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My FI Journey » Investment portfolio » Recent Transactions – Many

Recent Transactions – Many

As part of my commitment to keep my readers up to date on my stock portfolio and options holdings, I write up short posts describing my transactions. Today, I’m going to try to do something different by writing this transaction update as a bit of a fun story so that you can see my exact train of thought.

When we last left my portfolio, I was working on trying to deploy the rest of the capital that was freed up after I had converted my account to a margin account.  After my last buying binge, I still had a few thousand dollars of left over capital to deploy.  Unfortunately the market has been really overvalued as of late so there wasn’t a lot of good value out there.  But I was undaunted and hunted around for the best value that I could find.  I wound up buying some LO, KMI, and APD as described below.

Lorillard (LO)

  • 50 shares
  • Cost basis: $2,059.99 or  $41.20 per share
  • Yield:  5.33% – What a great starting yield!
  • Dividends: $2.20 per share
  • This will increase my yearly dividend stream by $110.00.
  • See my analysis of LO.

 

Kinder Morgan Inc (KMI)

  • 20 shares and 12 shares (32 shares total)
  • This was bought on two separate days because limit orders don’t have to be filled all at once.  For simplicity’s sake, I will combine them.
  • Cost basis: $1,235.98 or  $38.62 per share
  • Yield:  3.83% – Not too bad.
  • Dividends: $1.48 per share
  • This will increase my yearly dividend stream by $47.36.

 

Air Products and Chemicals (APD)

  • 20 shares
  • Cost basis: $1,735.79 or  $86.79 per share
  • Yield:  3.27% – Not a bad starting yield
  • Dividends: $2.84 per share
  • This will increase my yearly dividend stream by $58.80.
  • See my analysis of APD

 

That was fun, but the story isn’t over.  You see as soon as I finished blowing through the rest of my capital, what does the market decide to do?  Start tanking!  I figured a correction would come at some point since things were so overvalued.  I just didn’t think it would start the day after I bought my stocks.  So that made me kind of sad.

In addition to generally heading South, the market also took a few of great companies companies out behind the woodshed and proceeded to beat them senseless. Both Caterpillar and BHP Billiton were pounded down to near their 52 week lows.  I like both of these companies and the prices were great.  But I was out capital.  What was I to do?

Naked puts to the rescue!

One of the great things about having a margin account is that I don’t actually have to have the cash on hand in order to sell puts any more.  In the old days I would have had to drag the cash out of my bank account (assuming I had any in there), then sell the put and keep the cash locked up until expiration, assignment, or close out.  But no more!  With the power of margin I can be much more flexible and respond quickly to crazy market spaz outs.  And respond I did.

I sold two puts.

Puts Sold

  • BHP Billiton (BBL) Sept 21 2013 $50.0 Put – This brought in $289.23.
  • Caterpillar (CAT) Jan 18 2014 $80.0 Put – This brought in $729.22.

 

While I didn’t sell either of these puts with the intention of being assigned, I wouldn’t be complaining about it if I did.  Especially that CAT put.  If I get assigned CAT, I’ll have a starting yield of over 2.7% on a great company.

Oh, and look at that, selling these puts brought in over $1,000 in options premiums.  Whatever am I going to do with that?  Buy more stocks!  So I bought some BBL.  If it’s good enough to sell a put against, it’s good enough to buy outright.

 

BHP Billiton (BBL)

  • 19 shares
  • Cost basis: $1,035.99 or  $54.52 per share
  • Yield:  4.18% – Not a bad starting yield
  • Dividends: $2.28 per share
  • This will increase my yearly dividend stream by $43.32.

 

So there you have it.  At the end of the week, I managed to increase my yearly dividend stream by $259.48.  I feel that I did a pretty good job of both finding value in an overvalued market and capitalizing on a downswing all in the same week.

The market may go down more.  Or it may go up.  I don’t pretend to know.  But I’ll just keep on hunting for value the best that I can.

Readers:  What do you think of my transactions?  Did you make any notable transactions recently?

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18 Responses to "Recent Transactions – Many"

  1. Nice work on these transactions. I like the story format, and I think in months and years from now when you go back to see why you made your puchases this will be a great guide.

    1. MFIJ says:

      Thanks. I wanted to try and make this shopping excursion a bit more fun so I tried the story format. I’m glad you liked it.

  2. I try to give as much detail in my posts on transactions so it’s much easier for me to go back and look at exactly what/how I was thinking when I started the position.

    I missed out on the put selling with the sell off last week. Not really sure why, guess I was worried about my XOM put bein executed, although there’s still a month left on that.

    I can’t wait for the markets to take a dive again because I’m getting anxious to make some purchases. The options are nice, especially since they give better returns over the time period, but I don’t want to have to spend that much time once I reach FI devoted to trading options so purchases/increasing my dividends is what I’m really after.

    Looks like you had a pretty active month so far.

    1. MFIJ says:

      This was a pretty active month. I’ve invested most of my available capital now, so the next few months should be more subdued. Around mid-year I get my bonus so there will likely be some excitement around then.

      I wasn’t really planning to sell the puts, but I just happened to be looking at looking at BBL and CAT at the time, saw the opportunity, and jumped on it.

  3. Sounds like you’ve been busy recently! It seems like all of the company’s you recently invested in are decent buys with great yield’s. I really like keeping up-to-date with all of your trades to see how much closer you get to your end goal. Keep up the good work!

    1. MFIJ says:

      Thanks. I’m glad people enjoy reading about my buys. I’ve used up all my excess capital at the moment, so my buying will become a bit more subdued for the next few months. But rest assured that every month I’ll be adding to my portfolio. Consistency is the only way to get to financial independence.

  4. Looks like you made good moves to me. I can’t wait till our debt is gone and we can start working on investing in dividend paying stocks.

    1. MFIJ says:

      Thanks. Keep working hard on knocking out your debt and you’ll be investing in no time.

  5. MFIJ,

    Great moves here. I bought APD and BBL recently, so you’ll hear no arguments from me! :)

    LO and KMI are a couple I bought not long ago. LO is probably the riskiest of them all with the constant looming FDA issues surrounding menthol, but that’s a reason why that yield is so high.

    I looked at CAT as it neared $80 and didn’t pull the trigger. I went back and forth on that. Probably should have bought.

    Best wishes!

    1. MFIJ says:

      I can see LO as being risky, but I think that the tobacco companies are so used to being beaten up that they know how to deal with the regulators by now.

      I’m excited to see what next month holds. Hopefully some new companies will drift into undervalued territory so I can keep diversifying.

  6. I wish the rest of the world could see how great it can be when the market corrects. Instead of screaming about the sky falling, they would see the opportunities. I am not currently doing much with individual stocks, but I enjoy reading about your analysis and plans.

    1. MFIJ says:

      Market corrections are great for news writers because negative events sell.

      Also, if you’re solely focused on net worth, then a market correction drops your net worth and you start panicking.

      I focus on buying assets that produce income streams, so for me a market correction is like a Labor Day Sale.

  7. Integrator says:

    You’re LO analysis convinced me to have a little nibble on LO. I replaced one other speculative dividend stock (QSII) with this one, although I feel that the LO dividend is probably a little more sustainable, with regulatory risk being the wild card

    1. MFIJ says:

      I think LO is good in small doses. The dividend is really nice, it’s one of the few undervalued stocks available at the moment, and I don’t think that the regulatory risk is that bad in the short term. In the long run, the regulators will continue to beat down the tobacco industry.

  8. Pretty busy these days :-)

    I think you had some great dividend power to your portfolio. It will be interesting to see how those stocks go in the future.

    I’m currently holding on about 10% in cash in my portfolio, waiting for a correction. I’m hesitating to buy MCD. I wanted to buy it when it was $89 but didn’t have liquidity available at that time.. darn!

    Hey; it seems like AAPL will become a good dividend stock now :-)

    1. MFIJ says:

      I wouldn’t mind grabbing up some more MCD on a dip.

      I’m still not convinced AAPL is a good buy at the moment. I’d give it a few more years. My feeling is that the stock price hasn’t finished its descent yet.

  9. [...] Between the market run up, my fresh infusions of capital, my dividends, and my options premiums (okay, mostly the market run up) my portfolio value has grown by about $20,000 in four months.  Holy crap, that is amazing. I was pretty busy this month with transactions as I bought stocks, sold options, and then bought more stocks. [...]

  10. sumflow says:

    Why did you choose that particular Kinder Company?

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