October 2012 portfolio review

Time for the October portfolio review. For last month’s review see here. Not many new changes for October and for the most part unless there are some dramatic events in the market you will rarely see any major changes in my overall portfolio. Let’s start with my equity positions.

In general, I’m still finding stocks quite attractive. It’s a sign of the times when a slight pull back brings the bears, gloom and doomers out in droves. All with relatively little bearish price action in the market indices. The general trend still remains up and bullish. The key for equities is to keep an eye out for a recession. Why? Because stocks on average drop 25% to 30% in a recession. For now the economy remains in very low growth mode but still growth nonetheless. With this general back drop here are my equity positions.

EPD – still my largest holding. A few new developments for EPD last month. They issued some new equity, about $400M worth, less than 1% of their market cap. Also, more importantly, they announced an increase to their Q3 and Q4 dividends. The Q3 dividend will be $0.65 per unit and the Q4 dividend will be $0.66 per unit. This represents year over year growth rates of 6.1% and 6.5% respectively. This is higher than the 5% growth rates of the recent past. Needless to sat this is very bullish. I may need to raise my future return targets for EPD to 11% from my current 10% but I’ll wait to the earnings call. In the short term if the stock breaks $55 its probably got $59 to $60 in it by the end of the year.

WMB/WPZ – this pair of MLPs has been on a tear lately. Most likely a combination of improving nat gas prices and MLP dividend capture action that I discussed recently. WMB recently set a new all time high and WPZ just broke above its 200 day moving average. The trend remains higher for both. I added to my WPZ position on the break above the 200 day MA.

KMI/KMR – another MLP doing quite well. KMR has recently broken out quite strongly and still has room to go higher. I added to my KMR position on the breakout. Looking for at least $80 to $81 in KMR.

AFL – still trading quite a bit on European news no matter how silly it is. The stock has been pulling back from its test of $50 and has started to climb back higher in the last few days. AFL is a great long term hold but subject to a lot of European volatility. A break and follow through down from $47 would be quite bearish. I’m looking for a test of $50 again. If it breaks $50 I can see $54 in the stock in the short run. Long term the company is still very cheap and doing quite well.

FRFHF – a bit of positive news for Fairfax. They announced the were buying back about 5% of their shares and the recent positive earnings from RIMM  is benefiting them as well. Still a great long term disaster scenario holding.

IVY portfolio – no changes. Still fully invested as discussed in the last update.

That’s it for equities. As for bonds there are no changes in my muni poistions. Oct/Nov are normally months when there is larger than average issuance of munis so there could be some price weakness. I would add to my holdings on any significant weakness.

That’s it for this month.

Full Disclaimer - Nothing on this site should ever be considered advice, research or the invitation to buy or sell securities. These are my personal opinions only.

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2 Responses to October 2012 portfolio review

  1. Arvind says:

    What is your opinion on recent fall of mreits based on fear of narrowing spreads. Is it a good time to add? From your earlier posts is CYS best positioned for falling interest rate? Are you adding to your position?

    • libertatemamo says:

      Hey Arvind, I haven’t had a position in this sector for a few months. In my last post on the sector I mentioned how the big run was probably over. And boy has it ended. Look at a chart of the MORT or REM ETF. They have broken down hard. I don’t like to catch falling knives so I won’t touch anything in this space until I see a good bottom forming.

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