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Open Thread: What Are You Buying/Selling/Pondering
Over the last couple months I handed over 2/3 of my IRA balance to Schwab to handle, half in there diversified 'Intelligent Portfolio' and the other half in their managed 'Windhaven' portfolio. For the 3rd that I still manage; sold both my bond funds, PONDX and RSIVX, and my hedge-type fund, RGHVX. That money went to cash and a to another Riverpark fund, new to me, RSAFX. I was looking for something with bond-like returns and not a lot of volatility. These 2 quotes taken from David's commentary on the fund sold me. We'll see if it works out as rates rise this year or next.
"Structural Alpha is designed to address a far more immediate challenge: where should investors who are horrified by the prospects of the bond market but are already sufficiently exposed to the stock market turn for stable, credible returns?"
Mr. Frankel notes that “if volatility and interest rates return to their historic means, it’s going to be a significant tailwind for us. That’s part of the reason we’re absolutely buying more shares for our own accounts.” That’s a rare combination.
You might want to consider AZIIX. A "structured return" fund, with better performance than RSAFX. I own both of them, but am considering dumping RSAFX and keeping AZIIX. Another fund I recently bought with bond like returns with low volatility is QVOPX (Oppenheimer Flexible Strategies fund), a long-short fund in stocks, credit, commodities, rates and currencies. I am also considering MASFX in this area.
Took a little profit on overbought GILD, planning to keep the remainder. May look at other names in health care as I'm not against adding further to the sector.
@davidmoron - as you know bonds are getting beat up over interest rate concerns and a lot of babies are floating around out there in the bath water. PDI has shown it's chops time and again, and with the Fed doing at best a 'one & done' hike (if that) it was a temptation I found hard to resist for idle cash. The 8.5% yield doesn't hurt either.
Last year PDI earned and distributed $4.29/share. So far this year it looks like a repeat. That makes it an asset that generates distributable earnings at over 13%. I think sellers down here are being taken out by stronger and smarter buyers or they believe that 13+% earning assets are inferior to other opportunities. I'll take my chances
Lots of activity as my recent retirement saw a transfer of 401(K) dollars from Fidelity to an existing Schwab IRA rollover account. I am losing access to several funds I like, and have been thinking about this for more than a few months. None of the positions I created or added to exist in my taxable account, though that account contains similar funds.....far too many holdings for most in this forum according to past feedback. In my IRA account, I am:
Shifting a full OAKIX position to a similarly full position of FMIJX. I like FMI's European leanings, which I need as I am more Asia and EM focused in other holdings.
Shifting a position in ODVYX to currently existing positions in SFGIX and GPGOX. That was pretty easy. I am also creating a new position in Matthew's India holding...just because.
My most difficult decisions revolved around existing positions in small and mid-cap value spaces. I am moving full positions in PCVAX and TRMCX, to VVPSX and SCMFX respectively. I will fully attribute MFO for any results in this move.
I also made several moves to bond and near term cash (bucket 1) holdings, but I will spare those details as I don't think there's significant interest in that.
@Scott - You're the first person I've come across anywhere on the internet who thinks that GILD is overbought. I'm holding and not adding to my GILD position as it's a larger position than I want it to be, but I'm certainly not selling any GILD shares. By any metric GILD is still extremely undervalued. Check out the investor village GILD page for educated discussions about GILD.
@Scott - You're the first person I've come across anywhere on the internet who thinks that GILD is overbought. I'm holding and not adding to my GILD position as it's a larger position than I want it to be, but I'm certainly not selling any GILD shares. By any metric GILD is still extremely undervalued. Check out the investor village GILD page for educated discussions about GILD.
Thoughts:
1. Really like Gilead - great management, still undervalued at 120 (although not as undervalued as it was at 95-100 or especially the 80's during the Express Scripts situation.)
2. It was a very large position for me and now is still definitely a large position. With a company like Gilead, as much as I like it, still like valuation and consider it a long-term holding, it is still certainly not without risk. Despite the fact that Gilead's HEP-C medications provide a cure and are far cheaper than the alternative, because of price (Sovaldi and Harvoni have basically become kind of a "go to" example when the high cost of pharma is discussed), they are still a target of senators, of various organizations and of cost containment companies (like Express Scripts.) While they've handled everything that has come at them quite well (M* CEO of the year, 2014), I predict that the fight against pharma on cost is nowhere near over and has the potential to get much louder. That's not just a Gilead thing, but Gilead still continues to be in the spotlight for pharma cost.
"Figure 2 illustrates the result: health care spending has grown from 5 percent of GDP in 1960 to about 17 percent, or $2.4 trillion, in 2008. In their most recent 10-year projection, the actuaries of the Centers for Medicare and Medicaid Services (CMS) expect health care spending will nearly double to $4.4 trillion by 2018 and comprise fully one fifth (20 percent) of GDP. "(http://www.ssab.gov/documents/TheUnsustainableCostofHealthCare_508.pdf)
I like healthcare a great deal - if anything I've grown more positive on the sector in some regards recently. Still, there is an underlying concern that we get to the point where healthcare costs are unsustainable. If we don't do anything about it - and we can't agree on anything in this country so it wouldn't surprise me if we don't - by all means invest more in healthcare because spending on healthcare will just continue to crowd out spending on other things.
I do think the market really desires Gilead to do a deal to get something new going and there is the risk that if they do the market believes they overpaid (see the Pharmasset purchase, which ultimately worked out VERY well for Gilead, but the market initially hated it) or that they don't do anything or don't do enough.
Could work out great if they do something, but there is the risk on initial perception, especially with healthcare where it is you could get the, "Oh they overpaid." I think that the large biotech companies (Gilead, Celgene, Amgen, Biogen) are reasonable or very reasonable. However, I do think that a lot of the early stage companies are richly valued, so potentially there is a limited amount of opportunities for a large company to make significant purchases at the moment.
Do I think they need to do something or to rush into something? No, but I think the valuation is where it is partially because Gilead is reliant upon two major franchises and the market worries about the sustainability. I mean, Gilead has been fascinating to me from the standpoint of - look at the last quarter - it was a ridiculous blowout. Yet, after a little pop, the stock fell again. Finally after a delay the stock began to take off in May and broke out.
Primarily though, Gilead has basically gone from $101 to $121 since 5/7. I'm not saying that the company is now overvalued, not by any means. I'm just saying that I do think it's technically overbought in the short-term. I could be wrong and it could keep going, but I thought it was prudent to take a little off. If the stock was $101 and was $121 by the Fall I would quite possibly feel differently. I tend to like to take a little off after moves like that over reasonably quick time frame.
Again, still hold the great majority of the position in GILD and I'm not saying that my feelings on the company have changed. Just that - after 20 points in a little over a month - felt it was reasonable to take a little off.
Obviously, my view can change as things change, but if Gilead did come back in after the run recently and retested the breakout around the $115-116 level and held, depending on where things are at that point I'd consider adding some back.
I am also looking at names that I think compliment individual HC names I already own, as well and Allergan (formerly known as Actavis) is high on the list.
Have been adding to Franklin Mutual European fund, MEURX for awhile. Like the currency hedging in the fund. Europe is in early phase of recovery and there is more to go vs US.
@Scott - Nobody ever lost money by taking profits!
I agree with most everything that you've mentioned. Yet I think that the market has yet to fully price in the dominance of GILD's HCV cure as well as GILD's dominance in the global HCV market. I expect GILD to continue to outperform as GILD's HCV cure is just getting ramped up outside of the USA.
I am a bit concerned that M* named GILD's CEO as it's 2014 CEO of the Year... : )
GILD is the only equity I own, the rest of my portfolio is in funds and etf's. I think that biotech will continue to outperform and have increased my holdings in FBIOX.
@Scott - Nobody ever lost money by taking profits!
I agree with most everything that you've mentioned. Yet I think that the market has yet to fully price in the dominance of GILD's HCV cure as well as GILD's dominance in the global HCV market. I expect GILD to continue to outperform as GILD's HCV cure is just getting ramped up outside of the USA.
I am a bit concerned that M* named GILD's CEO as it's 2014 CEO of the Year... : )
GILD is the only equity I own, the rest of my portfolio is in funds and etf's. I think that biotech will continue to outperform and have increased my holdings in FBIOX.
I hope that you're right. I think ultimately Gilead has a very compelling valuation, terrific management and an impressive track record.
That said, my concern is that while I don't doubt that Gilead will ultimately get from point A to point B, I think that will not be an easy journey.
Harvoni/Solvaldi are ultimately terrific drugs that I think are certainly better than the alternative. However, I just worry that it doesn't matter if there's a senator that wants to make an example and point fingers at a company when people start complaining about the high cost of drugs. As I noted earlier I don't think this is a Gilead-specific problem, but one that Gilead has become the big example of.
This article is something I'd recommend and I think things could certainly go in this direction:
Additionally, there will be discounts between here and there (http://www.marketwatch.com/story/gilead-to-discount-its-pricey-sovaldi-drug-2015-02-04), which is good for patients thankfully but when you talk about investments I think that's a reason why people are somewhat concerned about the sustainability of Harvoni/Solvaldi's growth/revenue. While Gilead's drug is really considered by many to be the best, there is competition - not as much Abbvie's product, but potentially Merck.
Ultimately, things like the China issue at the link above are likely easily smoothed out and probably predictable, but Gilead is a stock where investors seem incredibly sensitive to headlines. Hopefully the upcoming dividend will smooth that out, but that's been an issue in the time I've held it - the littlest news that could possibly be construed as negative seems to send people fleeing.
As for valuation, I think my thing is that the valuation is acting like there's little/no pipeline - I think there's a pretty pipeline and I'm interested to see what GILD can do in terms of NASH and other things.
All that said, it's been a frustrating holding for me but one that I'm ultimately very positive on in the long-run.
I've been frustrated by GILD also. Yet sentiment toward GILD has changed since their most recent ER. One can look at GILD's chart since mid-April and say that the glass is half full, or the glass is half empty (which is my perspective).
While GILD remains a lightning rod for those angry about high drug costs, nobody can argue with their earnings. GILD sandbags their earnings. They raised their 2015 earnings guidance in April and I think will do so again in July. Then analysts will be forced to raise their pt's.
Their weekly scripts #'s for Harvoni & Sovaldi don't include prisoners, medicaid & medicare patients and the VA #'s.
I think that the biggest takeaway from GILD's CEO's comments at a conference last week were about their opportunities in Japan. And Japan is just getting started.
GILD remains an overweight portion of my portfolio, yet remains the only equity which I own directly. FBIOX has done well also. Time will tell what Mr. Market has to say about GILD's pps over the rest of the year as well as in later years. Good luck whatever you decide to do! : )
Hi Scott! Love these threads. I was waiting on Grease,.....uh, sorry, Greece....before doing much. I see there's more money owed in July and August to the European Union. Will this turmoil ever end? ..... 300 stops an army ..... 11 million stops the world. With the Supreme Court ruling on Obamacare, that also puts me on hold as healthcare seems to be the last man standing if the market goes down. Will buy the transports starting with a small position, as I think we are slowing and the bull has had its run. With rates set to rise later, it just seems like it's time to pause for the summer and wait for fall. I think things will look better then. After all, it'll be football season.....how could it not?? God bless. the Pudd
My 401K transfer from Fidelity to Schwab was completed earlier this week. In this thread I detailed the funds which would be the recipients of these monies. The embedded lag time allowed for an added degree of reflection. While I do believe these funds will indeed be the landing area, I will not be adding to any equity funds at this time, and will suspend any further re-investment of dividends or capital gains for the next few months.
I have quite a bit in equity funds at the moment, and can afford to take a breather for a bit on the sidelines with what amounts to about 35% of my tax advantaged account.
I did my monthly close on my portfolio for the month of June this past Friday (6/26) and performed an Instant Xray on its holdings. Here are a few interesting things that I noticed since the May close. Short positions were increased by 2% from 6% to 8%. Bonds were decrease by 2% while Stocks were increased by 2%. Cash and Other Assets remained relative the same. All of this was done through no effort of my own but was collectively done by the fund managers that I employ that manage the fifty one mutual funds that I own.
Year-to-date, my portfolio is up 3.1%, which includes currently being about twenty percent in cash, while the Lipper Balanced Index is up 2.3%. Part of this performance is attributed to the special equity spiff position that I opened back in the fall of 2014 and closed out in spring of 2015.
Seems, my mutual fund managers have indeed been active as we entered the summer months. And, I am ponding as to what I might do in the coming months with respect to any special spiff positions that I might choose to open. Right now, I am enjoying the summer while I watch the markets but have not actively enganged them with any special spiff positions.
I believe it was hank that said, a while back, there must be a pony somewhere in here? Well, when I find the pony ... I'll let you know.
Congratulations on the performance of your portfolio. Since you have a large number of funds, I wonder if some of them have adopted shorting as part of their investing style? I see more and more funds doing this and also some "unconstrained " methods too.
One of my funds in the past several months started to use shorting as part of their strategy albeit as very small percentage of the holdings.
Yes, I own some funds that can and at times do utlize shorting. For there to be a 2% swing in my short positions then there must be many of these fund mangers that are perhaps seeing some caution is warranted with their long positions and some opportunity on the short side.
Oldskeet, is a morningstar update really accurate month to month? I thought fund companies were only updating their portfolio make up every 3-6 months to m*. A portfolio composition viewed now could have actually changed at the start of the year.
Numbers don't lie. You are doing a fine job with your system.
Thanks for making comment. And, a good point you make.
Morningstar reporting does have from what I have found to have a lag time associated with their mutual fund holdings reporting from the fund companies themselves. Some funds that I own appear to have about a thirty day lag while I have seen some others have up to a ninty day and beyond lag. There seems to be no standard found with this reporting from the fund companies.
Yep - No changes in months. However, a recent distribution came out of the more aggressive side. So a bit heavy in cash. Would add to equity fund(s) if this market would ever correct. Actually cheering for a significant correction.
Obviously, my view can change as things change, but if Gilead did come back in after the run recently and retested the breakout around the $115-116 level and held, depending on where things are at that point I'd consider adding some back.
Probably too early, but starting to add back to GILD.
Note that this was actually up for most of the day and is now about flat. Perhaps people are now turning to the largest distressed debt investor now that Europe may become disorderly.
Comments
You might want to consider AZIIX. A "structured return" fund, with better performance than RSAFX. I own both of them, but am considering dumping RSAFX and keeping AZIIX. Another fund I recently bought with bond like returns with low volatility is QVOPX (Oppenheimer Flexible Strategies fund), a long-short fund in stocks, credit, commodities, rates and currencies. I am also considering MASFX in this area.
Last year PDI earned and distributed $4.29/share. So far this year it looks like a repeat. That makes it an asset that generates distributable earnings at over 13%. I think sellers down here are being taken out by stronger and smarter buyers or they believe that 13+% earning assets are inferior to other opportunities. I'll take my chances
Shifting a full OAKIX position to a similarly full position of FMIJX. I like FMI's European leanings, which I need as I am more Asia and EM focused in other holdings.
Shifting a position in ODVYX to currently existing positions in SFGIX and GPGOX. That was pretty easy. I am also creating a new position in Matthew's India holding...just because.
My most difficult decisions revolved around existing positions in small and mid-cap value spaces. I am moving full positions in PCVAX and TRMCX, to VVPSX and SCMFX respectively. I will fully attribute MFO for any results in this move.
I also made several moves to bond and near term cash (bucket 1) holdings, but I will spare those details as I don't think there's significant interest in that.
press
1. Really like Gilead - great management, still undervalued at 120 (although not as undervalued as it was at 95-100 or especially the 80's during the Express Scripts situation.)
2. It was a very large position for me and now is still definitely a large position. With a company like Gilead, as much as I like it, still like valuation and consider it a long-term holding, it is still certainly not without risk. Despite the fact that Gilead's HEP-C medications provide a cure and are far cheaper than the alternative, because of price (Sovaldi and Harvoni have basically become kind of a "go to" example when the high cost of pharma is discussed), they are still a target of senators, of various organizations and of cost containment companies (like Express Scripts.) While they've handled everything that has come at them quite well (M* CEO of the year, 2014), I predict that the fight against pharma on cost is nowhere near over and has the potential to get much louder. That's not just a Gilead thing, but Gilead still continues to be in the spotlight for pharma cost.
"Figure 2 illustrates the result: health care spending has grown from 5 percent of GDP in
1960 to about 17 percent, or $2.4 trillion, in 2008. In their most recent 10-year projection,
the actuaries of the Centers for Medicare and Medicaid Services (CMS) expect health care
spending will nearly double to $4.4 trillion by 2018 and comprise fully one fifth (20
percent) of GDP. "(http://www.ssab.gov/documents/TheUnsustainableCostofHealthCare_508.pdf)
I like healthcare a great deal - if anything I've grown more positive on the sector in some regards recently. Still, there is an underlying concern that we get to the point where healthcare costs are unsustainable. If we don't do anything about it - and we can't agree on anything in this country so it wouldn't surprise me if we don't - by all means invest more in healthcare because spending on healthcare will just continue to crowd out spending on other things.
I do think the market really desires Gilead to do a deal to get something new going and there is the risk that if they do the market believes they overpaid (see the Pharmasset purchase, which ultimately worked out VERY well for Gilead, but the market initially hated it) or that they don't do anything or don't do enough.
Could work out great if they do something, but there is the risk on initial perception, especially with healthcare where it is you could get the, "Oh they overpaid." I think that the large biotech companies (Gilead, Celgene, Amgen, Biogen) are reasonable or very reasonable. However, I do think that a lot of the early stage companies are richly valued, so potentially there is a limited amount of opportunities for a large company to make significant purchases at the moment.
Do I think they need to do something or to rush into something? No, but I think the valuation is where it is partially because Gilead is reliant upon two major franchises and the market worries about the sustainability. I mean, Gilead has been fascinating to me from the standpoint of - look at the last quarter - it was a ridiculous blowout. Yet, after a little pop, the stock fell again. Finally after a delay the stock began to take off in May and broke out.
Primarily though, Gilead has basically gone from $101 to $121 since 5/7. I'm not saying that the company is now overvalued, not by any means. I'm just saying that I do think it's technically overbought in the short-term. I could be wrong and it could keep going, but I thought it was prudent to take a little off. If the stock was $101 and was $121 by the Fall I would quite possibly feel differently. I tend to like to take a little off after moves like that over reasonably quick time frame.
Again, still hold the great majority of the position in GILD and I'm not saying that my feelings on the company have changed. Just that - after 20 points in a little over a month - felt it was reasonable to take a little off.
Obviously, my view can change as things change, but if Gilead did come back in after the run recently and retested the breakout around the $115-116 level and held, depending on where things are at that point I'd consider adding some back.
I am also looking at names that I think compliment individual HC names I already own, as well and Allergan (formerly known as Actavis) is high on the list.
Also added to Vanguard Health Care ETF, VHT.
No changes to bond allocation.
http://www.mutualfundobserver.com/discuss/discussion/21871/the-best-mutual-funds-to-buy-for-the-rest-of-2015#latest
Just kidding, but check back with me on New Years Eve.
I agree with most everything that you've mentioned. Yet I think that the market has yet to fully price in the dominance of GILD's HCV cure as well as GILD's dominance in the global HCV market. I expect GILD to continue to outperform as GILD's HCV cure is just getting ramped up outside of the USA.
I am a bit concerned that M* named GILD's CEO as it's 2014 CEO of the Year... : )
GILD is the only equity I own, the rest of my portfolio is in funds and etf's. I think that biotech will continue to outperform and have increased my holdings in FBIOX.
That said, my concern is that while I don't doubt that Gilead will ultimately get from point A to point B, I think that will not be an easy journey.
Harvoni/Solvaldi are ultimately terrific drugs that I think are certainly better than the alternative. However, I just worry that it doesn't matter if there's a senator that wants to make an example and point fingers at a company when people start complaining about the high cost of drugs. As I noted earlier I don't think this is a Gilead-specific problem, but one that Gilead has become the big example of.
This article is something I'd recommend and I think things could certainly go in this direction:
http://seekingalpha.com/article/2776255-what-happened-to-gilead-is-health-reform-in-action
Additionally, there will be discounts between here and there (http://www.marketwatch.com/story/gilead-to-discount-its-pricey-sovaldi-drug-2015-02-04), which is good for patients thankfully but when you talk about investments I think that's a reason why people are somewhat concerned about the sustainability of Harvoni/Solvaldi's growth/revenue. While Gilead's drug is really considered by many to be the best, there is competition - not as much Abbvie's product, but potentially Merck.
You will also continue to have issues in other countries, like today:
http://seekingalpha.com/news/2588915-china-rejects-gileads-hepatitis-c-patent
Ultimately, things like the China issue at the link above are likely easily smoothed out and probably predictable, but Gilead is a stock where investors seem incredibly sensitive to headlines. Hopefully the upcoming dividend will smooth that out, but that's been an issue in the time I've held it - the littlest news that could possibly be construed as negative seems to send people fleeing.
As for valuation, I think my thing is that the valuation is acting like there's little/no pipeline - I think there's a pretty pipeline and I'm interested to see what GILD can do in terms of NASH and other things.
All that said, it's been a frustrating holding for me but one that I'm ultimately very positive on in the long-run.
Also, added AGN.
http://www.wsj.com/articles/BL-270B-2068
While GILD remains a lightning rod for those angry about high drug costs, nobody can argue with their earnings. GILD sandbags their earnings. They raised their 2015 earnings guidance in April and I think will do so again in July. Then analysts will be forced to raise their pt's.
Their weekly scripts #'s for Harvoni & Sovaldi don't include prisoners, medicaid & medicare patients and the VA #'s.
I think that the biggest takeaway from GILD's CEO's comments at a conference last week were about their opportunities in Japan. And Japan is just getting started.
GILD remains an overweight portion of my portfolio, yet remains the only equity which I own directly. FBIOX has done well also. Time will tell what Mr. Market has to say about GILD's pps over the rest of the year as well as in later years. Good luck whatever you decide to do! : )
Love these threads. I was waiting on Grease,.....uh, sorry, Greece....before doing much. I see there's more money owed in July and August to the European Union. Will this turmoil ever end? ..... 300 stops an army ..... 11 million stops the world. With the Supreme Court ruling on Obamacare, that also puts me on hold as healthcare seems to be the last man standing if the market goes down. Will buy the transports starting with a small position, as I think we are slowing and the bull has had its run. With rates set to rise later, it just seems like it's time to pause for the summer and wait for fall. I think things will look better then. After all, it'll be football season.....how could it not??
God bless.
the Pudd
I have quite a bit in equity funds at the moment, and can afford to take a breather for a bit on the sidelines with what amounts to about 35% of my tax advantaged account.
I just don't like the current atmosphere.
Year-to-date, my portfolio is up 3.1%, which includes currently being about twenty percent in cash, while the Lipper Balanced Index is up 2.3%. Part of this performance is attributed to the special equity spiff position that I opened back in the fall of 2014 and closed out in spring of 2015.
Seems, my mutual fund managers have indeed been active as we entered the summer months. And, I am ponding as to what I might do in the coming months with respect to any special spiff positions that I might choose to open. Right now, I am enjoying the summer while I watch the markets but have not actively enganged them with any special spiff positions.
I believe it was hank that said, a while back, there must be a pony somewhere in here? Well, when I find the pony ... I'll let you know.
Old_Skeet
Congratulations on the performance of your portfolio. Since you have a large number of funds, I wonder if some of them have adopted shorting as part of their investing style? I see more and more funds doing this and also some "unconstrained " methods too.
One of my funds in the past several months started to use shorting as part of their strategy albeit as very small percentage of the holdings.
Thanks for the complement.
Yes, I own some funds that can and at times do utlize shorting. For there to be a 2% swing in my short positions then there must be many of these fund mangers that are perhaps seeing some caution is warranted with their long positions and some opportunity on the short side.
Numbers don't lie. You are doing a fine job with your system.
Thanks for making comment. And, a good point you make.
Morningstar reporting does have from what I have found to have a lag time associated with their mutual fund holdings reporting from the fund companies themselves. Some funds that I own appear to have about a thirty day lag while I have seen some others have up to a ninty day and beyond lag. There seems to be no standard found with this reporting from the fund companies.