Well Wednesday brought about some changes to my portfolio. This is something I've been thinking about doing for a while with two of my positions. Both Caterpillar and Intel are great companies although they've fallen on hard times. Caterpillar is suffering from the slowdown in the global economy leading to lowering demand for their products. Intel has been late to the game in mobile/tablets and is trying to make up ground. Earlier this year Caterpillar increased their dividend by 15% which I took as a very positive sign from management. Lately though I'm not so sure about it. Intel failed to increase their dividend after four straight quarters of paying $0.225 per share and they are struggling to make inroads into mobile. I reduced both positions on Wednesday morning in order to be able to put that capital to work in companies that I feel have better prospects going forward and to gain exposure to another sector.
I sold 45 shares of Intel (INTC) for $23.79 each. I had originally purchased the shares by having a put option that I had sold was exercised. My per share cost basis on these shares was $24.56 so I took a loss on the shares of $0.77 per share or $42.59. Not a horrible loss considering I was in the black when you count dividends received. These shares were held for over a year and so they'll be taxed at the long-term capital gains tax rate. While the loss isn't significant, any bit to try and pull down my net gain from selling off my Halliburton shares is welcomed. This ended up reducing my position by about 1/3 and I now own 107 shares of Intel.
I also sold 13 shares of Caterpillar (CAT) for $85.43 each which gave me $1,102.62 in cash. My total cost basis on these shares was $1,079.54 or $83.04 per share. So after commission I made about $1.78 per share for a total profit of $23.08. I ended up reducing this position by about 1/3 as well and I now own a little under 29 shares. These shares were held for less than a year, as they were purchased in April 2013, so they will be taxed at the higher short-term capital gains tax rate.
Overall I'm happy with reducing my position in both Caterpillar and Intel. I think in the long-term Intel might come back to haunt me because they can throw so much R&D towards whatever they want to get into that eventually they'll make progress. But for now I was able to reduce my exposure to some of the more volatile sectors, industrial equipment and technology. I wouldn't be opposed to adding more Intel in the future, but I want to see a lot more from them before I commit any more capital. I'm kind of torn on what to do with the rest of my Caterpillar position but for now I'm going to take a wait and see approach. Part of me wants to close the position and another parts wants to keep it open as they will still be around paying higher dividends for years to come.
Tomorrow I'll go over my what exactly I did with that new capital. Yes, most of it has already been put to work.
I've updated my Portfolio page to reflect these changes.