Income Portfolio quarterly results

Posted by Tim

October 1, 2008

Another calender quarter is behind us and it was one of the ugliest in my memory as far as stock investing goes. The market showed tremendous fluctuations with record daily gains and losses, but finished the quarter down significantly with the S&P500 down over 12% for the 3 months and the NASDAQ off almost 10%.

During the quarter I changed my Income Portfolio to an online actively managed system. I started the portfolio for the 2nd quarter of 2008 with equal dollar weighted positions in the stocks I had chosen for the portfolio. For the just departed 3rd quarter I started with the same equal dollar weighting and a portfolio value of $20,000. My new tracking system allowed the inclusion of commissions and a cash position. I opened the new portfolio on July 1 fully invested in 10 (10% each) stocks with a $4.95 Trade King commission subtracted from each purchase. Dividends were credited to the cash position of the portfolio. I actually set up the portfolio in early September and backdated the positions to July 1. For that reason, I made no trades in the portfolio until Sept. 8 to avoid any backdating bias/cheating. Trades are calculated at the midpoint of the open and close price of the stock on the day I decide to adjust the position.

For the quarter the portfolio ended with a value of $19,107.34, off 4.46%. $440.25 was earned as dividends and $94.05 paid in commissions. Cash balance at the end of the quarter was $2,113.56 or 11% of the portfolio.

The portfolio value was held up by the three financial stocks as all of the rest took serious hits during the quarter. City Bank (CTBK: 5.68 +0.18 +3.27%) led the way with an 83% share price gain for the quarter. Aircastle Ltd (AYR: 5.295 +0.325 +6.54%) and Monmouth Realty (MNRTA: 6.995 +0.105 +1.52%) chipped in with 21% and 24% stock price gains. Five of the stocks in the portfolio had share price losses of greater than 25%: Ship Finance (SFL: 13.08 +0.59 +4.72%), PowerShares Financial Preferred ETF (PGF: 15.00 +0.29 +1.97%), Penn West Energy (PWE: 13.55 +0.64 +4.96%), Alpine Global Dynamic Dividend CEF (AGD: 8.2299 -0.4801 -5.51%) and Atlas Pipeline Partners (APL: 9.32 +1.35 +16.94%). That leaves two stock with losses at about 14%: Nordic American Tankers (NAT: 37.01 +0.16 +0.43%) and Inergy (NRGY: 20.76 +1.16 +5.92%). It is interesting how some strong dividends and one great gainer (CTBK) can hold up a portfolio while most of the stocks are tanking.

Once I started making trades in the portfolio I reduced my positions in CTBK, PGF and MNRTA. City Bank had risen to the point it could hardly be considered an income stock (3.5% yield), PGF had a nice pop on bailout news so I reduced it to about 3% of the portfolio and I felt that MNRTA should be a smaller holding. The sales allowed me to increase the cash position as a defensive measure. I added to the positions in PWE, SFL and APL. These stocks are now yielding waaaay above their historical averages and I believe the dividends are secure.

This I ncome Portfolio is hypothetical and for informational purposes only. The details of the portfolio on the Stockalicious website are closed to uninvited viewers. You can see the level of detail the site offers by clicking on the name of the Indexes Portfolio on my sidebar. This is a practice portfolio I set up using a few of the larger ETFs.

Overall, I am pleased how the Income Portfolio is performing in difficult times. I look forward to strong returns as the market turns in favor of the stocks held in the portfolio.

Note: During the quarter I held long positions in NAT, SFL, CTBK, AGD, AYR, NRGY, PWE.