Monday, October 25, 2010

RSY XV:Update, Div. IVR, Partial Harvest CODI.

The above table shows realized gains {or losses} on the RSY portfolio. It reflects the recent dividend payout by IVR of $1 per share and a $400 deposit for the model portfolio. Overall that is good with a realized gain of over 4% based on last balance of holdings for just over the last two months. (Click on tables for clearer images.)

That is fine except for that one major collapse of LZ with over a 9% drop today. That's the bad news, the good news is that our option gained, that is lost value of what we sold! If the option continues to slide down, RSY might want to buy back the option. The low was $4.50 today on the option but now the theoretical value is a little over $2. The news was not all bad even on the press release. Their 3 quarter profits were up 24% but missed analyst earnings estimates, and gross margin fell more than 3 percentage points to 32.8% from last year.
Volume rose 1% during the quarter, and the company provided raised guidance for the full fiscal year -- $10.35 to $10.55 a share, up from $9.60 to $10 a share. They also expect strong growth over the next few years, predicting earnings of $13.50 a share in 2013. {From Motley Fool, Lubrizol Shares Plunged: What You Need to Know}

One piece of advice that I always try to practice is not to execute trades based on what you bought a stock for, but to consider only this moment as the decision point. That is, do I want to buy LZ at this new price or not, irregardless of what I did in the past. If the underlying fundamentals of a company materially changed then it is natural to come to a different decision but if the analysis still stands then standing put is the most prudent set of actions. LZ has shown to have highly volatile price movements and thus we should not panic on every move.

One thing that RSY portfolio does use to determine changes in its portfolio is when Sabrient changes its ratings. CODI has recently been downgraded to hold from buy. We are also just past the record date for the last dividend on the 22nd. Thus RSY will partially harvest the small profit by putting in a limit order to sell 200 shares at $16.89 {GTC}.

The Dividend Puzzle: The Relationship Between Payout Rates and Growth | AAII: The American Association of Individual Investors

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5:03 AM, April 25, 2017  

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