the Youngest Snowbird:

Starstruck

My Fella and I are dropping JohnnyDisco off at the Tiffin Motorhome mothership in Red Bay this weekend... 

... but I have to share a little story with you first. And maybe you can decide if I'm a sucker or not  :)  

If you've been reading this blog for a while, you know that I quit my full-time radio job at age 37 and have been living off stock dividends/interest since then. Investing started out as a hobby, but soon became our main source of income. And while this blog revolves around our RV travels, occasionally I toss out some stock talk or give updates on the portfolio.

One of our largest holdings is a company called Student Transportation - trading on the TSX and recently, the NASDAQ. It's a bus company, transporting kids to school in both Canada and the USA. I opened a large position in STB during the TSX sell-off in 2008, and have bought more since then on price dips.

STB is one of our largest stock holdings for several reasons:

• kids will always need a safe way to get to school
• STB management is good with guidance and transparency
• the monthly dividend has been consistent since the company IPO in 2004

This is not a recommendation to buy shares of Student Transportation. I am neither your financial advisor nor your mother; do your own due diligence and consult a fee-only advisor you trust ... and blah, blah, blah... 

That out of the way, Student Transportation is a solid company and a great moneymaker for us. Which is probably why I gush about it so much.

Needless to say, I was completely stunned to see a blog comment this morning from Denis Gallagher, the BIG CHEESE of Student Transportation. On MY blog.

"Thank you for investing in our company for the past years. In your travels i'm sure you've experienced bumps along the road, weather, higher fuel costs etc. Well so have we and you know what, kids are still going to school. We have a great company that gives back to our shareholders. please visit our web site at www.ridesta.com and view some of our videos. I'm so glad I stumbled onto your blog. Its cool reading and a neat adventure. Continued good success on the road to excellence." 

Denis Gallagher, Founder, CEO Student Transportation, Inc

The comment was made on this blog post written almost a month ago. I'm totally blown away that the very accomplished founder/CEO of one of my best investments left a comment on my silly little blog.

Or was it really him?

Not being completely naive, it has occurred to me that one of my devious pals (looking straight at you here, Laurie) might have left the comment to get me riled up.  If that's the case, it worked.  I'm starstruck.  And gushing.

On the other hand, if it really was you Mr G, thank you for the comment.  And for doing such a bang-up job and getting kids to school safely.  And for making us so much money $$$ over the years. Continued success right backatcha and everyone at Student Transportation.

And please keep doing smart things with your company, so I can keep gushing.

*edited to add:  sorry if you were misled by the title of this post and thought I may have met Oprah or George Clooney or someone... but getting a blog comment from the Big Cheese of one of my fave companies is better than Oprah - trust me  :) 

New Year, New Investment Goals

Actually the goals are the same, just bigger.

But it won't be hard to improve on my 2011 portfolio performance, which was very average. 

Our annual dividend income stayed around the $51,000 mark (tax free) which was on target. My non-registered cap gains were on track to hit $61,000 but this one was a huge fail. Mid-year I took a $32,000 loss on stupid stupid stupid Yellow Media and BioExx.

Hmm. I take that back.

Yellow Media is not stupid, stupid, stupid. I am stupid, stupid, stupid for being naive and believing the constant Yellow management assurances that the company and the dividend were 'just fine'. Clearly I need to read Investing for Dummies. Also Liar, Liar, Pants on Fire for Dummies.

Our total cap gains for the year ended up at $28,560. Some investors try to minimize capital gains but we always shoot for the stars. They are a big deal in our portfolio since we earn very little employment income and hang out in a really low tax bracket.

Hoping to find some bargains in the new year I wanted some cash available, so...  I dumped Chorus Aviation for a small loss, sold Canexus for a small gain and sold our entire position of Just Energy for a really good cap gain, plus several months of dividends. I'll buy back into Just Energy in early 2012, when the price is right.

Yesterday was the final day of TSX trading for settlement in 2011 and here's where our non-registered account sits:

• biggest position is CASH, followed by
• Student Transportation
• Data Group Income Fund
• Alaris Royalty Corp.
• Inter Pipeline
• Avenex
• Pembina Pipeline
• BTB Reit

Back down to only 7 companies in the portfolio, with lots of cash on hand. I have no idea what will happen in the new year, but we've got a mitt full of loonies ready to go.

Goals for 2012:

• $55,000 dividend income
• $65,000 cap gains from non registered account

And world peace.

Or maybe we'll just adopt another rescue pup.

Feliz Navidad. And to all, a good night.

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".   :)