Undoubtedly, a lot of investors have made costly trading mistakes out of fear in recent days, weeks and months as volatility rises and falls. And the investors that continue to do best are the ones that stick to their objectives and strategies. The S&P was up 4.5% over the last 5 trading days, and our portfolios extended their long-term track records of powerful gains and income. This report reviews the performance of all of our holdings, and highlights some attractive stocks if you have extra cash that you need to put to work.
To get right to it, here is a look at our portfolio holdings and their performance in recent days, weeks and months.
The strong gains across markets this last week was driven by increased hopes of an interest rate cut by the federal reserve. Such an idea still seems odd, considering the economy remains strong, unemployment is low (even though Friday’s jobs report was worse than expected) and inflation remains in check. Nonetheless, that’s the big news that has been driving the market. Not to mention President’s Trump’s talk of bringing manufacturing jobs back to the US by increasing tariffs on China and now perhaps Mexico.
Nonetheless, picking individual securities (and then holding them for the long-term as part of a prudently diversified objective-appropriate portfolio) is a much more realistic and attractive option than trying to time the market’s short-term macroeconomic-driven moves (short-term trading based on macroeconomics is a fool’s errand in our opinion).
And if you’ve got some extra cash sitting on the sidelines, here are some attractive individual investment opportunities (based on long-term fundamentals versus their current prices) to consider for your long-term investment portfolio.
Simon Property Group (SPG) offers one of the safest 5% yields around, and the shares keep getting more and more attractive from a valuation standpoint as FFO and earnings keep growing and the share price just isn’t keeping up. Some investors are wrongly afraid of SPG because it owns retail malls, and the ongoing narrative is that online shopping is going to put all brick-and-mortar stores out of business. Nonetheless SPG keeps growing and maintains the highest credit rating of any REIT. Further, some investors fear we are later in the real estate cycle, and if things turn south then SPG will start acquiring other weaker REITs thereby negatively impacting SPG’s price. We don’t see it this way as SPG is extremely disciplined in its management approach (they may acquire weaker REITs, but they’re likely do it wisely and with discipline). If your’re looking for a safe 5.0% yield, Simon Property Group is worth considering. We own it.
Teekay Offshore Series B Preferred (TOO.B): These shares have been trading below par all year, and the most recent big concerns is with regards to the $1 per common share bid to take control of the company by Brookfield (the common shares are down big and currently trade at $1.12. A takeover by Brookfield would only strengthen the value of the preferred shares we own (TOO.B) because Brookfield is in a much stronger position financially than Teekay Offshore. Unless Brookfield has something nefarious in mind such as forcing TOO into restructuring/bankruptcy whereby they could find a shady legal way to haircut (or even default) on the preferreds. A winning situation for investors would simply be for Brookfield to pay off the preferreds at par ($25) so they can reissue new debt or new preferreds that don’t pay such a high yield (i.e. to save cash). We’d miss the high yield as an investor, but would happily accept the price gain from $17.26 to $25.00. We continue to own these shares.
Chipmakers: Nvidia (NVDA) and Skyworks (SWKS): We’ve mentioned these two stocks as attractive growth opportunities in our last two Blue Harbinger Weekly reports, and they both had a big week this last week gaining 7.4% and 5.3%. They both continue below where we believe they should, and we continue to own them both as we expect them to gain dramatically over the long-term
GrubHub (GRUB): Shares of this attractive food delivery service continue to slide despite its attractive long-term growth potential. And quite frankly, we wouldn’t be surprised to see this company get acquired at a hefty premium to its current share price by a company like Square (SQ) another stock we own in our “Income via Growth” portfolio. This company’s valuable customer base would fit nicely into Square’s growing Fintech ecosystem, and shares of Grub continue to get cheaper thereby making them more attractive to a potential buyer.
Despite the market’s volatility, stick to your long-term investment strategy. Inevitably, a lot of investors panic at the first signs of volatility and end up making bad (costly) short-term trading decisions. A lot of times, doing very little (or even nothing) during market volatility can be extremely hard, but it can also be the exact right thing to do. All of our long-term investment strategies continue to generate powerful income and gains, and they all had another great week this last week. And we’re looking forward to more attractive income and gains for the long-term.