Quarterly Portfolio Review-It Sucked!

Posted by Tim

April 1, 2008

The first quarter of 2008 is behind us, thank goodness, and this is my review of this site’s 20 Stock Portfolio. I started the portfolio on this blog to track stocks that I am interested in and/or invested in. 20 was picked as a comfortable number to keep track of and be a semi-expert on. I track to 20 stocks for each quarter on an equal dollar weight basis. Right now I am seriously considering breaking up the portfolio into separate income and growth sections to further focus on the two types of stocks I am interested in. First, the overall performance of the portfolio:

The portfolio finished the quarter with a return of negative 12.08% for the 3 months. The 0.75% earned in dividends had negligible effect on the overall return. My -12% fits neatly between the S&P500, down 9.9% and the NASDAQ, off 14.1%.

Although 13 of the 20 stocks in my portfolio were negative for the quarter a majority of the actual overall loss came from just two stocks: Thornburg Mortgage (TMA: 0.42 +0.08 +23.53%) is flirting strongly with bankruptcy and has lost 87% of the value it started the quarter with. And Thornburg was up 50% at one point in February. Number 2 on the list of dogs is VeraSun Energy (VSE: 5.69 +0.16 +2.89%) which shed 52% of its value. VSE has been hit by high corn prices and negative sentiment concerning ethanol as an alternative fuel. With TMA and VSE starting the quarter as 10% (2 of 20) of the portfolio, they managed to be responsible for almost 7% of the loss on the total portfolio.

The next two on the loser hit parade come from opposite sides of the stock spectrum. Number 3 dog, Terra Nitrogen Co. L.P. (TNH: 120.15 +4.79 +4.15%) was down 22% even as grain prices kept rising (TNH is in fertilizer) and the company sports an eye-popping 15% dividend based on the latest quarter payout. PowerShares Global Clean Energy Fund (PBD: 25.936 +0.386 +1.51%) was 4th worst down 19.3% as the market soured on the formerly very hot renewable energy sector.

Only two stocks in the portfolio had double digit positive returns for the quarter: Headwaters (HW: 15.48 -0.16 -1.02%) still has falling earnings, but it appears the market has some faith in the company’s efforts to enter new markets in coal cleaning and waste oil. Penn West Energy (PWE: 29.24 -0.24 -0.81%) had an 11.5% positive return including almost 4% in dividends. The company still sports a 14% yield, pays monthly, and the dividend looks secure for at least a couple of years.

The bottom line is that I learned a lot over the last 3 months. My personal investments in the stocks of the portfolio were down about 5%, even though I still have a long position in TMA. I had been buying call options on TMA as the stock fluctuated, made some money, now hold July $10 calls, but made a little money overall on the positions. This blog is still fairly new, and I am learning as I go and hope to improve my results going forward. Since MarketWatch reported it was the worst quarter since 2002, my odds of doing better are good!

Note: Of the securities listed I am long TMA, HW, PWE.