Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Paul Senior who wrote (38184)	6/5/2010 11:33:27 AM
From: E_K_S	Read Replies (1) \| Respond to of 78481

Hi Paul RE: Source of Funds - equity value buy & hold allocation That's a good overview and I probably need to be more diligent to peel off more long term holds as positions test recovery highs. Some of my largest sells in the past six months were also in the commodity natural resource sector too with BHP, CVX & BP. I sold 15% of my BHP holding at the beginning of the year near the all time high. As a result of the proposed Australian tax and market correction the stock is now down 24%. Unfortunately I started a new position in CNX (CONSOL ENERGY INC) which is down 20% from my average cost and pays a much lower dividend than BHP. Their exposure to coal and NG is a better fit as a core holding for my portfolio and the company is not impacted on any special country tax (either Australia or Canada). My other big sales in the last six months was a re-balancing of my integrated oils. I sold 17% of my CVX which is down 8% and reinvested the proceeds into COP (70%) down 1% and XOM (30%) down 16%. I also closed out my small BP position which is now off 26% from my recent sale. I would like to further pair down my integrated oil exposure and put the proceeds into more domestic NG and E&P companies. Many of these pay a slightly higher dividend than the integrated oil companies, have limited exposure to offshore drilling activity and could benefit from any new U.S. legislation that promotes domestic NG consumption. I continue to hold a large percentage of the portfolio assets (about 25%) in several bond like holdings (GNMA, Credit Union, Treasury Direct, Preferred REITs, MLP & preferred stock mutual funds). I am tempted to stay put with these positions as the blended yield is around 5%. I do have LT gains in every one of these positions, so these assets could be used as a source of funds if I see an opportunity in a low risk value buy. The risk/reward trade for me must be 20% or more annualized, and a dividend yield of at least 2%-5%. As the market sells down, many potential value buys begin to meet this criteria. Several of the drug companies come to mind. I also pay particular attention to all the holdings that pay little or no dividend. These are top candidates for sale and have to have a very compelling value argument for me to continue to hold. 15% of the portfolio may be made up of these positions where each holding represents less than .5% of the portfolio. Many of these positions are special situation, theme stocks and/or Global BRICK investments. These are also the stocks that if left to run become the multi baggers in the future. This is where much of the due diligence and pruning is done. The key change for my equity Buy & Hold allocation is to work on the overall portfolio turnover rate. I need to get it down (from 60 months avg) to 36 months for everything but my core holdings. This will allow me to add many more value buys to the portfolio, while weeding out the non-performers. EKS