What Have I Done This Year ?

This post is to have an overview of my latest actions year to date. Sometimes I am under the impression that I do little, which actually is a very nice feeling. I prefer inaction and to just do things after quite some thought and only being very sure.

Lets start with Dell. I have been adding it since May 2012. I had 60 shares that I had bought during the 2008/2009 market fall. I also had a strike 7.5 call that I had bought in 2011 for around 6.5. I exercised it in May and is roughly equivalent to having bought 100 shares at 14. That’s the highest price I have paid for Dell. This year I started adding slowly in the upper 12 price and as I kept studying it and feeling more comfortable with the lower prices I kept on adding more up until the low 9s in October. I manged to build a decent position of 900 shares at an average price of 10.86. During the same time I sold a strike 10 put and I added several calls. I started by buying Jan 2014 strike 10 calls and as the stock moved lower in October I added more and more Jan 2014 strike 8 and even an interesting Jan 2015 strike 7 call. When the stock reached 8 I was just buying calls. The position got big and I did not feel comfortable with the initial strike 10 calls I bought therefore I sold them today along with half of the strike 8 calls. Goldman Sachs helped, I must thank them for their latest coverage on Dell which pushed up the stock and allowed me to exit fast my riskiest positions. My assessment of Dell has not changed. I just fine tuned the position. That allowed me to lower my average price and exit the riskiest positions with a slight gain. I have quite some money invested also in Cisco. It is one of my main positions and it has the potential to overlap with Dell on servers so I needed to be careful not to be overexposed. Now I have a position that I feel very comfortable with. I could exit the riskiest strike 10 calls and I have more cash to keep adding if it goes back down again. All the calls I now have are quite positive and the stock is just a bit over my average buying price. Finally I ended up with 900 stocks, 4 calls and 1 shorted put. Dell is now my 4th biggest position. It comes after Tesco.

Tesco is the only non technological stock I have initiated this year. The other one is Banco Santander (SAN, ADR), where I increased positions. In the case of Banco Santander I had 889 stocks at the beginning of this year. I bought and sold 5 calls for a decent profit and exercised one which allowed me to buy 100 stocks for the nice price of 5.15. Including all the stocks received instead of cash dividends I have now 1088 stocks. I am still quite sure that Santander will end up doing very well and that it is quite undervalued.

In the case of Tesco I initiated its position starting in the beginning of 2012 and now have 630 adrs (TSCDY) and 950 ordinary shares in London. Tesco still seems to be quite undervalued and the dividend is tax free. Plus I like the fact that it allows me to get diversified away from the Dollar and the Euro. It has a huge margin of safety with it’s real state.

Applied Materials (AMAT) is the other technological position initiated this year along with Dell. I bought it in May, June and July. I now have 675 stocks, 3 strike 10 Jan 2014 calls and one Jan 2014 strike 10 put short. It is my 7th biggest position just after Cisco. It’s business is extremely volatile. Sometimes its customers pass several quarters without buying their machines. Fine with me. Thar keeps away a lot of investors (my competition). What I care about is the end result no matter how volatile the path may be. Actually the more bumpy the better. From my calculations demand for their machines will inevitably come back along with the share price, which as of now seems quite attractive. The nice thing about Amat is that no matter who wins the technological race their machines will be sold to foundries. They will be used to build iPads, PC’s, Smartphones or whatever is in fashion.

Cisco and Intel are two companies I like quite a lot, specially at current levels and which a added into this year. I had the equivalent of 480 Cisco shares at the beginning of the year. They were originated by shares and options I had bough last year at the equivalent price of 15. This year I just added 100 shares more in July when it touched 15 again. So now I have 580 shares and it represents my 6th portfolio position.

I substantially increased Intel (INTC) this year. I had 100 Intel shares at the beginning of the year. 15 were bought in 2006 at 17, 45 in 2008 at around 14 and 50 in 2011 at around 19.3. Intel is a company I have always admired but that I never felt it was cheap enough to get in big. This year I finally felt it was at a good price. Therefore I added. So in October and November I added 135 shares and bought the interesting Jan 2015 strike 18 call for 3.21. Basically my position went from 100 to the equivalent of 335 shares.

Finally the last Technological stock I increased substantially is Western Digital (WDC). WDC is a stock I have made quite a lot of money with. Already 2 times in the past I have made several thousands. The details are written in past posts. The reason is that it is an extremely volatile and misunderstood stock. Fortunately it has been very inefficiently valued and seems to still be. I had 100 stocks at the beginning of the year and I have added and keep adding now. I now have 255 stocks. WDC is probably the only stock I will keep on adding for sure if it does not go up soon. It’s now my 9th position and could increase. It has been already twice in the last 5 years my number one position.

Besides the buying activity detailed above I sold out this year American Express, USG (bonds, options and stocks), Jefferies (Bonds) and AV Homes. The reasons I sold were posted and the realized profits were quite nice.

Note that in practical terms I have been shorting the dollar. Most of the stocks I bought were financed by US dollar debt which I get at 1.5% interest rate with Interactive Brokers. That debt is fully collateralized by Euros which are giving me more than 2% interest. In other words I am carry trading and I am short around 40 thousand dollars. I prefer to do it like that because I do not want to buy dollars to finance my US purchases. I do not trust the currency.

As you can see even though it seems like I have not done much I actually have done a lot. I bought Tesco, Banco Santander, Amat, Intel, Cisco, Western Digital and Dell. Tesco and Banco Santander represent almost 19.5% of my portfolio. The 5 technology companies I just mentioned represent 19.7% of the portfolio and most of them were added during 2012. It has been a year rather concentrated on Technology. Nothing was planned, I just grabbed the opportunity to buy what I knew were cheap and good companies.

That’s all for now, this post was basically done in order to have a summary of my recent activities.

Cheers and best wishes !
jrv

PD: I just received a small book called Benjamin Graham, The father of Financial Analysis, written by Irving Kahn and Robert D. Milne. Thanks to the person that sent it to me ! Here is nice a sentence from Graham that I just read in it:

“True investors can exploit the recurrent excessive optimism and excessive apprehension of the speculative public”

About jrv

I was born in Spain and lived in Belgium, Chile, France, USA, Argentina among other places. Currently I am trying to settle down in a wild place. I am "retired", even though now I dedicate more hours "working" for my investments than I ever worked in the real labor market where I used to work in IT and Banking. I am a family man, I have a lovely wife, several sons and one step daughter. I have humble tastes, I like to stay home and read about companies and investments. I started investing at 25 before the internet bubble exploded. I did not know much about investing and liked technical analysis so my results were pretty bad. Fortunately I did not have much to lose. Some years later in 2006 bored of doing only real state investments and with quite a lot of money saved I opened an account in a cheap and excellent online broker and started again. This time I did not want to commit the same mistake, so I decided to follow a model. I heard that Warren Buffett was the best at making money via stocks so I started by reading a lot about him, all of his shareholders letters and several of the books that he recommended. I learned a lot, started applying his investing principles and reading a lot of 10K's. Digested news from lots of different sources. Basically I started buying very good and cheap companies and holding them for ever if possible and if nothing changed fundamentally. When the housing crisis started I was more than 75% cash. At that time I identified good companies at incredibly cheap prices so I invested most of my savings in stocks. In less than I year I doubled. By the second semester of 2009 I turned my software company into an investment vehicle and dedicated myself full time to it. My wife and I decided to change our lifestyle and moved from Belgium to the beach in a wild country. The goal was to keep fixed costs low in order to be able to live with a minimum 6-8% yearly return but specially to move away from the inhuman life of civilization and to have finally some peace and sunny weather to concentrate better on investing. Now I can think and study about companies 60 hours a week and I am doing great. I can finally do what I want full time and can proudly say that I have never been so happy, specially also with my just born 4th son, my other great kids and my sweet wife who supports me fully while I study most of the day and patiently wait for the opportunity to make a swing ! You can learn a bit more about my portfolio by viewing it at www.kuchita.com/view/sumo.php or you may learn more about me and my family by following the link "Author's site" from the menu above.
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8 Responses to What Have I Done This Year ?

  1. anon.coder says:

    Thank you so much for being so candid. Really appreciate your conviction and dedication to your stock picks. Wish you all the very best for the coming years.

  2. jrv says:

    thanks anon, best wishes too!

  3. Felipe says:

    Jrv,
    Thanks for sharing your positions, strategies and views of investing. I see you have done well with carefully studying what you own and applying sophisticated trades. I do not know in detail the companies you own, but I see your train of thought for in investing making a lot of sense. I have followed your way of investing, basically knowing very well my positions and profit from any over-bullish or over-bearish sentiment on them. Sounds simple, but it requires so much discipline, the most scares commodity in the investor community.

  4. pablo says:

    Hola Jrv:

    Me encanta tu blog, te encontré casualmente en gurufocus hace meses y desde entonces te sigo, nunca me he decidido a escribirte pero hoy he vendido bankia perdiendo mucho dinero y siento mucho no haberte hecho caso en muchas de tus apreciaciones. Sospecho que todavía van a seguir los problemas en la eurozona y espero encontrar santander a buen precio. No se muy bien porque la prefieres a bbva cuando van tan parejas. Perdona que escriba en español pero no me manejo en ingles como tú.
    Entiendo que en la bolsa hay q controlar ciertos impulsos y hacer como tu dices, ser frío y valorar opciones sin ningún sentimiento que pueda hacernos tomar la decisión erronea.

    Gracias por tus sabios consejos y tu interés.

  5. jrv says:

    Hi Felipe, What a surprise to see you here !
    Thanks and best wishes !

  6. jrv says:

    Hola Pablo gracias!

    Santander y Bvba en efecto me parecen bastante similares. Pero es poco lo que se de Bvba. Creo que Santander esta un poco mas diversificada fuera de Espana y Portugal. Como conozco mucho mejor Santander y me siento comodo con su administracion y gerencia inverti en ellos. Lo que si me sorprende es lo practimante igual que se mueven las dos acciones. Me hace pensar que ambas acciones estan en las carteras de inversores institucionales y que por esa razon se mueven juntas. Pero ya que hay diferencias a la laga deberian tener comportamientos diferentes.

    Otra accion que me gusta bastante es Construcciones y Auxiliares de Ferrocarriles que acabo de agregar hoy a 335.40 (CAF.MC).

    Te deseo buenos resultados y si quieres no dudes en contactarme para intercambiar ideas!
    jrv

  7. Lysle says:

    Hi jrv, thank you for the blog. I have been reading some of it today and I can already tell it will be one of my favorites in the future. I am a student in grad school with a small amount of money in a handful of stocks I started purchasing early this year, all of them long term. I found your blog today while searching the web concerning Intel, which I am considering right now. A lot of my $$ is in nokia right now, and I am wondering if I should take some out to better diversify my portfolio. Do you have any opinions about nokia?

  8. jrv says:

    Hi Lysle, What a pleasure to receive a comment from a woman. It’s not often that they contact. I do not know much about Nokia, I have never read their year reports or SEC fillings. Since I do not know what will happen with the mobile telephone business in the future I tend to stay away from it. Then again from what I remember it has fallen in value in the last few years so maybe the price you bought it is good. It depends a lot on that. There are several stocks that have been very low and even if the companies faced huge uncertainties an investment at the right time would have played out well. For example the ones that bought USG or RIMM near the lows are doing very good by now. I would concentrate on an investment only if I am very sure about the long term sustainability of the business and its valuation. Otherwise I would prefer to diversify if I find better opportunities or stay with a substantial amount of cash to study so that I know when to deploy it at the right moment. In any case, if you are quite sure that the stock is undervalued, you should stick with it, regardless of what others say.

    Cheers!
    jrv

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