue Value Fund (MUTF:TAVFX) and have enjoyed a solid return in the fund. While most Seeking Alpha readers likely research individual stocks and ETFs, Third Avenue's funds could be used to provide a steady return for diversification or while researching other investments. While reporting short-term results goes against everything Whitman and company stand for, in the month and a week since I wrote on the funds, Third Avenue Value is up 3%. I still recommend these funds.
Cal Dive International (NYSE:DVR) was the topic of my most recent article and I discussed different options to unlike value in this deeply discounted to book value stock. So far the stock has appreciated slightly as management's turn-around efforts begin to take effect-most recent earnings report shows lower G&A costs, contract backlogs turning into revenues and international diversification paying off. Time will tell, but any significant closing of the discount will mean a large pay-off as this is a low-price, small capital stock. I'm still long DVR.
In summary, I have made 9 recommendations in ten articles. Two cautionary recommendations proved to be accurate, with one warning of a large destruction of wealth in Groupon which bore out. Seven "long" recommendations so far score 6 and 1, with two having double digit returns, four having positive returns and the Big Five Sporting Goods recommendation proving to be my worst one with a total return of -16.34%. Besides the financial return in my portfolio and a few dollars as a contributor, I have established a more disciplined approach to my investing, plus learned greatly from my peers here on Seeking Alpha. Until next time, thanks for reading and happy hunting for good investments!
Disclosure: I am long BGFV, DVR, NAT, O. 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.
Additional disclosure: I am long HT-PC preferred stock and the Third Avenue Value Fund (TAVFX)