Portfolio - Jan 2014

As already explained in my last post end of December, price losses and dividend cuts for K+S gave me quite some headache last year. The recent upward trend of the stock represented and opportunity to exit this investment. I sold 17 stocks at EUR 22.50 and reduced my exposure to EUR 1,000 already at the end of 2013. Right after that the price went further up to EUR 26.00 and therefore I decided to enter a stop loss order at EUR 25.00 to sell the remaining part. The order was executed on the same day so the remaining 30 K+S shares left my portfolio as well. 

Overall, the K+S investment resulted in a 28% loss and has cost me EUR 439, but I decided that it is better to cut losses and use the funds for other investments.

Intel was the other candidate which I considered selling in December. When the company reported its Q4 results on 16 January, many analysts were not really delighted about the results: For FY 2013, the company reported USD 52.7bn in sales (down 1% yoy) and a USD 9.6bn profit (down 13% yoy). Forecasts for 2014 show that management is basically expecting a flat 2014. Dividends for 2014 are also expected to be held constant at 2012/13 levels. Given these key data, Intel's stock price went down more than 4% within the same day from an interim high at EUR 19.74. Intel fights against declining PC sales, which used to be its core business segment, and still finds itself within a transitional phase to mobile devices. 

I decided to exit at EUR 18.74 and took a EUR 200 profit with me which compensated me for my K+S losses. In my view, it still remains to be seen if Intel's mobile play can come out to be a profitable venture and it can take much time until that happens. Given that Intel is a rather cyclical stock and the bullish market atmosphere which could also well change in the course of 2014, I thought it is better to exit and use the funds for other investments.

That said, I entered into two new positions: 20 stocks of Philip Morris International at price of EUR 61.33 and a yield of 4.5% and 32 stocks of Seadrill Ltd. at a price of EUR 28.68 and a yield of 9.7%. Basic investment considerations for entering into the positions will follow soon in the Stocks section.

New portfolio composition is shown below:

In comparison to December 2013, expected dividends for 2014 increased from EUR 539 to EUR 612 due to the higher portfolio yield of 6.20% in comparison to previous 5.48%. This particularly has to do with the replacement of low-yielding K+S by high-yielding Seadrill as total invested capital remains almost the same. Interestingly, despite the higher yield I feel more comfortable with the new composition of the portfolio. I do hope though that this is not only a feeling...