I wanted to publish a quick post to serve as both a portfolio update and State of the Stash update for the month of November. TLDR version: I sold out of a position and spent a ton of $$$ on one of our dogs (totally worth it).
First the savings update. This is going to be shore because I basically achieved a big stinking pile of zero progress in November. My savings and market gains were about $5K.
However, one my dogs injured his back. He could end up paralyzed but we decided to get the surgery to treat the spinal injury. His prognosis is pretty good, with the veterinary neurologist estimating a 90% chance of a nearly full recovery with the surgical option. So far, so good. He is walking around reasonably well three weeks after surgery but is still confined and doing physical therapy. From a financial perspective, however, this left a mark (though not as noticeable as the scar down my boy’s back). So far, we are nearly $5K in costs with a few hundred more likely to be incurred. So basically November 2019 was a push financially right at $249,000.
Overall, I didn’t make any big moves in my asset allocation or portfolio. I did want to mention that I read an interesting article about the German economy in the Journal[$]. The article is behind a paywall but it is basically about the German savings glut, despite negative rates, and how thrifty and conservative they are financially. This is obviously shaped by the collective experience of Germany over the last century or so.
One interesting anecdote in the story was how the midcap companies in Germany refuse to issue public equities or debt. My (novice) take is that the economy remains very “intermediated.” (i.e., the banks seemingly have a very large role to play in linking capital with needs). Maybe that makes me a bit more comfortable with their domination of foreign developed indexes.
Overall, the psychology on the ground (as reflected in the story) seems consistent with cheap prices and low expectations. I revisited my portfolio based on this with a view to putting more $$$ in those markets. I’m about 40% allocated to non u.s. markets. I am considering rebalancing that back up to 50%, but I lack the testicular fortitude to go “full GMO” with it.
Hit the Brix!
In other (hopefully more interesting) news, I sold out of my position in Brixmor Property Group (“BRX”). I have discussed BRX previously in a number of posts looking at retail REITs. I bought BRX in September 2018 and sold a couple of days ago. I made roughly a 27% return (not 100% sure I got all the dividends in there). That’s pretty ok, but Kimco did even better (I think the SPY was up like 9% over the same period).
I really liked the last BRX earnings call. They raised the dividend a bit and narrowed the FFO projection (increasing the bottom of the range). James Taylor (hah, not that guy) the CEO of BRX blew off a question about issuing stock. He also said they were keeping the payout ratio low and that they could fund redevelopment plans internally, by doing so and by selling assets as needed to cull the portfolio. I like both of these actions. They seem very rational and different from the sort of methods most REITs use to sucker in yield-hungry retail investors
Selling is Hard
So, why did I sell? First, it is now in the zone of where I said I would start thinking of selling, at like almost a 12x price to FFO (more like 11.5 but still). I also saw some commercials like advertising the stock on CNBC. I couldn’t determine whether those were paid for by NYSE or the listing company. I also saw a clip of Mr. Taylor on Mad Money. That is not exactly the recipe for an “outsider” rational-capital-allocation outfit that crushes the per share returns. See The Outsiders That’s just not my bag baby.
So I decided to sell at some point. But selling is hard. I decided to employ a bit of trend-following/time-series momentum to determining when to sell. I’ve read a bunch of stuff (academic research and otherwise) and I do believe that higher prices attract buyers, for a time. So I decided I would sell when the positive momentum started to fade. I just used some like shorter-term moving averages.
I could have used relative strength or something (that is the more usual academic momentum measurement). So basically BRX had been ripping but it started to fade a bit recently and when it broke through one of the shorter-term moving average lines I sold it. This is something new to me. I think it worked out ok. I definitely, like as a philosophy, look to avoid or mitigate risk of situations where the business/asset is “expensive” and has no momentum. Basically just allowing for a bit of reflexivity markets.
I have also often considered making a “rule” that I will never sell. Perhaps only for one of my brokerage accounts. I would probably favor companies that are likely to return capital so I could have some cash coming in. I think this could have a number of positive psychological, behavioral impacts on my investing. Perhaps a matter for further discussion down the road.
Now What?
So, now I’ve got some $$$ to invest (like 25% of the discretionary, active portion of my portfolio). Some of names I’m looking at are: WFC, AXP, EBAY, VIAC. I’ve actually started to nibble at EBAY and WFC. If I buy like a material chunk (relative to my small discretionary, active portfolio), I will post about it.
If there is any interest in a brief discussion of any particular name, let me know in the comments and I we can start a discussion. Thanks for reading!