Below are my Buys and Sells from 2/21/2014 through 3/7/2014.
Buys:
Atlas Pipeline Partners, L.P. (NYSE: APL) - Upped position by 25% @ $30.60/share
Campus Crest Communities, Inc. (NYSE: CCG) - New position in taxable account @ $8.54/share
Physicians Realty Trust (NYSE: DOC) - New position in taxable account @ $13.32/share
El Paso Pipeline Partners, L.P. (NYSE: EPB) - Upped position by 15% @ $30.01/share
Kinder Morgan, Inc. (NYSE: KMI) - Upped position by 25% @ $32.26/share
Kinder Morgan Energy Partners, L.P. (NYSE: KMP) - upped position by 44% @ $74.50
Swift Energy Co. (NYSE: SFY) - upped position by 45% @ $9.94/share
Vodafone Group Public Limited Company (NasdaqGS: VOD) - upped position by 60% @ $41.35/share
EXCO Resources Inc. (XCO) -NYSE - upped position by 40% w/ buy @ $4.80/share
Sells:
Calumet Specialty Products Partners LP (NasdaqGS: CLMT) - reduced position by 33% selling high cost shares @ $25.51/share Plan to buy back in 31 days.
Enerplus Corporation (NYSE: ERF) - peeled off 50% of high cost shares @ $19.95/share (67% gain)
Industrial Services of America, Inc. (NasdaqCM: IDSA) - peeled off 20% of high cost shares @ $4.79/share (127% ST gain)
Magnum Hunter Resources Corp. (NYSE: MHR) - peeled off 7% of high cost shares @ 7.96/share (139% LT gain)
Magnum Hunter Resources Corpora (NYSE MKT: MHR-PC) - peeled off 27% of high cost shares @ $25.87/share (18% LT gain)
Magnum Hunter Resources Corpora (NYSE MKT: MHR-PD) - peeled off 55% of high cost shares @ $48.70/share (22% LT gain)
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Portfolio Strategy and the long term Value proposition(s)
Many of my recent buys continue to be in undervalued MLP's & REITs, an undervalued Mid-Cap E&P, an undervalued special situation E&P play w/ the renowned Value Investor Wilbur Ross and a EU restructure Telcom w/ plans to move into the cable business. All these buys generate the minimum income requirement I need in the taxable portfolio but looking forward (over 24 months) have unique "growth" opportunities that may/will achieve my 10% annual return targets (div + LT gain). I also achieve a pretty tax efficient treatment from the income I generate as much of the MLP distributions are tax deferred and the REIT dividends are "qualified" and are taxed at a 20% maximum Federal tax rate.
I have focused on pipeline and storage assets w/ buys in the Kinder Morgan family of companies. This group of companies is one of the largest and best run pipeline companies. I was under weighted in my holdings but a recent Barron's hit piece along with a secondary issue ( 6.9 Mln shares of KMP) and a huge insider buy by CEO R. Morgan (100K shares EPB $ 30.00/share), presented me w/ the opportunity to up my Kinder Morgan holdings by more than 30%. The Kinder Morgan Family of stocks now represent 8.6% of my taxable portfolio and is the largest sector holding in my taxable portfolio. I still have stock specific diversification holding shares in KMR, KMI, KMP and EPB.
I also increased my SFY position by 45% as earnings disappointed the market and the stock sold off more than 25%. Their asset profile did not change and in the conference call the company is close to selling their Louisiana holdings an entering into a JV drilling agreement (CEO stated net cash to SFY is one of their requirements). These two specific company events will further create value for the shareholder and an experienced JV partner will help SFY drill new wells w/o depleting their limited cash reserves.
Another special situation IMO is XCO. I upped my current position by 40%. I am following Wilbur Ross & Prem Wasta into this as they now own over 20% of the outstanding shares. The recent "rights" offering (completed last week) allowed them to up their position by 25% exercising these rights at $5.00/share. I also exercised my "rights" as well as increased my holdings buying shares at $4.80/share. This is a 1.4% portfolio position and I figure FV is around $7.00/share ( or 33% undervalued from the current closing price of $5.25/share). The most recent company event(s) announced during their conference call last week is that 2014 wells CAPX drilling expenses are covered from current cash flow and their JV partner(s). The JV deal allows XCO to buy back their interests into the new producing wells at a cost of 120% of what was originally paid by the JV partner (before the well development). This is an ok arrangement because XCO can then obtain better financing on producing wells than if the financing was obtained on a virgin well site. The big issue is that the 1st year's production is quite high and on NG wells can diminish as much as 50% in the 2nd-5 years. Therefore, current cash flows may not cover the future financing if commodity prices fall and/or they extend their leverage/debt too much. The positive from these deals is as their "oily" wells are developed (which is the focus on future CAPX expenditures), the future proved reserves should grow faster in value than their financing/debt resulting in increasing company NAV (and in their vast un-developed land assets/acreage). Therefore, at the margin overall company BV should increase w/ future well development financed from current cash flow. This business model has yet to be proved out over the long term but Wilbur Ross is a Board member (as of 3/2/2012) and reviewed these new JV deals before they were announced.
MY VOD buys were just a re-balancing from the recent completed VZ spin off and reverse split. VOD plans on expanding their reach into the cable business and there are rumors that AT&T is looking to expand their reach into Europe. The position is very small and in fact my VZ holdings increased by 25% w/ the tax free shares I received. This position could be a huge grower if it is successful expanding their cable footprint. My CMSCA is up almost 200% from my first buys 8 years ago (10/2005 @ $18.58/share). I am looking for VOD to achieve those results in the next 6-8 years. The portfolio position is small only 0.7% but could grow into a 2% position if the same growth is achieved as CMSCA.
I started two new positions in specialty REITs (CCG & DOC). They total only .06% of the taxable portfolio but I plan to build these along w/ MPW ( a 0.05% portfolio position). That's a 1.1% portfolio position which I would like to at least double. My value strategy is to identify those w/ undervalued assets, good future growth potential and some event that provides a good entry "buy" point (interest rate increase, company specific news, etc.). There is no rush to build the position but rather let the sector come to my value buy level. FWIW my original MPW cost basis (bought 8/2010 @ $8.61/share) is 40% of the current price of $13.09/share. MPW just completed a secondary of 8Mln shares @ $13.25/share this week. Part of building a "value" centric portfolio is to be a patient investor and wait for those values to come to you.
My recent Sells consisted of booking some LT gains, harvesting some short term losses, and moving preferred income assets into better growth assets that generate at least 5% income. I always work on reducing my cost basis on stocks I own peeling off the high price shares and buying low cost shares in 31 days and/or doubling down w/ low cost shares only to sell my high cost shares in 31 days. If/when a core position falls by more than 20% and I still like the company and their assets, I will implement such a buy/sell strategy. IDSA was one of those where I more than doubled my original holding 8/2013 @ $1.56/share. Stated BV is/was $ 3.94/share and since my buy, there is new management that has an incentive stock option at $5.00/share so if/when the turnaround is completed, management will profit from all those $5.00/share. We saw the stock hit a new 52wk high this week closing at $4.63/share. My plan is to peel off shares up to $6.00/share, booking profits from my $1.56/share cost basis.
I try to keep all LT gains inside the portfolio as long as they generate income and continue to have good growth potential. This provides for very tax efficient investing in the taxable portfolio. The IRA and Roth accounts do not have this consideration but the focus on my buys is income generation.
EKS |
