Portfolio Update October 2015

The time has come for my monthly portfolio update. At the end of every month, I will update my portfolio and comment on any changes. I do that for accountability and also so you may glean some ideas on how I allocate my capital. You have the opportunity to learn from what I do well, so you can do the same, as well as what I do poorly, so you will not have to repeat my mistakes.

My Current Portfolio Holdings, as of Oct 31, 2015:

Ticker	Current Price	Shares Held	Cost basis	Market Value	Weight	Dividend Yield TTM
BDX	$142.52	155.80	$13,487.61	$22,204.62	4.86%	1.68%
VWO	$34.84	615.82	$24,965.34	$21,455.17	4.70%	3.09%
AFL	$63.75	245.27	$12,690.27	$15,635.96	3.42%	2.45%
XOM	$82.84	179.68	$15,723.80	$14,884.69	3.26%	3.43%
EXC	$27.93	464.84	$14,307.78	$12,982.98	2.84%	4.44%
MCD	$112.25	104.80	$9,640.55	$11,763.80	2.58%	3.03%
AZN	$31.89	344.45	$7,612.35	$10,984.51	2.41%	4.39%
EMR	$47.23	216.76	$12,082.20	$10,237.57	2.24%	3.98%
LMT	$219.86	44.57	$4,715.95	$9,799.16	2.15%	2.73%
BRK.B	$136.09	62.26	$7,013.59	$8,472.96	1.86%	0.00%
MHFI	$92.64	86.58	$4,390.47	$8,020.77	1.76%	1.39%
BMTC	$29.13	272.53	$6,954.97	$7,938.80	1.74%	2.68%
WMT	$57.26	130.33	$8,762.09	$7,462.70	1.63%	3.41%
INTC	$33.86	193.62	$4,933.44	$6,555.97	1.44%	2.79%
NSC	$80.03	80.87	$6,360.43	$6,472.03	1.42%	2.92%
CVX	$90.89	71.00	$7,016.93	$6,453.19	1.41%	4.71%
MSFT	$52.64	115.86	$4,125.77	$6,098.87	1.34%	2.36%
UL	$44.45	136.78	$5,699.62	$6,079.87	1.33%	2.97%
HPQ	$26.97	221.25	$4,135.16	$5,967.11	1.31%	2.49%
MAT	$24.58	240.82	$7,202.93	$5,919.36	1.30%	6.18%
SON	$42.69	137.76	$5,088.85	$5,880.97	1.29%	3.14%
PEG	$41.29	139.91	$4,947.22	$5,776.88	1.27%	3.73%
PEP	$102.21	55.75	$4,428.78	$5,698.21	1.25%	2.66%
ESLT	$79.53	70.54	$2,576.83	$5,610.05	1.23%	1.75%
MOCO	$13.71	400.43	$5,982.42	$5,489.90	1.20%	3.21%
CINF	$60.23	91.00	$4,684.68	$5,480.93	1.20%	3.02%
T	$33.53	162.93	$5,319.66	$5,463.04	1.20%	5.61%
PG	$76.40	66.68	$4,586.92	$5,094.35	1.12%	3.45%
SAN	$5.55	915.31	$6,260.72	$5,079.97	1.11%	8.03%
VEA	$38.04	126.04	$3,940.01	$4,794.56	1.05%	2.87%
VIG	$78.71	60.71	$3,646.24	$4,778.48	1.05%	2.29%
CHL	$60.31	78.05	$3,717.52	$4,707.20	1.03%	3.11%
OGZPY	$4.18	1,123.78	$7,461.90	$4,697.40	1.03%	5.39%
YORW	$23.18	197.60	$4,027.09	$4,580.37	1.00%	2.58%
NUE	$42.30	107.00	$4,684.46	$4,526.10	0.99%	3.52%
ABBV	$59.55	76.00	$4,684.64	$4,525.80	0.99%	3.39%
BAMM	$3.17	1,396.15	$4,928.41	$4,425.80	0.97%	0.00%
ED	$65.75	67.00	$4,684.64	$4,405.25	0.96%	3.92%
HCP	$37.20	113.00	$5,202.52	$4,203.60	0.92%	6.02%
DV	$23.56	167.07	$3,695.59	$3,936.17	0.86%	1.53%
VALE	$4.36	894.24	$9,532.60	$3,898.89	0.85%	2.23%
BCR	$186.35	20.50	$2,047.34	$3,820.18	0.84%	0.49%
GIS	$58.11	62.42	$2,741.49	$3,627.23	0.79%	2.98%
K	$70.52	50.78	$2,881.77	$3,581.01	0.78%	2.79%
NKE	$131.07	27.05	$2,450.19	$3,545.44	0.78%	0.85%
JNJ	$101.01	32.90	$2,058.55	$3,323.23	0.73%	2.87%
LUKOY	$36.25	89.42	$4,412.88	$3,241.48	0.71%	6.79%
RBCAA	$25.43	118.94	$2,508.44	$3,024.64	0.66%	3.03%
VFC	$67.52	43.56	$2,899.79	$2,941.17	0.64%	1.90%
DGS	$37.06	78.87	$3,507.35	$2,922.92	0.64%	3.44%
CSX	$26.99	108.27	$2,272.59	$2,922.21	0.64%	2.52%
BUD	$119.36	24.08	$2,649.52	$2,874.19	0.63%	2.93%
WBA	$84.68	33.43	$1,243.26	$2,830.85	0.62%	1.62%
KO	$42.35	65.51	$2,700.32	$2,774.35	0.61%	3.06%
SKM	$23.56	110.63	$1,454.78	$2,606.44	0.57%	4.00%
BBL	$32.25	79.90	$3,641.84	$2,576.78	0.56%	7.69%
FNDE	$20.47	121.85	$3,038.94	$2,494.27	0.55%	1.55%
HIMX	$5.92	421.22	$1,069.90	$2,493.62	0.55%	5.07%
CEO	$113.68	21.29	$3,080.88	$2,420.25	0.53%	6.47%
LLY	$81.58	28.91	$1,065.91	$2,358.48	0.52%	2.44%
PNY	$57.31	41.11	$1,535.87	$2,356.01	0.52%	2.29%
AGNC	$17.83	130.35	$2,639.59	$2,324.14	0.51%	14.13%
PPL	$34.40	65.78	$2,020.76	$2,262.83	0.50%	4.35%
SBRCY	$6.11	346.00	$2,138.28	$2,114.06	0.46%	0.53%
BP	$35.70	57.32	$2,236.63	$2,046.32	0.45%	6.72%
SGTZY	$5.50	371.00	$2,392.95	$2,040.50	0.45%	1.84%
PAYX	$51.58	38.69	$1,449.71	$1,995.63	0.44%	3.10%
TOT	$48.23	40.71	$2,123.84	$1,963.44	0.43%	5.78%
SC	$18.01	105.00	$1,840.65	$1,891.05	0.41%	0.00%
TESS	$21.84	85.92	$1,060.25	$1,876.49	0.41%	3.66%
BVN	$6.41	282.50	$2,607.48	$1,810.83	0.40%	0.36%
RDS.A	$52.46	34.17	$2,178.68	$1,792.56	0.39%	7.17%
CIG.C	$1.78	1,001.67	$3,405.68	$1,782.97	0.39%	8.55%
HCBK	$10.12	153.92	$1,471.48	$1,557.67	0.34%	1.19%
VMI	$108.44	14.24	$1,657.96	$1,544.19	0.34%	1.38%
TLK	$39.76	36.14	$1,162.62	$1,436.93	0.31%	2.84%
APOL	$7.26	194.00	$3,686.00	$1,408.44	0.31%	0.00%
PKX	$40.03	35.13	$1,930.74	$1,406.25	0.31%	1.05%
IBM	$140.12	10.02	$1,522.74	$1,404.00	0.31%	3.43%
TLSYY	$19.20	72.99	$1,087.55	$1,401.41	0.31%	5.85%
OGS	$48.84	28.52	$1,032.99	$1,392.92	0.31%	2.42%
PBR	$4.88	285.38	$2,562.71	$1,392.65	0.30%	0.00%
VIAB	$49.31	27.87	$1,599.74	$1,374.27	0.30%	2.96%
SBS	$4.39	307.00	$1,510.44	$1,347.73	0.30%	0.00%
NAT	$15.28	82.75	$1,617.76	$1,264.42	0.28%	9.03%
MDLZ	$46.16	27.29	$486.03	$1,259.71	0.28%	1.34%
OAOFY	$32.30	38.00	$1,086.42	$1,227.40	0.27%	3.09%
DO	$19.88	59.44	$2,031.06	$1,181.67	0.26%	2.52%
PDLI	$4.58	255.36	$1,544.93	$1,169.55	0.26%	13.10%
BCMXY	$22.35	52.00	$835.64	$1,162.20	0.25%	4.94%
HCN	$64.87	17.15	$1,067.24	$1,112.52	0.24%	5.04%
CICHY	$14.48	73.00	$995.72	$1,057.04	0.23%	6.80%
CRC	$4.04	255.00	$1,259.70	$1,030.20	0.23%	0.74%
MBT	$7.03	142.00	$1,525.08	$998.26	0.22%	11.62%
RYAM	$9.22	106.83	$2,890.82	$984.97	0.22%	3.04%
SB	$3.08	314.89	$2,260.91	$969.86	0.21%	2.60%
DTEGY	$18.66	50.94	$637.26	$950.54	0.21%	3.02%
VSS	$94.96	10.00	$878.20	$949.60	0.21%	2.76%
MRK	$54.66	17.24	$597.71	$942.34	0.21%	3.29%
OJSCY	$3.85	236.00	$1,109.20	$908.60	0.20%	3.75%
BEN	$40.76	22.00	$960.08	$896.72	0.20%	1.47%
POT	$20.24	43.85	$1,278.67	$887.52	0.19%	7.37%
ARLP	$21.44	41.00	$1,093.88	$879.04	0.19%	12.24%
MYTAY	$6.90	124.00	$1,634.32	$855.60	0.19%	0.00%
FTD	$28.32	30.00	$967.50	$849.60	0.19%	0.00%
STRA	$52.92	16.00	$768.00	$846.72	0.19%	0.00%
GSH	$25.84	31.59	$597.37	$816.29	0.18%	1.58%
PTR	$78.63	10.31	$1,086.57	$810.68	0.18%	3.24%
FSBK	$8.01	100.29	$453.31	$803.32	0.18%	1.25%
CTL	$28.21	27.47	$1,068.03	$774.93	0.17%	7.66%
BFR	$23.25	33.32	$369.85	$774.69	0.17%	0.00%
ITYBY	$107.77	7.16	$448.36	$771.63	0.17%	3.87%
KHC	$77.97	9.58	$312.40	$746.95	0.16%	0.71%
TLKGY	$20.09	36.34	$711.90	$730.07	0.16%	3.44%
EZPW	$6.66	109.00	$997.35	$725.94	0.16%	0.00%
EVEP	$5.62	123.76	$1,211.61	$695.53	0.15%	40.46%
AEO	$15.28	45.30	$549.94	$692.18	0.15%	3.27%
SCL	$52.93	13.00	$499.98	$688.09	0.15%	1.36%
MPC	$51.80	13.03	$290.44	$674.95	0.15%	2.07%
DRI	$61.92	10.22	$460.92	$632.82	0.14%	3.55%
KSS	$46.12	13.63	$650.15	$628.62	0.14%	3.77%
SWRAY	$11.60	53.35	$610.32	$618.86	0.14%	4.36%
OIBR.C	$0.85	682.30	$3,008.94	$579.96	0.13%	0.00%
IDCBY	$12.65	45.00	$548.10	$569.25	0.12%	6.61%
PB	$51.38	11.00	$499.73	$565.18	0.12%	2.12%
CPLP	$7.41	75.76	$646.23	$561.38	0.12%	12.63%
MWE	$43.68	12.26	$258.69	$535.52	0.12%	8.29%
PNW	$63.51	8.43	$368.98	$535.39	0.12%	3.79%
BACHY	$11.79	45.00	$495.00	$530.55	0.12%	6.59%
TSCDY	$8.37	63.00	$504.00	$527.31	0.12%	0.55%
RAD	$7.90	66.00	$528.00	$521.40	0.11%	0.00%
HSY	$88.69	5.81	$525.34	$515.29	0.11%	2.47%
ICE	$252.40	2.03	$173.02	$512.37	0.11%	0.85%
MRO	$18.38	27.26	$514.40	$501.04	0.11%	4.57%
HNNMY	$7.76	61.56	$403.22	$477.71	0.10%	3.05%
DYN	$19.43	24.00	$764.16	$466.32	0.10%	0.00%
BRGYY	$15.97	29.00	$493.00	$463.13	0.10%	1.80%
NUS	$38.20	12.07	$490.04	$461.07	0.10%	3.65%
E	$32.60	13.00	$518.44	$423.80	0.09%	6.52%
ABEV	$4.87	85.02	$510.97	$414.05	0.09%	0.73%
NTT	$36.73	11.12	$248.42	$408.44	0.09%	2.01%
RAVN	$18.21	22.00	$497.20	$400.62	0.09%	2.86%
ELNK	$8.55	45.36	$369.68	$387.83	0.08%	2.34%
NGLS	$30.00	12.50	$212.00	$375.00	0.08%	10.93%
CQP	$28.01	12.93	$223.17	$362.17	0.08%	6.07%
CIG	$1.95	184.45	$959.14	$359.68	0.08%	0.00%
CACQ	$7.32	48.00	$504.00	$351.36	0.08%	0.00%
APA	$47.13	7.03	$475.93	$331.32	0.07%	2.12%
POM	$26.63	12.14	$194.36	$323.29	0.07%	4.06%
OPTI	$0.52	600.00	$1,392.00	$312.00	0.07%	0.00%
IAG	$1.80	150.00	$253.50	$270.00	0.06%	0.00%
IEMG	$42.34	6.25	$316.44	$264.63	0.06%	2.56%
TPUB	$9.44	26.00	$494.00	$245.44	0.05%	7.42%
CLD	$2.97	82.00	$993.02	$243.54	0.05%	0.00%
LYG	$4.58	50.00	$162.00	$229.00	0.05%	2.01%
TGT	$77.18	2.57	$149.75	$198.35	0.04%	2.75%
BND	$81.79	2.23	$177.82	$182.39	0.04%	2.44%
QCCO	$1.55	113.87	$412.21	$176.50	0.04%	0.00%
CEL	$7.63	23.13	$644.40	$176.48	0.04%	0.00%
BCS	$14.23	11.00	$163.13	$156.53	0.03%	2.80%
AMC	$27.36	5.56	$100.08	$152.12	0.03%	2.92%
LC	$14.18	10.00	$150.00	$141.80	0.03%	0.00%
LGCY	$3.99	29.19	$439.89	$116.47	0.03%	48.12%
SOUHY	$5.14	20.00	$180.00	$102.80	0.02%	0.00%
MVC	$8.32	11.69	$105.56	$97.26	0.02%	6.49%
WPG	$11.62	7.00	$123.13	$81.34	0.02%	6.45%
ISH	$2.03	37.06	$796.42	$75.23	0.02%	29.56%
ZAHLY	$0.60	118.00	$200.60	$70.80	0.02%	0.00%
TLN	$8.68	8.00	$123.52	$69.44	0.02%	0.00%
BK	$41.65	1.08	$27.26	$44.98	0.01%	1.63%
GOOGL	$737.39	0.05	$27.24	$36.87	0.01%	0.00%
ALN	$1.16	15.00	$31.65	$17.40	0.00%	0.00%
BKS	$12.99	1.00	$8.70	$12.99	0.00%	2.31%
BPI	$7.75	1.00	$17.85	$7.75	0.00%	0.00%
BBEP	$2.29	1.50	$20.36	$3.44	0.00%	38.53%
NUOT	$0.05	10.00	$5.00	$0.50	0.00%	0.00%
LPHIQ	$0.00	130.10	$870.37	$0.00	0.00%	0.00%
			$441,648.74	$456,662.13	100.00%	3.31%

As of Oct 31, 2015, my portfolio contains 177 holdings, valued at $456,662.13. This is an increase of $18,635.45, or 4.25%, over portfolio value of $438,026.68 a month ago.

My transactions in October are listed as follows:

Stock	Action	Cost	Price per share	Impact
WMT	Add	$2,200.00	$61.83	0.48%
EMR	Add	$1,350.00	$46.31	0.30%
XOM	Add	$1,200.00	$78.35	0.26%
BRK.B	Add	$700.00	$131.03	0.15%
NSC	Add	$600.00	$80.36	0.13%
IBM	Add	$560.00	$140.00	0.12%
PM	Sold Out	-$539.99	$90.00	-0.12%
RAD	New Buy	$527.84	$8.00	0.12%
PTGCY	Sold Out	-$513.01	$0.36	-0.11%
EVEP	Add	$500.50	$5.50	0.11%
KSS	Add	$500.00	$45.94	0.11%
MAT	Add	$500.00	$21.62	0.11%
VIAB	Add	$500.00	$46.67	0.11%
VMI	Add	$354.10	$107.30	0.08%
MCD	Add	$300.00	$101.54	0.07%
VFC	Add	$250.00	$70.90	0.05%
AFL	Add	$200.00	$57.63	0.04%
UL	Add	$200.00	$41.26	0.04%
PEP	Add	$168.47	$99.26	0.04%
PEG	Add	$153.13	$41.61	0.03%
BMTC	Add	$150.00	$30.53	0.03%
YORW	Add	$130.18	$22.45	0.03%
PNY	Add	$112.66	$41.16	0.02%
BDX	Add	$100.00	$140.10	0.02%
BUD	Add	$100.00	$108.13	0.02%
INTC	Add	$100.00	$29.92	0.02%
KO	Add	$100.00	$39.93	0.02%
MOCO	Add	$100.00	$14.03	0.02%
MSFT	Add	$100.00	$47.34	0.02%
SON	Add	$100.00	$37.66	0.02%
PPL	Add	$24.55	$32.91	0.01%
BBL	Add	$1.08	$31.21	0.00%
CEO	Add	$0.83	$116.90	0.00%
CHL	Add	$0.55	$61.11	0.00%
SWRAY	Add	$0.11	$11.34	0.00%
		$11,884.00		2.60%

Net cash inflow was $11,884.00 during this period. Factoring out the cash inflow, my portfolio returned 1.54% in October.

Purchases
I added significant amount of money into stocks this month to reduce the cash from my annual bonus. I added to position in Walmart, Emerson Electric, and Exxon Mobil, Berkshire Hathaway, and Norfolk Southern, all of which are wide moat, high quality, part of my monthly investment plan and selling at low valuations and near 52 week lows. 

I also added to my positions in IBM, EV Energy, Partners, Kohl's, Mattel, Viacom, and Valmont, which were selling near 52-week lows. With the exception of IBM, which is high quality, these are higher risk speculations with low valuations.

I initiated position in Rite-Aid at $8.00, after Walgreens announced acquisition in cash for $9.00 per share. See this for more details. This is a 12.50% arbitrage. If the deal closes within a year, that is an acceptable return.

The rest of my purchases are either part of my monthly investment plan, or dividend reinvestment.

Sales

I sold out positions in Phillip Morris (high valuation at 52-week high) and in Pharol (tax loss harvesting). I should now have maxed out the 3000 capital loss limit for the year.

My monthly performance against the S & P 500 is shown below:

2015	My Portfolio Return	S & P 500 TR
Jan	-1.52%	-2.99%
Feb	1.90%	5.75%
Mar	-2.71%	-1.57%
Apr	3.25%	0.96%
May	-2.39%	1.29%
Jun	-3.59%	-1.93%
Jul	-4.05%	2.10%
Aug	-5.20%	-6.03%
Sep	2.97%	-2.47%
Oct	1.54%	8.50%
YTD	-9.78%	2.82%

I am trailing the index by 12.6% YTD.

Turnover was 2.6% in September, relatively high due to heavy cash deployment.

What do you think about my portfolio? Thanks for reading.

Why I lost money on this IPO from loyal3

 

I just lost $11.75 by participating in the First Data (FDC) IPO on loyal3. I had reserved the maximum $10,000 and got the entire allocation for 625 shares at the IPO offer price of $16 on Oct. 14, 2015. I held on for the first day of trading yesterday. (The stock reached a high of $16.41 near the open, then started dropping to as low as $15.65, so I did not sell as I did not want to lose money). Today, I put in my sell order after seeing the stock getting back to $16, hoping to break even. Unfortunately, the sale price was executed at $15.98, netting me proceeds of $9988.25 for my 625 shares. IPOs tend to have a pop on the first day and I have invariably made money with loyal3 by selling on the first day of trading. What went wrong this time?

Simply put, I missed several warning signs.

First, too many shares were offered. This was the biggest IPO of the year.

Second, the stock market is cooling off with most of the indices off their highs, so the demand for speculative stocks and IPOs is not there.

Third, the fundamentals are horrible. The debt of this particular company is overwhelming. The approximately $2.5 billion received from the IPO will be used to pay off debt, but this is small compared to the company's debt of $21 billion. FDC has an interest coverage of only 1, while only 3 companies in the S&P 500 has interest coverage below 1. FDC looks like a prime candidate for bankruptcy when interest rates rise and as it continues to lose money.

Fourth, it took days before the First Data IPO enrollment closed on loyal3. IPOs that have done well on loyal3 in the past were available for only an hour before enrollment closed. This was the first major warning of weak demand.

Fifth, the IPO was originally offered at a price range of $18-20. On the day of pricing, the IPO priced below range at $16. This was unprecedented in the history of loyal3 IPOs. It required confirmation, which I did, like a sheep led to the slaughter. An IPO pricing below range is a loud and clear warning of weak demand, and the smart thing would have been not to confirm my reservation.

I got my entire reservation. That never happened before on loyal3. My hope for a pop was quickly vanishing.

One or two of these warning signs above is probably not a big deal. Combined, they outweighed the odds that IPOs tend to pop on the first day. The CEO of FDC said he is "taking the long view". They tend to say that when there is nothing good to say about the present. And the foreboding thing is that the long term view of this company does not look good. So today, given the chance of breaking even, I am out. Live to fight for another day.