Helical Portfolio - Still Steaming
I mentioned last month my discomfort with the rapid start to the year. This continues, and the bias imposed by this positive recency has me more optimistic on the year than the outlook I had originally. That could be dangerous. The Helical Portfolio closed February at $64,426.76.
+14.4% year to date
+24.0% CAGR from 1/1/2011 (just 14 months, and I don't expect that to keep up at all). I have not added money to the port yet, but still plan to.
In February, I raised a bit of cash by selling Rochester Medical (ROCM). I also collected dividends from CVS (2/2 - $16.25) and HCN (2/21 - $37). Cash now stands at $8,124.86, 12.6% of the portfolio at the end of February. I find myself looking at the portfolio about every other day now considering where to raise more cash, but have so far been hesitant to make changes. I'll continue to try to avoid dropping more than 6% overall or losing 2% in any one holding from here. Last month I wrote regarding ROCM:
"Rochester Medical had its oft recurring 'timing issues with revenue' in the quarterly numbers. I was on the fence about selling this ahead of earnings, but did not do so. I've held this too long in the past, but am inclined to give this another quarter. "
I did not give this another quarter, but this lack of ease made it the most sellable holding. I had noted when I bought it that it was a low conviction holding and "may not be long for the portfolio". I wasn't soured on it so much as interested in increasing cash. Overall, I had a nice gain here, up 23.4% in about 4 months. Bought 10/17/2011 for $2,070.97 and sold 2/15/2012 for $2,554.98 (includes commissions). I could list a CAGR here and get a big head, but instead I'll note that it is $9.55 today (I sold at $8.54), so humility is perhaps more in order. I'm still content to have the increased cash, and if I hadn't sold it then, I would be now.
Earnings for the quarter continued to be fairly uneventful, except for with Almost Family (AFAM). This company beat estimates for both revenues (modestly) and earnings (substantially), and jumped nicely last month and is now about 7% of the portfolio. The home care industry suffered in 2011 due to rate cuts and increased regulation, but is recovering. Operating cash flow margins may never be what they were in prior years, but came up nicely from the Q2 low.
OCF Margin (% of Rev)
2009 2010 Q1-11 Q2-11 Q3-11 Q4-11
9.1% 10.3% 10.2% 6.4% 6.8% 7.7%
I'll keep an eye on this going forward, and would not be surprised to see it dip a bit from here as the 2012 rate reducions take hold. I also expec them to look for acquisitions in this fractured and stressed industry.
Also of note was the announced departure of Bill Weldon from JNJ. He is only going as far as the board chair, but I'm pleased to see him out of the CEO role. Where I gave up faith in Weldon was during the congressional committee hearing (the one he showed up for), in which he felt the need to correct the questioner saying they (JNJ) had actually increased spending on quality, not decreased it. I found this completely disingenuous as the period in question covered the Pfizer OTC unit acquisition. So of course total spend increased, but per any metric (products, revenues, whatever) it almost certainly did not.
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