20 Stock Portfolio, November month-end Review
It was a pretty crappy month, at the end of October the portfolio was up 7% for the quarter, at close yesterday it was down 1.5% for the quarter, meaning down 8.5% for the month. I am tracking the stocks on an equal dollar weighting for a quarter then re-balancing for the next three months.
Despite its name the portfolio now contains 14 stocks, with two additions in November. Terra Nitrogen Co. LP (TNH: 121.37 -2.79 -2.25%) was added 11/15 and KHD Humboldt Wedag International (KHD: 26.86 -1.61 -5.66%) joined the portfolio on 11/24.
Almost every component of the portfolio suffered during the month with the exception of TNH. The fertilizer limited partnership has managed to gain 20% in the last two weeks. I am a bit surprised by the gain and plan to take a close look at what is happening with the company in an up coming post. Here are a couple of highlight (or low lights) from the portfolio for November.
Exactly half of the stocks are in positive territory for the quarter starting 10/01. Previous leader Gigamedia (GIGM: 10.71 +0.15 +1.42%), which was up 50% in October alone as fallen back to be up about 17% for the two months. I believe this stock will be a 5-fold gainer over the next few years, but it is very volatile! I think buying when the price is below $20 will pay off handsomely.
A couple of thoughts about the three stocks at the bottom of the portfolio. Wayside Technology (WSTG: 7.40 -0.18 -2.37%) continues to fall in price, and I no longer believe it has the potential I am looking for. I will leave it in the portfolio till the end of the quarter to make calculations easy, but I have sold the shares I did own personally.
Thornburg Mortgage (TMA: 0.1825 -0.0175 -8.75%) has ranged between ugly and really ugly. The stock actually closed yesterday up 2% from the end of October, but the share price recovered a bunch over the last few days. I do not expect much to happen until the company declares a 4th quarter dividend, which usually occurs in late December. If a reasonable dividend is resumed, say 40 cents, I think the share price will recover into the low teens. It will take a growing dividend over several quarters to get the stock up to around $20. Not an unlikely scenario by the end of 2008.
Penn West Energy Trust (PWE: 31.82 -1.24 -3.75%) has dropped from $33 in late October to a current $26 and change, giving a yield of over 15% based on the current dividend. And it pays monthly. After reading this article, I learned the company has made some acquisitions that have diluted free cash flow (where the dividends come from). The growth is timed to beat a change in Canadian tax law going into effect in 2011. It is better to increase equity now rather than later. Also of not in the article is that the current distribution is to be maintained until at least 2011. This last week I purchased some additional shares for myself.
Final word: The 20 Stock Portfolio is a hypothetical portfolio of stock I am interested in. I own some but not all of the securities listed in the portfolio. Also, returns quoted here do not include any dividends earned during the quarter.
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[...] weekend I gave a month end review of the hypothetical 20 Stock Portfolio I am running on this blog. At that time the portfolio was [...]