I have been continuing my ongoing efforts to concentrate my portfolio into my best ideas.
I previously mentioned that I sold a few demutualizations. I also have sold out of GLDD, AER, and ALLE and rolled the proceeds into Extendicare (pre-pop), Canexus (pre- & post-pop), NRF (pre- & post-pop), CTRE (limit orders in the $14s) and ADK. Those are by far my favorite ideas right now. I still think that the stocks that I sold have a very good chance of beating the market, but I like the ideas that I put the money into better and am hoping to get more bang for my buck.
I'm keeping a very close eye on NCT. I love the story of a misunderstood company that's transitioning from a hodgepodge of investments to one solely focused on senior living facilities. Still, I want to know what the company's distribution will be like post-spin before I add any more shares. I think that there is a decent chance that it will cut its current 8.5% distribution when it spins off Newcastle Senior Living. I personally wouldn't necessarily mind them doing so, but if they do I think that there's a good chance of a temporary sell off.
I strongly believe that there will continue to be a tremendous amount of consolidation in the senior living and healthcare REIT sector. Some of the companies that I have been adding are special situations in their own right that also stand to benefit from the consolidation trend and significant demographic tailwinds.
I've bought a little more Caulmet (CLMT) when its distribution climbed to the 9% level. I realize that the company's current cash flow does not cover this level of distribution, but I have been and continue to be of the belief that it will grow into it when a number of substantial new projects and expansions come on-line over the next couple of years. CLMT's Q2 was worse than I had expected, as a result of yet more downtime for maintenance at some of its refineries and worse crack spreads. I hope that the falling price of oil will help the crack spreads a little and that we will see less facility downtime during the second half of the year. If so, that should be enough to carry the company until increased cash starts flowing in. This definitely goes to show that the MLP structure is less than ideal for refiners, which have volatile cash flows and facilities that require significant investment. That's fine with me, that's why we have been given the opportunity to buy into CLMT at this level. I wonder if it ultimately would consider de-MLPing (how's that for a new word) like Kinder Morgan (KMI) recently did.
I am sitting on around 35% cash. I will continue to ease that money into the market over the rest of the year if we see pullbacks or if I come up with any interesting new ideas. [more]
A little less than a month ago, I blogged about my position in Chicago Bridge and Iron (CBI)...CBI: Scam or Super Bargain? . As a refresher, I went long CBI after an anonymous short seller called Prescient Point issued a report that crushed the company's stock. While the report did contain somewhat valid points about how CBI has accounted for its recent acquisition of Shaw, for the most part it was as Shakespeare would say "full of sound and fury. Signifying nothing." [more]
The other day I came across possibly the best dividend growth story in the market today. Better yet, it's a secret. OK, it's not really a secret, but it's a small cap stock that is completely transforming itself that not many people are talking about. [more]
The name of the game in today's market is lowering taxes. Earnings growth really isn't there for many companies in today's recovering yet still sluggish economy. They only way for many of them to achieve sufficient growth to keep their stock prices rising is to either buy back stock to lower their number of outstanding shares and make their earnings look larger or to avoid taxes. Tax avoidance actually is a double bonus for stocks, not only does it make companies' earnings higher but it usually increases the multiple that investors are willing to pay for those earnings. [more]