Portfolio Update October 2017

october_2017_update

Another month – another update!

Purchases

Company Stock Units Price Date Cost
Helmerich & Payne HP 20 $48.92 2017-09-13 $978.40
Uniti Group UNIT 100 $16.98 2017-09-19 $1698
CVS Health CVS 20 $73.85 2017-10-09 $1477
Sabra Health Care SBRA 44 $20.67 2017-10-25 $909.48
Celgene CELG 10 $95.45 2017-10-26 $954.50

 

Sells

none
 

Options

Stock Open Date Exp Date Type Strike Price Premium Fees Exit Price Closing Date P/L Annualized
UNIT 2017-10-03 2018-01-19 Put $15.00 $244.00 $7.00 $1.10 2017-10-26 $127 172%

 

I’ve added some shares to my new initiated position in Helmerich & Payne because I see the oil price stabilized and the oil price environment (demand/supply) more positive going forward. My portfolio is already very energy heavy, but I don’t just want to wait for the better times to see my underwater positions going back into the green, but I also want to take some opportunity here.

Same with the new position in Uniti, a communication REIT. From Bloomberg:

It operates in four business segments: Leasing, Fiber Infrastructure, Towers, and Consumer CLEC. The company engages in the acquisition and leasing of mission-critical communications assets, such as fiber, data centers, consumer broadband, coaxial and upgradeable copper assets

Highly speculative, because the biggest customer (70% of revenue) Windstream has a higher chance of going into bankruptcy. In hindsight I was way to early to jump the yield-sucker train. My original plan after my purchase was to add in the low 13s again, but this time I decided to try out selling a cash secured put. I was always reading about this strategy but never tried it myself. As this is a highly speculative position I also wasn’t to eager to add again, so I decided to sell a slightly “in-the-money” Put instead, which also would result in an even lower price: $15 (strike price ) – $2.44 (premium) = $12.56. I also added an order to close the option at $1.1 which already happened yesterday. Subtracting the fees (2x$3.5), I made $127 in 18 days. I will continue to evaluate the use of option writing, but I still need a lot of practice (no experience in selling covered calls and rolling options).

I also initiated a new position in CVS Health, a dividend contender with 14 years of an increasing dividend. I like the dividend yield (2.71%), the payout ratio (39.84%) and the difference from the historic dividend median yield from the last 13 years (1.18%). The price was driven lower because of the rumor about amazon entering the pharmacy space. Yesterday it was confirmed. Additionally I read yesterday that CVS wants to buy Health insurer Aetna (AET) for $66B. I have to read further details, but just by the look of the market cap of CVS (74.524B) the news itself will be a material change in valuation of the company (in every aspect). I’m curious to see the details of this offer and how the market will react to it. But I’m sure I’ve to evaluate the position again.

I’ve added 44 shares to my Sabra Health position. In August I wasn’t sure what to do with the CCP / SBRA merger. In the meantime Sabra was busy and I like all of the actions of the management (Enlivant and TPG acquisition, disposing its entire Genesis stake, capital raise through share offering and not taking new debt). This will result in a slightly lower guidance for AFFO, but with a much better diversification and risk profile. This could also lead to additional credit upgrades. I also consider adding below $19 or maybe writing another cash secured Put.

My last update includes a new position in Celgene which I initiated yesterday on the legendary -21% intraday drop caused by a slightly reduced guidance. Celgene is a biotech company which unfortunately doesn’t pay a dividend. However, I’m watching CELG for a long time and wanted to add it to my portfolio before as I’m a fan of biotechs and healthcare in general.

2 thoughts on “Portfolio Update October 2017

  • October 28, 2017 at 6:03 am
    Permalink

    Hi DivRider, I like the addition of CVS, even though the stock has been volatile recently and is trading lower than where you purchased it. The purchase of CELG looks intriguing, too. The recent drop in the stock price will hopefully just be temporary. I see your portfolio is concentrated in just a few market sectors. Any plans for further portfolio diversification into those other sectors such as consumer staples or discretionary, or tech?

    Reply
    • October 28, 2017 at 3:51 pm
      Permalink

      Hi ED,
      thank you for your visit & comment!
      Regarding CVS: I welcome the volatility, this offers us the opportunity we need to add to our positions at an even better price. Assuming the investment thesis didn’t changed.
      The same goes for CELG: if it falls further into the low 90s, I will certainly add again to my small initial position. Important for me is the general outlook of the pipeline and high EPS guidance. Even at the revised EPS guidance of $12.50 for 2020, you’ll buy today for a P/E of 7.84.
      And you’re right, at the moment it’s a very concentrated portfolio. I’m guilty of waiting (sometimes too long) for a (subjective) good entry point, instead of just buying the stocks I want to own. But eventually I will add nearly all missing sectors to my portfolio.

      Cheers
      -DivRider

      Reply

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