Recent Buy

Late last week and early this week the market finally cooled off a bit from its upward trend.  I used this as an opportunity to add a few new positions to my portfolio.  I didn’t use all of my cash reserves in these purchases, but did use what I had set aside for short-term use.   I will continue to divide new capital in this means: short-term use and long-term corrections or *gasp* a market crash.

Annaly Capital Management, Inc  (NLY)

NLY has been on my watch list for almost a year.  There has been no shortage of commentary as to whether it is a good REIT investment or not.  I like the way NLY’s management has steered the company through many different market cycles, even when that means dividend cuts as we have seen recently.  I picked up 221 shares of NLY at 15.80.  NLY will be held in my IRA so you will not see it or its dividends reported in the portfolio listed here.

New Jersey Resources Corp (NJR)

I’ve wanted to add a utility to my portfolio for a while.  Although I would prefer for the yield to have been higher, I’m happy with how NJR has grown its dividend and I am focusing more on the possibility of dividend growth vs. high yield.   I already have a few high yield stocks and as I continue to diversify I would like to add stocks with lower yields but better prospects for the growth of those dividends in the future.

I purchased 70 shares at a cost of 43.04.  I would like to have purchased more shares, but I think there is a very real possibility of a lower share price later this year as the glut of natural gas supplies continues to impact the price of natural gas.  I think the initial price of these shares was fair and will add to the position on future dips.

National Presto Industries Inc (NPK)

NPK is another company I have watched for a while.  Although there have been recent concerns with the demand for ammunition from the U.S. military as it scales down its activity in Iraq and Afghanistan as well as recent demand for it household appliance products, I don’t think those concerns justify the hit in its recent price.  Maybe those concerns combined with the reduction in the dividend this year is what is causing the share price to drop.  Who knows.

The thing to remember is that the dividend “cut” with NPK is not your typical cut.  NPK issues a special dividend each year along with its normal dividend of a dollar a share.  The dollar a share dividend is what you will see reported on Google and Yahoo, missing the rather large special dividend paid each year.  If the company does well then the special dividend is higher.  If revenues/earnings are not so great the dividend will be reduced.  Some people will not like the unpredictability of the dividend payout.  For me, I get it.  Considering the CEO owns several shares of the company herself, I see no reason the company will not continue to be managed in a way that continues to be favorable to shareholders.  Also, the fact that the company has no debt means it is in a much better position to handle changes in market demands for its products.  I purchased 27 shares at 71.87 and will add more on future dips.

Telefonica S.A.  (TEF)

So, for those of you who follow along with my investment activities you didn’t think  I would let the recent drop on TEF go without picking up a few more shares did you?  I’ve stated my case for TEF here and here so I’m not going to elaborate much more on it now.  I like the steps that TEF is taking to reduce its debt and the policy for shareholder remuneration, which includes share buybacks.  A lot of people have different ideas of whether company buybacks are good for shareholders.  This can be debated, but to me it is much better when a company like TEF buys shares when the cost is at lows it has not seen in six years versus say APPL who has decided it would now be a good time to buy back shares.  I’ll let you decide which makes more sense.

Added a 100 shares at 15.46

Leave me a comment and let me know your thoughts on these purchases or the ones you may have made.

7 thoughts on “Recent Buy

  1. When evaluating telecom stocks you have likely rulled out a few before selecting TEF to follow (and buy).

    I own some FTE shares and watched it go further down over the last year. Do you have any thoughts on France Telecom? I am tempted to average down, but do not want to commit extra resources to what seems to be a company in a difficult environment.

    • AverageCFA— Correct. There are three telecoms I would like to own T, VOD, and TEF. T had a run up after it’s deal with T-mobile fell through and decided to hold off on making any more purchases until it comes back down. TEF is the one I’m currently adding shares of and enjoying seeing all of of the red in my portfolio because of it. Buying low may be the think to do, but I see why so many people do the opposite. It is emotionally distressing! However, I went through this same think with NYB last year so I know what my emotional response it to these events. I’m waiting for VOD to come down as well.

      As far as FTE is concerned I really can’t tell you what I think of it because I have not followed it. I know that I looked at it briefly before, but can’t remember why I decided not to pursue it. Wish I could give you a little more, but it would be uneducated opinion at best.

  2. You certainly did a lot of buying lately! NLY, NPK, and TEF are a bit too risky for my liking, but I hope they work out well for you. I have not come across NJR before, but a quick glance suggests it’s a good utility. These purchases should give a nice boost to your dividend income.

    • Deedubs… TEF is the one I’m most worried about in the short-term. With all eyes beginning to turn to Spain and it’s troubles, I believe that many Spanish stocks are going to suffer. I was somewhat prepared for this when I first purchased TEF back in Jan. I have to admit that its further price decline recently was a surprise. I still claim that TEF is a good investment for the long-term if you are emotionally willing to ride out the short-term volatility. I’ve always had a 1-3 year window to determine if this investment plays out like I think it will. Barring, of course, any significant fundamental change in the company, like say selling off all of it’s South America assets. Then I’m screwed.

      I think NJR will do fine even while the price of natural gas finds a new norm while the market adjusts to the new supply. NPK I think has had a few different challenges that I mentioned, lower sells in their appliance unit (which they have addressed if you look at their 10k), reduction in the dividend this year (I use reduction instead of cut as although NPK has a long history of dividend payments it has never made a claim of continuous increases in those payments. An investor is rewarded as the company does well and accepts a reduction in income when times are tight), worries about the need for its ammunition from the military (I like that they have diversified into the civilian realm by acquiring a company who produces less-than-lethal ammunition), and finally, NPK pays a divi once a year. I think many investors decided they would sell out after getting their divi payment due to the challenges mentioned above. That is my investment thesis for NPK anyway. Will see how it does.

  3. Interesting buys you made there. NJR looks like a good one (I’ve never heard of it before). I don’t know what to think about NLY, I guess I’m neutral. It looks like you picked an opportune time to purchase NPK, it’s at its 52 week low. To be honest, I’m not a fan of TEF. I do hope it treats you well in the end though.

  4. NJR and NLY are the highest quality investments in their sectors. Though NLY is right in the crosshairs of the 2008 crisis and Fed policy, expect volatility and uneven dividends.

    TEF, IMO, is a play with too much risk and uncertainty. Even if you can make a case for it on its merits (a large chunk of their earnings are outside of Europe), there is reason enough with what’s going on in Europe to stay away until there perhaps is a real fire sale. Don’t fight the tape.

    For my part I bought some LO recently. I also want to start a position in KMR.

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