Saturday, April 11, 2015

Weekly Roundup - April 11, 2015

Lots of interesting news in the work side of my life this past week.  The really great news is that I finally can have some resemblance of work/life balance.  I have a 20/10 schedule now, so I work 20 days then I'm off for 10.  This is the first time since I started this job where I can actually tell my wife, family, and friends when I'll be home other than when I've had vacation.  That's a huge plus but there's no telling how long it will last so I'll enjoy it while it does. There was also news at the start of the week that our division will be sold sometime this year to help facilitate the acquisition of Baker Hughes.  I'm not surprised by the announcement but it brings up a whole slew of questions and not many answers.  There's rumors that General Electric could be a potential buyer which is a company I wouldn't mind becoming a part of.

On top of all that Luke continues to be very up and down.  Honestly, if he could just have a stable week I would feel better.  They currently think that his fluid balance is the big issue as the pulmonary hypertension has shown slight improvement, but the problem is there's very little solutions for that given his current condition.  So we're at a waiting point right now while we try and figure out the best way to approach this.

I didn't get to do any investing this past week because of capital restraints but that doesn't mean I'm not on the look out for potential investments into excellent companies.  While I rarely sell positions I do have two in mind to potentially end my relationship with.  One shouldn't be too surprising, it's my employer Halliburton (HAL).  I'm a bit wary of selling shares at a down point in the oil and gas cycle but with capital being rather tight the thought has crossed my mind.  I currently have three different lots of shares that were purchased through the ESPP program.  Two of them are sitting on pretty heavy losses and the other is looking nice with a large gain.  Thanks to the quirky tax rules regarding ESPP's I can only logically shed some exposure to my employer with the lot that's increased in value.  I don't want to pay taxes on "income" when I've suffered a loss.  Selling a chunk of those shares could net me about $2k in proceeds to put to work in dividend growth companies.

The other company that I'm thinking of selling is American Realty Capital Properties (ARCP).  To no one's surprise the share price plummeted after the accounting scandal and then the subsequent dividend freeze.  However, the accounting issues have now been resolved and a new CEO has been announced but the dividend still sits at ZERO.  As a dividend growth investor, that just won't cut it and the capital in ARCP isn't pulling its weight.  Even worse is that the dividend, when reinstated, will be smaller than before the accounting scandal and will most likely move to quarterly payments.  The dividend might not even be reinstated this year although I suspect that it will.  ARCP has indicated that the dividend payment will be "in line with peers" which assuming $0.90 FFO for this year, the dividend would be in the neighborhood of $0.45 (50% payout) to $0.80 (90% payout) annually.  That would put my YOC somewhere between 3.65% and 6.57%.  Considering there's comparable yields from companies that don't come with the additional headache of overcoming the recent hurdles it's very tempting to close this position.  However, I also know that the underlying properties are a huge asset that will be able to generate a ton of cash flow over the years once management can get things straightened out.  Disposing of my ARCP position would free up just under $1,900 that I could invest into actual dividend producing assets right now.  I currently have around a 21% loss that I could use to help write off against any gains from sales this year for next years taxes.  I'm leaning towards selling my position in ARCP possibly sometime this coming week but I wanted to give myself a weekend to do a bit of last minute research and thinking on it.

In case you missed them, here's the posts from this past week.


Now on to the links!

Reject the assertion that you'll work longer than your parents by Retire Before Dad

Seth Klarman says this is the biggest investing advantage you can have by Sure Dividend

Gracious - April 2015 by Dividend Hustler

An accounting homework assignment for those of you who want to learn to analyze businesses by Joshua Kennon

Preparing for the future: Building a successful online business by FI Fighter

Portfolio vs dividend diversification by No More Waffles

Dividend income update - March 2015 by Tawcan

That liberating feeling of selling your bad investments by Islands of Investing

Dividend income update - March 2015 by Dividend Mantra

The value of dividend growth by Dividend Growth Investor

These 67 free dividend stock resources will make you a better investor by Sure Dividend

Quarterly review - Q1 2015 by DivGro

Quarterly update - Q1 2015 by Roadmap2Retire

Doubling down on risk by A Wealth of Common Sense

Raising the difficulty of my pullup bar challenge by Long Term Mindset

Also, if you're looking for investment ideas A Frugal Family's Journey keep an ongoing list of Recent Buys and new Stock Analyses that are worth checking out.

I hope you all have a great weekend!

16 comments:

  1. Hey JC. Thanks for the support.
    It'll be nice to free up those positions to gain some capital for sure. Especially ARCP. It's a tough call because it could a great turnaround story and in a few years, people tend to forgive and forget. In my opinion, I would move on and invest in high quality assets rather. Last week, I was gonna buy SNC - Lavalin which is down 50% from its high 6 months ago because of scandal of bribery and corruption resurfaced. I'm pretty fearless and it's still a leading construction and engineering firm here in Canada which has been around for 100 years. I chose BMO instead. Maybe one day I'll take on more gambles but I just wanna chill out and buy the best for a while. So many companies, yet so little cash. It's a good thing i suppose to make us think thoroughly before we deploy our hard earned Cash.
    I hope Luke will pull out of this JC. In the meantime, stay positive and count our blessings. Take care bud.

    ReplyDelete
    Replies
    1. Hustler,

      ARCP could be a beast in the future, but the problem is how long into the future will that take? I'll probably unload some HAL shares this week to free up some capital. I don't have any pressing needs for capital right now so ARCP might sit in my portfolio for a bit longer. Although I can always get back into the company if/when they show that there's a clear vision to success in the future. With the markets currently expensive I'm leaning much more towards the higher quality companies because they'll be there through the next recession and come out even stronger.

      Thanks for the well wishes for Luke. Yesterday was actually an okay day for him with not as many swings as the days prior so maybe he's turned a corner. One of the big issues is still his fluid balance and they aren't quite sure what to do because he receives so much fluid because of the amount of drugs he's on but they can't stop the drugs because that'll make things worse. So it's a pretty rough situation.

      Thanks for stopping by!

      Delete
  2. Thanks for the mention, JC.

    Have a great weekend
    R2R

    ReplyDelete
  3. Hey JC,

    Thanks so much for mentioning my post. I'm sorry to hear that things are still up and down with Luke, but hope you all keep hanging in there and that things start to improve for the better.

    Cheers,

    Jason

    ReplyDelete
    Replies
    1. Jason,

      Well yesterday was actually a decent day for Luke. No really crazy swings so that was good. If we can get his fluid balance under control then we might be able to actually make some progress.

      Thanks for stopping by!

      Delete
  4. JC,

    I'm sorry to hear that Luke continues to have ups and downs. I hope he makes some good progress soon.
    Hang in there!

    Thank you for mentioning me in this great list of articles.

    Have a great weekend,
    NMW

    ReplyDelete
    Replies
    1. NMW,

      I don't necessarily mind the ups and downs because that's just the nature of the NICU. Although obviously we wish there were some more ups and less downs. They have some ideas of what to do short-term but there's just so much fluid that he's getting that managing it long term is still going to be an issue.

      Thanks for stopping by!

      Delete
  5. Hi JC -- thanks for the mention, and best of luck with your sell (and then buy) decisions. I'm looking forward to seeing what you do. I have some duds in my portfolio (SDRL, VNR, and perhaps a few others) that I'm currently dragging along. I've been contemplating next moves, so it'll be interesting to see what you do.

    Take care, and I'm hoping Luke makes good progress soon!

    ReplyDelete
    Replies
    1. Ferdi,

      I'm much more interested in the buy decisions! I'll probably unload some of my shares of HAL this week but I'm still unsure about what to do with ARCP. That's capital that could produce for me right away but ARCP could very well be a beast down the road. Of course I can always get back in on ARCP in the future once things get better and there's a lot more clarity on the forward vision of the company.

      Thanks for stopping by!

      Delete
  6. Just got done reading through a little of your babylukeblog. In December I finished a month of radiology at the Children's Hospital of Wisconsin where, unfortunately, reading similar x-rays multiple times a day were common. At least in the radiology side you miss out on much of the interaction with the parents and what they are going through. It sounds like you guys have a ton of support from family, friends, and the staff at the hospital. Luke looks like quite the fighter! My prayers are with him and your family!

    ReplyDelete
    Replies
    1. Scott,

      I honestly don't know how people can work in children's hospitals. That has to be one of the hardest things in the medical field, at least emotionally. Luke has been one hell of a fighter. The doctors were pretty surprised that he even made it past a couple days so the fact that he's almost 5 months old now is way beyond their expectation. His strength inspires me so much. Thanks for the prayers! Actually, if you have the time he could use some extra ones because the last 24 hours have been kind of rough.

      Thanks for stopping by!

      Delete
  7. OK, now I see why people were getting rid of ARCP. I didn't follow that stock, but knew it was a good dividend player. Apparently not anymore.

    Also a good list of articles by other bloggers. Some are new to me, so thanks for sharing.

    ReplyDelete
    Replies
    1. Martin,

      Yeah ARCP definitely has its problems. If I was following the markets closer at the end of last year I probably would have closed my position. I'm leaning towards closing out of this position since I can always get back in later. But I also really want to see what the dividend is like whenever it's announced.

      Thanks for stopping by!

      Delete
  8. Nice roundup JC...found a few posts I haven't read yet. :)

    Congrats on the new hours at work...The 20 days on might be challenging at times but I bet you're going to enjoy those 10 days off!

    Last but certainly not least, thanks for providing links to our Collection of Recent Buys and Collection of Stock Analyses! Your ongoing support is greatly appreciated. :) AFFJ

    ReplyDelete
    Replies
    1. AFFJ,

      Just knowing what days I'll be home and what days I'll be at work is a big positive. The 20 days won't be that bad since I'm used to spending 10-20. Plus on the time between wells I can go back home for a day or two since I live relatively close.

      No problem on the links. Thanks for compiling all of that data for us. I think it's a pretty valuable resource.

      Thanks for stopping by!

      Delete