News: Amazon Buys Whole Foods Market

So the big news this week is that Amazon (AMZN) has bought Whole Foods Markets (WFM).

http://www.cbc.ca/radio/asithappens/as-it-happens-friday-edition-1.4164029/amazon-s-whole-foods-deal-another-tech-company-swallowing-ever-greater-portions-of-our-economy-1.4164035

And this is the impact it had on our Feb 2017 portfolio F2017.  If you recall, this portfolio was made up entirely of food and grocery stocks.

The portfolio dropped by almost 2% and is now losing money.  Today's news reinforces the idea of diversifying your stock portfolio.  I'll continue to watch this portfolio to see if it rebounds over the next few months.

Review of Model Portfolios as at May 28, 2017

Hi and welcome back to my stock portfolio blog.  Wow, it's been three years since I started it and I can't believe how time flies.  

The TSX is slumping yet global stock markets are still strong.

https://www.theguardian.com/business/2017/may/16/global-stock-markets-whats-driving-the-rise-and-will-it-continue

I remain cautious right now.

Let's now examine the portfolios of the past three years.

May 2014 Portfolio

Most of the stocks in the M2014 portfolio are doing well.  LNR and STN are both down a bit but not much.  Strongest stocks in this portfolio are GIB.A and GC.  EQB is down close to 20%, mostly due to the recent events surrounding mortgage lender Home Capital Group (HCG).  There haven't been any reported problems at EQB, but it's being painted with the same brush as HCG.

Overall the portfolio is returning 13.7% before dividends and including dividends of 16.4% over the past 3 years, so our dividend yield is just under 3%.  On a year over year basis, the portfolio is doing about 5% each year, which is kind of meh.

For those of you with financial advisors that are managing your portfolios, make sure that you are asking them to provide you with both sets of numbers, ie Overall performance to Date and Year over Year performance.  You might have a great one year return, but you'll want to know how your portfolio is doing over it's lifespan to get a better idea of the overall portfolio health.

Oh another thing, don't forget to subtract the fees you pay your financial advisors from the portfolio calculations because they will have an impact on your overall return.  Ask your FA if your portfolio performance is net of their fees or not.

On the bright side, the M2014 portfolio is faring much better against the TSX for the past 3 years.  The TSX has only returned a total of 6.2%, or about 2% year over year.   Still better than current GIC returns but just barely.

May 2015 Portfolio

Here's our two year old portfolio.  Again, most of the stocks are doing well.  Stella Jones (SJ) is borderline and the worst performer is fintech company Davis and Hendersen (DH).  DH is being bought out and the transaction closes by 3rd quarter of this year.  There is no more hope of this stock rebounding and the next time we review this portfolio, it will probably be gone.  Strongest stocks in  this portfolio are WPK and ATD.B.

The M2015 portfolio had more of a dividend focus and that has made a strong impact on the returns.
Before dividends, the portfolio returned 9.7% but inclusive of dividends, this portfolio returned 15.3% over two years.  Dividend yield was a healthy 5%. Year over year performance is 7.4% each year.  If you look at the graph, we see a surprising correlation between it's jump in performance and Donald Trump's presidency, both occurring around the November timeframe.  Heh.  Wait until you see the M2016 performance chart.

As compared to the TSX, this portfolio performed much better than the TSX average of 2.6%.

May 2016 Portfolio

Our one year old portfolio is doing exceptionally well.  There is one stock which isn't faring so well, retail property owner/operator First Capital Realty (FCR), down about 5%.  Best performers are AQN and RNW both of which are renewable/electric power generation companies. Hey, wasn't I supposed to diversify?  Why do i have two companies in the same sector?  Oops, my bad.

Well, the portfolio performance is benefitting from my mistake.  It's up 11% over the past year. and when you factor in dividends, the portfolio return jumps to 16%.  Our dividend yield is therefore 5%.
The portfolio performance was actually starting to slump until Donald Trump won his presidency, and then the performance just took off.  Now the performance is starting to peter out, which just happens to be after his first 100 days in office.  Crazy, huh?

Surprisngly, the TSX has had a decent year also with an average return of over 10%.  But we still beat that performance, which is all that matters.

Feb 2017 Portfolio

Here's the non-diversified food and grocery portfolio from earlier this year.  Definitely the grocers like Metro and Loblaws are having a banner year so far, up 15% and 13% respectively in just under 4 months.  However the rest of the food industry stocks are all just treading water.

It's too soon to predict what the one year performance of this portfolio will be but right now we are doing  about 2% to 3% for the quarter year.

You can see that the overall food stocks (excluding L and MRU) are faring no better than the rest of the TSX which is also treading water.

May 2017 Portfolio

So that brings us to our newest M2017 portfolio.  I created this portfolio just days before the market sold off, which is why most of the stocks are underwater.  As I mentioned in my last post, it's getting harder and harder to find stocks which match my criteria for these portfolios.  To reiterate what I'm looking for:

Market Cap over 1B
P/E ratio under 30, preferably under 20
Positive EPS
Beta under 1
Share price above $10
Positive trajectory in 1 and 5 year performance
Decent dividend yield of above 2% is bonus

Yup it's been down close to 3% for the past month.

Even the TSX is doing better than the latest portfolio.  Well not really at -1%, but whatever.

Summary

Portfolios and total overall returns (inclusive of dividend yield)

May 2014 - 16.42% (down, since last checked in Feb, 2017)
May 2015 - 15.36% (up, since last checked in Feb 2017)
May 2016 - 16.17% (up, since last checked in Feb 2017)
Feb 2017 - 3.52% (for 3 months)
May 2017 - (2.91%), down since portfolio inception


 Anyways, we will look in again around the August or September timeframe.   See you then.

New 2017 Portfolio - March 1

As promised in my previous post, today I will give you the details about this new model portfolio I have setup for 2017.  Normally I create my portfolios around the May timeframe but with all the uncertainty around Donald Trump's presidency, I decided to create this new one around the time of his inauguration. So I created this portfolio during the first days of February 2017.

I have also strayed from my approach of portfolio sector diversification in this portfolio, so I would not recommend that you seriously consider using this Food and Grocery centric portfolio as something to invest in.  We are purely looking at this from an academic standpoint.

Ok so here is the Feb 2017 portfolio, F2017 for future reference.  It consists of seven stocks as always, because I think seven is a nice manageable number of stocks in a portfolio. The stocks in this portfolio are all grocery or food companies.

It has been a month since I created this portfolio and is now returning about 2.5%.


The stocks in this portfolio are:  AW.UN (A&W Revenue), MRU (Metro), PZA (Pizza Pizza Royalty), SAP (Saputo), BPF.UN (Boston Pizza Royalties), MTY (MTY Food Group) and L (Loblaws).

The above Google Finance chart shows the stocks data such as Market Cap, EPS, P/E ratio and Beta.  We have a mix of smaller companies and larger ones in this portfolio.  The smaller ones are income trusts, much like mutual funds, but can be bought and sold on the TSX.

For our model portfolio, I bought 100 shares of each company.   Below is more data about each stock with a corresponding 1 year return graph.  Again, you can find all of this information on Google Finance by searching for the stock name.

AW.UN has had an excellent year to date and a 42% return. It has a dividend yield of 4%.

MRU is down 10% over 1 year and a dividend yield of 1.67%.  

PZA is up 39% in the past year and has a dividend yield of 4.83%.

SAP one year return is 16% with a dividend yield of 1.31%.

BPF.UN had a return of over 23% in the past year and it's dividend yield is a whopping 6%.

MTY had an amazing one year return of 70% with a small dividend yield of .87%.

L is at about the same price as it was last year, so no gains and the dividend yield is 1.5%.

Clearly, we have a mix of winners and losers in this group of stocks.

If we examine the first chart again, we see that MTY is stand out stock of the portfolio after one month.  L and AW.UN are tracking at the portfolio average and the remainder of the stocks are just average.

The F2017 model portfolio has already given some dividends and that is reflected in the graph above. The blue line is the performance of this portfolio and the red line is the performance of the TSX during the same one month.   It says our return is 3.22% so we have a 0.7% dividend yield at this point in time.  I always like to see that the portfolios I create outperform the TSX, so we are off to a good start.

Full disclosure: I don't have any of these stocks in my own portfolio right now.

We will revisit this and all the other portfolios performance in May 2017.   See you then.

Model Portfolio Review at Feb 24, 2017

Hi and welcome back to my portfolio blog.  It's time to look at how my stock picks are doing.

M2014 Portfolio

We see considerable improvement on the May 2014 portfolio.  If it wasn't for the market downturn this past week, this portfolio's gain would all be in the green.  As it stands, it's not looking too shabby.
EQB had a big jump in it's share price this month.  The only stock that's losing money is LNR, but not by much.  The portfolio is now returning 15% as we approach May 2017, so we can say, for now,  that the average return is about 5% per year more or less.  Biggest winners in our portfolio are GIB.A (tech) with over 67% and GC at 58% return at this review.

Here's the May 2014 portfolio performance graph.  After a dismal 2016, things are starting to look up again.  The total return of the portfolio, inclusive of dividends is over 17%, so that gives us a dividend yield of about 2.5%.  Our performance graph also compares our returns to the TSX over the same period of time and we did a whole lot better than it's 5% return.  The actual return of the TSX therefore was only about 1.7% each year for about three years.  That's pretty close to current GIC rates.   So you definitely don't want to just buy the index or mutual funds that just mirror the TSX composite returns. 

M2015 Portfolio

What can I say about the May 2015 portfolio that I haven't already talked about in past posts.  DH continues to be the loser stock in our holdings.  With the exception of DH and SJ, the remainder of the stocks have held up well, with three of our holdings yielding double digit returns.  I have Telus (T) in my RRSP and this stock hasn't seen any uptick in share price.  Luckily it provides a 4% dividend, so it's worth holding on to it for that.

In fact, if you look at the total returns of the May 2015 portfolio, and include the dividend yield of 5%, it doubles the return at over 10%.  It would be even more if DH wasn't doing so poorly.   Whereas the TSX only returned 3.4% in the last year and a half. 

M2016 Portfolio

My most recent portfolio is as of May 2016.  It hasn't been an entire year yet, and it is up over 8% before dividends.  Already there are three stocks in our seven stock portfolio with double digit gains. The only laggard is FCR right now at just under minus 1%.

With dividends, this portfolio is returning over 10% and is pretty much on par with the TSX return for the same time frame, except that we don't have any exposure to resource or gold stocks.  It's interesting that this portfolio was outperforming the TSX until November 2016, which is the time that Donald Trump got elected as president of the USA.  I guess we will have to see what the portfolio consequences are in the next couple of years.

Summary

Portfolio and total overall returns (inclusive of dividend yield)

May 2014 - 17.89%
May 2015 - 10.16%
May 2016 - 10.57% (for 9 months)

A New Portfolio

Instead of waiting for May 2017, some of you may know that I have already created a new portfolio for 2017.  I decided to throw caution to the wind and instead of diversifying, I created a new portfolio in the first week of February 2017 that holds only food and grocery stocks.  I wouldn't do this in any of my own portfolios, but I was thinking about what Donald Trump's presidency would mean to my actual portfolios.  Right now, the markets are extremely bullish and I think there should be some kind of reversal.

I created the new food portfolio because despite any major catastrophe, people still have to eat, hence the food and grocery portfolio.  So, what I'm saying now is that I'm a bit contrarian to what's happening in the markets.  I have sold off some stocks that have reached new highs in my real portfolios.

Anyways, in the next few days, I will reveal the seven stocks in the Feb 2017 portfolio or F2017 for short.   See you then!