Friday, August 23, 2013

Recent Sells

Yesterday seemed like as good a day as any to try and sell off some more shares of Halliburton and also close my position in Alcoa.  I sold 25 shares of Halliburton, leaving me with just 100 more.  I had been debating whether or not to sell those shares or not because they changed the ESPP program and purchases are now made on a quarterly basis rather than semi-annual.  This leads to lots of less than 100 shares every quarter which means no covered call capabilities.  I might hoard up some more shares in the future and keep some extra handy to take advantage of call writing, but for now I decided to sell off some more shares and diversify into other dividend growth candidates.

I also closed out my position in Alcoa.  I purchased the shares in late 2011 hoping to get a bounce in price and then sell the shares.  Greater fool theory in practice I guess, although there was at least some rational thought behind it as they did pay a dividend and in theory as the economy improves Alcoa should improve.  I held on for so long because it was such a small position, just under $300, but it was time to get rid of this.  There were so many mistakes made with such a small purchase and not having it fit my investment thesis so the shares had to go.

Now on to the details.

I had originally acquired the Halliburton shares through the ESPP program at work on 12/31/2012.  Since I sold the shares less than 2 years from the grant date, 7/2/2012, and less than 1 year from the purchase date these will be a disqualifying disposition with short term capital gains.  The amount reported as ordinary income on my taxes for this year will be $259.50 with $315.02 as short term capital gains.  My cost basis was $867.25 to report to the IRS, but it was actually $607.75 in withholding from my paycheck.  Before taxes these shares earned a 94.5% return in less than a year.  Not bad at all.  For more details on ESPP taxation and a spreadsheet to run your own calculations check out this post.  

The Alcoa position didn't go quite so well.  I purchased 30 shares on 11/28/2011 and had reinvested the first 4 dividend payments while taking the rest of the payments as cash.  I received $235.91 in sales proceeds by closing out the position, so I found a great way to lose 18.2%.  Ooops.  I had a chance to close the position much earlier and actually for a profit but didn't jump on that opportunity despite Alcoa not really fitting into my investment strategy.  I'm just glad that it wasn't a large investment so the loss is manageable despite the percentage being quite high.

I've updated my Portfolio page to reflect these changes.

2 comments:

  1. Thats a great return on HAL! I'd love some of that action in my own portfolio :)

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    1. Integrator,

      The ESPP plan has been a boon for me. It pretty much completely funded my down-payment. Of course getting to purchase at a 15% discount right before the shares/market take off on a nice bull run has helped a lot. The return after taxes is going to be much different since some of that gain is considered income and taxed at regular rates and some is capital gains. Actually, since it was short term capital gains you can just take off 28% from that 94.5% return. Those taxes are killer but I was able to fund my IBM purchase with that.

      Thanks for stopping by!

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