T, the author of Investing From the Right has a post up disclosing his portfolio, and he asked for my two cents.
Here is what he calls the permanent portion of the portfolio;
Bank of Nova Scotia (BNS)
Chesapeake Energy (CHK)
ETF: Claymore Dividend Hogs (CVY)
ETF: iShares MSCI Value Fund (EFV)
ETF: iSHARES Switzerland (EWL)
ETF: Powershares Dynamic Buyback Portfolio (PKW)
ETF: Claymore Water Resources (PHO)
Energy Transfer Partners, LP (ETP)
First Horizon Bank (FHN)
Fortune Brands (FO)
MDU Resources (MDU)
Smithfield Foods (SFD)
Verizon (VZ)
Goodrich (GR)
This next grouping is the speculative portion which makes up 30% of his equity allocation;
Allied Waste (AW)
British Aerospace (BEAV)--if BEAV is the right ticker, the name is BE Aerospace
Converium Insurance, Switzerland(CHR)
Donegal Insurance (DGICA)
ETF: Claymore Bric- Brazil,Russia,India,China (EEB)
ETF: iShares Japan (EWJ)
ETF: iShares Singapore (EWS)
ETF: Powershares Oil and Gas Service Companies(PXJ)
Cheniere Energy (LNG)
L3-Communications (LLL)
WellCare Health Plans (WCG)
United Technologies (UTX)
The important thing is that the mix moves in such a way to help T have a chance to get to where he wants to be and does not cause too much anguish during normal corrections. That I view portfolio construction differently than T does probably does not mean much.
At first glance he seems very top heavy in financials; CVY 37%, EFV, 39%, EWL 24%, PKW 15% plus the position in FHN, BNS, CHR and the weightings in some of the "speculative" ETFs. Healthcare looks very light; EWL has a lot and there is the position in WCG. Industrials look about right or maybe a little heavy (tough to know because weightings for each position were not given) with UTX, BEAV, AW, LLL, GR and PHO. There is almost no tech, although Singapore does benefit from technology exports. Telecom and utilities might be about right with VZ and MDU and some of the ETF exposure.
Energy is well represented with CHK, PXJ, LNG, ETP and whatever might be in the ETFs. The consumer sectors are very underweight. Materials look to be close to zero, Brazil is covered in EEB but that fund is only 12% materials.
There is plenty of foreign exposure and what appears to be a huge bias to value. The big weighting in financials is common when so many products are used. I wonder how volatile the energy names might turn out to be. The other thing that just occurred to me is there might be a large cap bias.
I did not plug the portfolio into any software as the weights were not given, but if they were it would have been a very time consuming task. Most of this was just eyeballing the list so I certainly may have a few things wrong. All portfolios have issues that may or may not be flaws and while I am not trying to be harsh it does T no good for me to just validate every aspect with no real critique.
Lastly, BNS, CVY, PHO, VZ and UTX are either client or personal holdings.
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7 comments:
Just a brief comment:
Stocks are 50% of my portfolio
Real Estate 40%
Bonds 15%
Cash 5%
I also have small positions in stocks not listed, some of which would fall under Roger's aptly stated weightings, but nothing really significant.
I thought giving Roger specific names of portfolio stocks (though not dollar totals) might encourage others to take the plunge and have some fun.
We're all good sports here.
oops...real estate is 30%....
Invest in what you know, so someone we know said. What about WisdomTree,per etf trend post:
WisdomTree Investments is one step closer to becoming a world-class asset management company and leader within the exchange traded fund (ETF) market. WisdomTree has raised more than $56.4 million by issuing about 18.8 million shares of common stock. According to the press release the lead investors are AIG Global Investment Group and Atlantic-Pacific Capital Inc. and its principles. The company has 118.6 million shares outstanding after this transaction.
In my portfolio, criteria for selection addresses low correlation, and high alpha. As a composite the sharpe ratio of the portfolio has to meet a specific level in order to control for risk, sector representation can rotate into no less than x sectors and no more than y sectors, at least 5 asset classes are always present, within each asset class there is diversification of style and strategy, there is sufficient cash to use a hedging strategy to soften the impact of a protracted downturn, and the timing system to reduce or replace allocation of equities has been constructed with back testing that does not exceed three modifications per year. Now that I have software than directly mananages my account per selected parameters, reading blogs is strictly for entertainment.
Anon 3:40, A number of the WisdomTree funds look useful and I'll doubtless invest in some after a bit more time has passed to see how faithfully they track their respective indexes (particularly in a more stressful market environment) but investing in WisdomTree the company is another matter entirely: It's getting some good buzz and, as a technical trading play, has some interesting possibilities but as a long-term play:
1. (quick back-of-the-napkin calculation) at the current price and float w/ approx $1 bil under management (AUM) you'd be paying, umm..., about a dollar for roughly $2-3 AUM; in contrast there are proven investment/management companies such as T. Rowe Price where that same dollar would buy nearly $26 AUM.
2. while WisdomTree has done a nice job adding stellar names to their 'consultant' list none of those people run the company nor, as far as I can tell, even have a clearly defined role; the people that do run the company either have no record or a record that is, umm..., not particularly compelling.
3. the company itself has no track record and access to (as well as credible auditing of) corporate financials appears to be a problem.
There may be more positive info out there but I didn't have time to spend looking.
This portfolio has great exposure for the do it yourselfers. I would consider taking positions in these.
ROGER, Frontier Markets, you mention them several times. Give me a few of the more respected names in the mutual fund or ETF area. Thanks!
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