Portfolio Update 9.1.20

Period
September 1, 2020

Updates

  • I own some common stock and call options on Atlantic Power (AT) — here’s the scoop
  • My watchlist has a few interesting ideas that I’m currently working on…
    • AT&T (T) — there’s a ton of press going on about how stupid the DirectTV deal was but this is water under the bridge at this point and the stock has been range-bound from $30-40 for years now… asset sales + deleveraging + high average historical dividend yield might be a recipe for a $40 share price again
    • Marathon Petroleum (MPC) — recently announced a sale of Speedway gas station chain for $21bn
    • Teva Pharmaceuticals (TEVA) — could be a great pair with Mylan in the generic drug space
    • Xperi (XPER) — recently completed merger with TiVo, insiders have been buying stock and yet shares have drifted from $20+ to below $13… could be a good setup for an eventual separation of their products and IP segments as well
    • Hyster Yale (HY) — they manufacture and service forklifts and material handling equipment… shares down ~30% so far this year but could ultimately see a benefit from e-commerce/warehousing trends? competitor Kion Group has historically traded at a premium valuation too…

Portfolio as of 9.1.20

  • Not much change at the top of the list as my core holdings are all still inexpensive
  • Concentration is starting to creep back in — which feels natural given the S&P 500 is back above 3300 — back in March, it felt like everything I looked at was cheap on past results with a murky outlook… now it feels like the outlook is just as murky without the “everything is cheap” aspect.
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Portfolio Commentary & Trading Activity

  • Exited Vornado Realty Trust (VNO)
    • This is a major player in NYC real estate. The office real estate industry is in flux to say the least. While I feel like it’s still a cheap and interesting situation, I’ve ultimately got some better ideas I’d like to concentrate in. Wound up being an OK return of ~6-7% from March to August.
  • Exited HP Inc (HPQ)
    • I really liked this stock — at the time I wrote about it in April it was a ~$15-16 stock with solid earnings and cash flow and minimal debt… they had just defended themselves against a takeover approach from smaller rival Xerox (at $24 per share)
    • They’ve benefited somewhat from work-from-home trends in computing but the lack of offices using printing supplies and hardware is a serious drag on the biggest profit generator for this business. Part of the thesis centered on huge levered buybacks of >$20bn and it’s clear this won’t be happening anytime soon.
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    • A quick gain from $15 to $20 and I’m moving on as I wouldn’t have the conviction to add more at these prices… a good litmus test to continue owning.
  • Exited Broadcom (AVGO)
    • Originally part of a basket purchase of a few “quality” stocks in mid-March, this name performed well for me from ~$185 to $340…
    • Naturally as a value investor I have an aversion to holding on to stocks up nearly 100% in a short period of time :) This went from a single digit earnings multiple and a 6-7% dividend yield right back to a market multiple of earnings — could be a great business from here but the bet has certainly changed.
    • In retrospect, buying this thing at just the right time might have been some blind luck…
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  • Added H&R Block (HRB)
    • It might be early to get excited about tax season but I’m confident that the 2021 tax season will be plentiful for all tax players.
    • Check out my quick value post on this stock from back in April — the share price hasn’t budged since then!
    • Still a $14-15 stock with consensus estimates for $3+ in FY21 earnings — there’s a good chance this gets back to $20-25 within the next 6-9 months.