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Rotated AMP Into BLK

|Includes: Ameriprise Financial, Inc. (AMP), BLK

As noted in my March monthly update, Ameriprise (NYSE:AMP) was a rotation candidate. Today I took the plunge and replaced it with BlackRock Inc (NYSE:BLK).

Why AMP was sold:

  • Relatively narrow moat
  • Revenue declined slightly last year
  • Company does not have a good reputation according to many (haven't used them myself)
  • Chart short-term looks like it's topped out

Why BLK was bought:

  • Revenue still growing, unlike other asset managers
  • Much wider moat
  • Low payout ratio
  • P/E below S&P 500, with much higher growth rate
  • I believe it will NOT cut its dividend in the next recession
  • I believe it has potential for a high dividend growth rate
  • Largest ETF provider (distant seconds are Vanguard and State Street)
  • Has a wide base of institutional clients that provide a much more stable/stickier stream of revenue source
  • Has ETF products that are suited for all market conditions

Was debating whether to wait until the short term chart gives a better buy signal, but in the end, this is a rotation move, so I'm not as concerned about getting the best price. This is a very high quality company trading at below average S&P 500 valuation. Risks I considered include: poor market performance can drag down this sector; intensifying competition from Vanguard.

Actions in taxable account:

  • Sold all 300 shares of AMP; loss of 0.72% excluding dividends
  • Bought 100 shares of BLK

Disclosure: I am/we are long BLK.