the Youngest Snowbird:

Quick Peek at November Stock Stuff

Current holdings as of November 2/2011:

• Alaris Royalty Corp
• Student Transportation
• Data Group Income Fund
• Just Energy
• Inter Pipeline 
• AvenEx
• Chorus Aviation
• Pembina Pipeline
• BTB REIT
• Cash

On October 28th, I sold out of Superior Plus (2700 shares for $7.30) with a gut feeling that there was a yield cut coming. And after market close tonight, SPB announced a 50% cut in the dividend effective immediately.  Glad I got out early - there could be a rush to sell in the morning.

With the proceeds we bought more Just Energy, who should be announcing their November dividend payment tomorrow. They usually send out the release on the third of every month, and recent guidance indicates they are keeping the payout the same into the new year.

Alaris Royalty reported today and the numbers look good.  I started buying this one in 2009 around $6 and it has been one of our most consistent performers, along with Student Transportation. 

Our dividend income has finally hit $51,000 per year, tax free. We were actually on track to hit that figure back in May but then I messed things up by getting greedy with Yellow Media. That was a hard, expensive lesson that I won't be forgetting soon.

Anyway $30,000 of that $51,000 covers our annual living expenses and the rest is added to my cap gains (from trading) and reinvested back into the portfolio.

Stock investing isn't for everyone, but if you have the time and patience to read/research individual company info, it can pay off. And it's a great forced savings plan since you have to get the start up cash from somewhere. Better than spending it all the mall.

Usual disclaimer stuff:  I'm not your mother or your investment advisor.  Don't buy into any company I talk about on this very non-professional blog unless you've done your own dd and see value in the purchase, and blah, blah blah...  

We Lost $30,660 This Morning

Sort of.

Last Friday morning I sold out our entire position in Daylight Energy.

I had been trading in and out of that company for several months and though we made a few small gains here and there, it really wasn't going anywhere. And there are some stocks I just don't like holding going into a long weekend. Daylight was one them.

Yesterday China Petrochemical (Sinopec) announced they were buying Daylight Energy for $2.2 billion (CAD). Shares of the stock doubled this morning, hitting a high of $9.72.

Daylight is currently trading at $9.66 and my average price per share was $4.55. Had I held on 'til this morning, my gain would have been $5.11 per share x 6000 shares = $30,660.  

That's probably not the worst trade I've ever made but I can't lie - it still makes me a bit nauseous thinking about it.  Thirty thousand bucks would cover our living expenses for a year. And it would've bought a lot of Tillamook cheese.

On the bright side, Alaris Royalty Corp (our largest holding) announced a 12% dividend increase this morning.  Which is kinda like getting a pay raise for doing absolutely nothing. This company has been an excellent investment, with three div hikes over the past 18 months, in a crappy economy.

Still...that $30 grand profit from Daylight would have been nice ...  :( 

Totally off topic - only 8 more sleeps til we head south for the winter.

The Markets Have Been Humbling

Haven't blogged much about investing lately 'cause at the moment, the markets are kicking my butt.  And who wants to admit that? 

Our portfolio hit an all time high back in April, but six months later it's down 23%. 

Our dividend income has hung in there (roughly $50,000/year tax free) but we lost a fair bit of capital.  Hard pill to swallow since I'm a very bad loser. Not in a John McEnroe throw your tennis racket and whine like a five year old kinda way ...but I do really beat myself up over mistakes. Like most INTJ personality types I am by far my own worst critic.  

We'll probably regain that capital by years end, but let's face it - losing sucks.

Our current holdings still include names I first bought back in the 2008 sell-off:

• Alaris Royalty
• Student Transportation
• Pembina Pipeline
• Inter Pipeline
• Avenex Energy (formerly Avenir Income Fund)

And some higher yielding names I regularly trade:

• Just Energy
• Data Group Income Fund
• Chorus Aviation
• BTB Reit
• Superior Plus

Just Energy sent out a press release last week, reassuring investors that the monthly dividend is safe. I really like this management team and will be adding to our holdings as we get more cash.

Data Group has stated that while they are converting to a corporation before years end, they've already cut their distribution to a payout ratio they're comfy with and have no intention of further cuts.  During the Q2 conference call, CEO Michael Suksi said:

"...regarding our unitholder distribution policy going forward. Obviously investors want to understand our intention and our ability to sustain our distribution... During our annual general meeting last May our unitholders voted to approve our plan to convert the Fund to a corporation at the end of 2011. And this upcoming conversion may be creating some confusion regarding how it will impact our distributions. So I want to clarify this point.

We already reduced our distributions in January of 2011, and that was as a result of our becoming taxable at the beginning of 2011. Also it was a result of our anticipated financial performance and our intent to invest in our strategic plan. Therefore since we have already done that in January of 2011, we do not expect the conversion to a corporation at the end of 2011 to have any further impact on our distribution policy. Our intention is to maintain our annual distributions at the current level of .65 per unit as long as our financial performance continues to justify it as it has in the first half of 2011."

Data Group is a printing company with steady clients (banks, fed government, etc.) and they're expanding into digital services as well. Guess we'll find out more when third quarter earnings are released November 15th. 

Chorus Aviation - man, I just don't know about this one.  I've never liked the air industry, but this company has more positives than negatives. Scotia Capital recently upgraded the stock to an outperform with a target price of $5.50. They called it 'the best risk-return on their list'.  And TD and RBC both have a 12 month target price of $6.  Course the analysts could be way off base, as they were with YLO, BXI, ARF, etc. etc.

BTB Reit is a teeny weeny real estate investment trust and we only hold a teeny weeny position.  I'd be surprised if they cut the distribution, but if they did we wouldn't even notice it in our passive income. I like this name more everyday and will probably buy more on dips.

Superior Plus is our riskiest holding. The share price has dropped so much that the yield is stupidly high. I took a small loss on this one a couple months ago and recently bought in again at $7. The company is heading into its busy season, but if our economy stays sour and revenue drops, I'm sure they'll reduce the dividend.  If they cut by a third it would be $0.80/share; still a huge 11% yield at current prices. Guess we'll find out more when third quarter earnings come out November 2. 

We're fully invested but with the overall market drop last quarter, some of the stocks we own are paying out ridiculously high yields.  I call them Fairy Tale yields.

Hope they have a happy ending.

Then again, as economist David Rosenberg (from Gluskin Sheff) says "hope is not an investment strategy".   :) 

Just Energy Reassures Investors

Stock investors are riding a crazy rollercoaster at the moment.  

And days like today certainly test our risk tolerance.

But one of my picks, Just Energy (JE.to) impressed the heck out of me this afternoon, after voluntarily sending out a press release to reassure retail investors about its monthly dividend - which is currently yielding over 12% after a recent drop in share price:

"Given that the Company believes it will meet or exceed all its financial growth targets for the year and the closing expected today of the recently announced immediately accretive Fulcrum acquisition, Just Energy sees no reason why it would consider reducing its dividend which is covered by current cashflows. The Just Energy Board has not considered a reduction in the dividend and no discussion of any future reduction is planned.

Management is not aware of anything affecting its business that would justify Just Energy's recent price decline. The Company had strong operating results during the 2008-2009 recession and benefits from difficult labour markets when identifying and training new independent sales contractors. While sustained low gas and electricity prices make new sales and renewals more difficult than at times of commodity price volatility, these conditions have been in place for more than three years and Just Energy has had record new customer additions over this period."

To the execs at Just Energy, specifically Rebecca MacDonald:  THANK YOU for giving a hoot about the little guys - and gals. I realize things could change in a heartbeat if our economy gets whacked again, but I appreciate the thought that went into this. There are numerous companies on the TSX that could learn a thing or two from you folks.

Okay, rant over.

This Just In from the Vancouver Sun

BC Voters Opt to Scrap HST

Loonie on the Rise

At 7am pacific time, the Canadian loonie is trading at $1.0422 against the US greenback!  

I'm a buyer at $1.05.