When I posted my most recent update of my Dividend Income portfolio http://jubakpicks.com/2012/07/03/if-you-want-to-earn-more-dividend-income-youll-have-to-put-up-with-more-volatility-what-you-want-to-avoid-is-a-permanent-impairment-of-capital/ on July 3, I promised that I’d make the required changes to the online portfolio http://jubakpicks.com/jubak-dividend-income-portfolio/ within a couple of days.
Liar, liar, pants on fire.
Here it is early September and I’m just updating the portfolio now. My bad.
For those of you without perfect recall (or who have better things to stuff their brains with than changes in my portfolios) on July 3 I dropped Penn Virginia Resource Partners (PVR) from that portfolio. The closing price that day was $24.03.
My logic was pretty simple. Although Penn Virginia’s share price wasn’t down significantly in the period under review (May 6, 2011 through June 29, 2012)—in fact it was up 0.9%–I was worried about the stock going forward. It wouldn’t profit me, or any other income investor, to collect Penn Virginia’s hefty dividend yield, then 8.5%, if the share price tumbled and investors suffered a permanent impairment of capital. Looking ahead, I could see a recovery in coal demand and prices from current levels, but to me it looked like the market share losses suffered by high-cost Appalachian coal, Penn Virginia’s strong point, would be permanent. Western producers were building out new shipping capacity on the West Coast that just about guaranteed that lower-cost coal from the Powder River Basin would grab a bigger share of Asian markets after any recovery. Management at Penn Virginia seemed to recognize this trend too and had started to diversify the company’s asset base into natural gas collection and pipeline systems.
“If I wanted to own more of this kind of asset,” I wrote then, “I’d look to increase my investment in ONEOK or Magellan or Western Gas Partners.”
And with that I sold Penn Virginia out of the portfolio, an action whose bookkeeping I’m completing today.
Full disclosure: I don’t own shares of any of the companies mentioned in this post in my personal portfolio. The mutual fund I manage, Jubak Global Equity Fund http://jubakfund.com/ , may or may not now own positions in any stock mentioned in this post. The fund did not own shares of Penn Virginia Resource Partners as of the end of March. For a full list of the stocks in the fund as of the end of March see the fund’s portfolio at http://jubakfund.com/about-the-fund/holdings/
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