Mr. GIC portfolio

[selkirk]

thought I would start a portfolio. A friend recently put close to $50,000 in a 2 year GIC/CD that paid him 2.5% a year for the next two years.
(if you have a GIC in Canada the bank will send you notice that it is coming due, if you do nothing they sometimes in this case put it back in, renew (2 year GIC) for two more years).

anyways we will start with $50,000. It will be a portfolio of Cdn. stocks, in Cdn. dollars (some stocks will also trade in the US).

Will be a Cdn. Margin account and will be allowed to write options. Have two other portfolios started in July and August of 1999, both started at $100,000, one is at $155,000 and the other is $158,000. Could have done better since both were up $45,000 in the first six months, since March 2000 just treading water was difficult. The portfolios have options but no short positions, except for some uncovered calls.

Portfolio started on August 16, 2002, do not count commissions on the trades (most commissions at a discount brokerage would run $25-$30 over the computer) of course this varies with rebates and special offers. To offset this will not count interest that would be earned on the cash position. Cash position on the other two portfolios between $10,000-$20,000, hate to have a large cash position. Will only do a few trades a month.


August 16, 2002 Mr. GIC portfolio

1. Saxon small cap $5000 invested at $17.237 to buy 290.073 units.
2. Encana July $45 puts 2 contracts (200X $2= $400)
3. XIU I 60s Dec $42.50 puts 3 contracts (300 X $1.70= $510)

1 contract= 100 shares. I am obligated to buy Encana at $45 until July (3rd friday), and XIU Dec $42.50 until Dec(3rd friday).

XIU I60 track the TSE/SP 60 (60 companies) closed at $44.49
Encana is a merger of Alberta Energy and PanCanadian closed at $46.75

$910 credit from the two options is added to cash

cash $45,910
value of portfolio = $50,000

have positons Saxon small cap, Encana own shares and have puts out on the the stock, have options out on XIU do not own the stock yet.

just a note: always take the worse price for record purposes on the options (XIU DEC $45 $1.70-$1.85), Encana ($2-$2.10)

thanks
selkirk

 

[selkirk]

an update on the portfolio, will take yesterdays close, should not be that volatile

Bought 500 units/shares of Summit Reit SMU.un trades on the TSE. $14.98 X500 shares = $7490 Should yield us 10%, and be a good source of cash flow (tax benefits). They have office space 7%, retail 27% and Light Industrial 86% (concentrating on this segment of the market). 44% of the properties in Ontario, 22% Alberta, 9% Nova Scotia, 9% Quebec, 9%US, remaining 7% in other parts of Canada

Portfolio
Saxon small cap $5000 invested at $17.237 to buy 290.073 units.

Encana July $45 puts 2 contracts (200X $2= $400)

XIU I 60s Dec $42.50 puts 3 contracts (300 X $1.70= $510)

Summit Reit (smu.un) 500 shares (purchase price $14.98/yield 10%)

cash balance $38,420

more trades soon, for now will wait.

thanks
selkirk

 

[TIME TO MAKE $$$]

Thanks for sharing this info Selkirk, it is very much appreciated!

 

[selkirk]

just the latest update on the portfolio

 

[selkirk]

thanks Time to Make $$ hopefully this portfolio can beat 2.5% this year. another trade.


next trade
using closing prices
CP sell 5 contracts (500 shares/1 contract=100 shares) $30Put October .95
500 shares X .95 = $475 credit

this money will be put into the cash position. It will be one of the last puts I write for a while.

the bid was .95 ask $1.15 (always take the worse price)
CP closed at $33.05 cdn.

this option would count against our margin account roughly like this
$30 X500shares = $15,000 total obligation of contract X.25 (25%)= $3750 + $475 (the amount you get from the option) = $4225
The $4225 may go up or down depending on how the stock trades, the further it becomes in or out of the money.

Portfolio
Saxon small cap $5000 invested at $17.237 to buy 290.073 units.

Encana July $45 puts 2 contracts (200X $2= $400)

XIU I 60s Dec $42.50 puts 3 contracts (300 X $1.70= $510)

Summit Reit (smu.un) 500 shares (purchase price $14.98/yield 10%)

CP $30P Oct 5 contracts (500 shares)

cash balance $38,895

Will add a financial stock as soon as they stop falling, maybe an insurance play Sunlife or Manulife (I own the Cnd. banks in the other two portfolios and do not want overlap, the Cdn. banks own TD,Royal, BNS,CM). So will probably add an insurance company like Manulife or Sunlife, great companies with growing earnings just fully valued so will wait for 5-10% drop.


Will slowly decrease cash position, would like to see if Encana is put to me in July currently over $48 cdn.

note: have positions in these trades or ones similar so I am biased with all of these selections.

Cdn. options quotes can be found at me.org
Montreal exchanges website, click on English (or French) then next screen drop down menu click on quotes, then next screen another drop down menu just click on the Stock (stock symbol) you are interested in getting quotes for. Or just use your broker.

thanks
selkirk

 

[selkirk]

next trade use closing prices for May 2,2002.

buy 300 shares of Manulife Finacial MFC-TSX closed at $45.95cdn. X 300 shares = $13,785

at the same time write 3 covered call July $47.50 for $1.20 ($1.20/$1.40 always take worse price) $1.20 X 300 = $360

MFC came out with good earnings earlier in the week, I would like to buy it for $40-$42.50 cdn. but still a good stock doing well in the US and Asia. Trades at around 18X this years earnings yields 1%, should grow earnings by 15% next year (that is their goal). will have a write up on this company. Would like to buy it for a cheaper price but will take a position, the option helps to lower my price I do not think it will shoot past this price to much by July.

Portfolio
Saxon small cap $5000 invested at $17.237 to buy 290.073 units.

Encana July $45 puts 2 contracts (200X $2= $400)

XIU I 60s Dec $42.50 puts 3 contracts (300 X $1.70= $510)


Summit Reit (smu.un) 500 shares (purchase price $14.98/yield 10%)

Manulife Financial 300 shares ($45.95)

Manulife $47.50 calls 3 contracts (300 shares) $1.20 $360 credit

CP $30P Oct 5 contracts (500 shares)

cash balance $25470

will have a write up on the stocks and the positions soon,

thanks
selkirk

 

[selkirk]

time to add another stock. buying 1000 shares of Russel Metals RUS/TSX, will take the closing price of $4.31
Russel Metals is a small cap stock on the Toronto Exchange it only has a market cap of $178 million market cap. It should earn .35-.40 this year and .45/.50 in 2003. It just started paying a dividend again after just cutting it in the first quarter, the div is .20 a year for yield around 4.6%. not bad to just sit and wait. last report they had $46.5 million in cash so the div should be safe for awhile.

they distribute metal products and manufacture products for different industries, such as oil and gas.

this portfolio unlike the other two will have mutual funds and hopefully some small caps, this is the first one. would consider selling around $5.

Portfolio
Saxon small cap $5000 invested at $17.237 to buy 290.073 units.

Encana July $45 puts 2 contracts (200X $2= $400)

XIU I 60s Dec $42.50 puts 3 contracts (300 X $1.70= $510)


Summit Reit (smu.un) 500 shares (purchase price $14.98/yield 10%)

Manulife Financial 300 shares ($45.95)

Manulife $47.50 calls 3 contracts (300 shares) $1.20 $360 credit

CP $30P Oct 5 contracts (500 shares)

1000 shares Russel Metals RUS ($4.31 05/06/02)

cash balance $21160

thanks
selkirk

 

[selkirk]

these will be the last trades until June/July
in this portfolio.

4 TD Oct $37.50P ($1.20 $1.25) will take the worse price 4 Put contracts (400 shares)X $1.20 = $480

will put an order in for next week to buy
300 shares on Contrans (CSS.a) for $35.50. currently trading at $37.50.

more info if I get the stock, rest of the portfolio is looking good...so far.

Portfolio
Saxon small cap $5000 invested at $17.237 to buy 290.073 units.

Encana July $45 puts 2 contracts (200X $2= $400)

XIU I 60s Dec $42.50 puts 3 contracts (300 X $1.70= $510)


Summit Reit (smu.un) 500 shares (purchase price $14.98/yield 10%)

Manulife Financial 300 shares ($45.95)

Manulife $47.50 calls 3 July contracts (300 shares) $1.20 $360 credit

CP $30P Oct 5 contracts (500 shares)


1000 shares Russel Metals RUS ($4.31 05/06/02)

TD $37.50P Oct. 4 contracts $480 credit

cash balance $21640

will have update on the portfolio, and when I get Contrans (Css.a)

looking at some junior golds and drug stocks, may include one but will be a small play.

thanks
selkirk

 

[selkirk]

Contrans hit $35.50 yesterday so purchase 300 shares. one thing concern me is there is little volume, total 6,600 shares traded yesterday.


Portfolio
Saxon small cap $5000 invested at $17.237 to buy 290.073 units.

Encana July $45 puts 2 contracts (200X $2= $400)

XIU I 60s Dec $42.50 puts 3 contracts (300 X $1.70= $510)

Summit Reit (smu.un) 500 shares (purchase price $14.98/yield 10%)

Manulife Financial 300 shares ($45.95)

Manulife $47.50 July calls 3 contracts (300 shares) $1.20 $360 credit

CP $30P Oct 5 contracts (500 shares)

1000 shares Russel Metals RUS ($4.31 05/06/02)
TD $37.50P Oct. 4 contracts $480 credit
300 shares of Contrans (CSS.a) ($35.50 (05/16/02)

cash balance $10990

thanks
selkirk

 

[selkirk]

will sell 500 shares RUS add to cash

will sell 500 shares RUS add to cash

will sell 500 shares of Russel it is trading over $5, at $5.14. for record purposes will take first trade (open) as long as it is above $5.

my target is $5.50 so will take some off the table is up from $4.35 a good gain in one month.

review of holdings
Saxon small cap is up slightly
MFC is at $45.73 so not bad play considering the calls should expire worthless.
SMU.un Summit is at $15.38, happy if it stays above $15, pays out .1275 div/share/month
CSS.a now at $37 will split 4-1 and sell more trust units, needs to has little volume often 12 or less trades a day.
TD above $38
Encana happy with the put.
XIU trading at $42.70 with the market seems to go down each day/week may regret this put.
CP above $34 will be patient with this stock but have a large position in these OCt. $30 Puts.

thanks
selkirk



Portfolio
Saxon small cap $5000 invested at $17.237 to buy 290.073 units.

Encana July $45 puts 2 contracts (200X $2= $400)

XIU I 60s Dec $42.50 puts 3 contracts (300 X $1.70= $510)

Summit Reit (smu.un) 500 shares (purchase price $14.98/yield 10%)

Manulife Financial 300 shares ($45.95)

Manulife $47.50 July calls 3 contracts (300 shares) $1.20 $360 credit

CP $30P Oct 5 contracts (500 shares)
1000 shares Russel Metals RUS ($4.31 05/06/02)
TD $37.50P Oct. 4 contracts $480 credit
300 shares of Contrans (CSS.a) ($35.50 (05/16/02)

cash balance $10990

 

[selkirk]

open trade on Russel Metal was at $5.10 trading between $5. $5.10

$5.10X500 shares= $2550 add to cash

Portfolio
Saxon small cap $5000 invested at $17.237 to buy 290.073 units.

Encana July $45 puts 2 contracts (200X $2= $400)

XIU I 60s Dec $42.50 puts 3 contracts (300 X $1.70= $510)

Summit Reit (smu.un) 500 shares (purchase price $14.98/yield 10%)

Manulife Financial 300 shares ($45.95)

Manulife $47.50 July calls 3 contracts (300 shares) $1.20 $360 credit

CP $30P Oct 5 contracts (500 shares)

500 shares Russel Metals RUS ($4.31 05/06/02)

TD $37.50P Oct. 4 contracts $480 credit

300 shares of Contrans (CSS.a) ($35.50 (05/16/02)

cash balance $13540

believe Russel could go to $5.50 so will hold the other 500 shares, will keep a higher cash position until I know how the puts will turn out.

thanks
selkirk

 

[Spock]

great work selkirk.

Am myself invested with Saxon Group of Funds. Sit down and talk to the Fund Manager every year to figure out distribution of portfolio and talk about the coming year expectations.

Great company and both are good fund managers with plenty of experience ..

Cheers !!!
Spock

 

[selkirk]

Saxon funds

Saxon funds

I agree Spock they have five funds total and all are in the top 25% in their respective categories, each fund. Value managers who have not flip flopped on their approach unlike some, two good managers.

The min is only $5000, and no load also like them because low mer (at least by Cdn. standards) of 1.75% per fund, and one has 1.25 high income.

some mer in cdn. can easily go to 3% and beyond if stocks return on average 10% per year over time, that is basically stealing the investors money. if a fund has a mer over 3% I just pass on it.

other fund families I considered for the portfolio

Mawer NL, low mers, great performance, good selection min $5000

Leith Wheeler nl, low mers, good performance, to high of an investment for this portfolio $50,000

Phillips Hager and North similar to the above min is $25,000, I find the performance in some funds not as good as the above. many people in my shareclub love this mutaul fund family.


saxon small cap is a good selection for this portfolio.
thanks
selkirk

 

[selkirk]

will update the portfolio, in general everything is doing fine except TD put is in the money, and so is the XIU 60.

Will write 4 uncovered $40 Oct TD calls for a credit of $160 to hedge the put position (somewhat). the money goes to the cash postion.

will update the portfolio and prices at the end of June, will then update prices and dividends.

thanks
selkirk


Portfolio
Saxon small cap $5000 invested at $17.237 to buy 290.073 units.

Encana July $45 puts 2 contracts (200X $2= $400)

XIU I 60s Dec $42.50 puts 3 contracts (300 X $1.70= $510)

Summit Reit (smu.un) 500 shares (purchase price $14.98/yield 10%)

Manulife Financial 300 shares ($45.95)

Manulife $47.50 July calls 3 contracts (300 shares) $1.20 $360 credit

CP $30P Oct 5 contracts $475 credit (500 shares)

500 shares Russel Metals RUS ($4.31 05/06/02)

TD $37.50P Oct. 4 contracts $480 credit

TD $40 Calls uncovered 4 contracts (.40/.50) 400X.40= $160 credit

300 shares of Contrans (CSS.a) ($35.50 (05/16/02)

cash balance $13700

 

[selkirk]

Portfolio
Saxon small cap $5000 invested at $17.237 to buy 290.073 units.

Encana July $45 puts 2 contracts (200X $2= $400)

XIU I 60s Dec $42.50 puts 3 contracts (300 X $1.70= $510)

Summit Reit (smu.un) 500 shares (purchase price $14.98/yield 10%) divs= $127.50

Manulife Financial 300 shares ($45.95) divs= $42

Manulife $47.50 July calls 3 contracts (300 shares) $1.20 $360 credit

Manulife $45 Oct Calls 3 contracts (.75/.90) .75 X 300 = $225 credit

CP $30P Oct 5 contracts $475 credit (500 shares)

500 shares Russel Metals RUS ($4.31 05/06/02)

TD $37.50P Oct. 4 contracts $480 credit

TD $40 Oct. Calls uncovered 4 contracts (.40/.50) 400X.40= $160 credit

300 shares of Contrans (CSS.a) ($35.50 (05/16/02)

500 BFI Canada Income Fund BFC.un$10.97x500= $5485
cash balance $8609.50

Wrote 3 contracts MFC Oct $45 calls for a credit of $225 used closing bid ask .75/.90 always take worse price for record purposes.

Bought 500 units of BFI Canada Income fund which should yield over 10%, bought them for another portfolio average cost was $10.10. Would be happy if they stay flat and return 10%.

A quick review. prices TD$33.95, XIU $40.15, Summit $15.86, Russel $4.85, css.a $37 going to become an income trust. MFC $41.25 stock is going down because of trouble in Asia, but long term winner. Use calls on MFC, and TD to lower cost.

Dividends have been paid on Summit and MFC, missed the divs on Russel.

thanks
selkirk

 

[selkirk]

just an update

just an update

first of all best wishes on this holiday weekend. happy birthday to Canada July 1st, and the US July 4th. may you enjoy them

an overview of the portfolio up to this date.

stocks in the portfolio
Contrans (bought at $35.50) is now trading at $40, will hold as it should spin out over a 12% yield as it is converting to an income trust. if it goes to $42 will consider selling.

Summit $14.98 is now at $15.80. may trade up to $16 and go to $17 by next year, but the main move for the next 3-6 months is over. will still hold as it pays over 9% yield.

Russel Metals (bought $4.35) currently $4.95, sold half at $5.10.
pays 4% yield, trades below book and will trade 10X earnings. made it main move for the next 3 months, but will hold remaining 500 shares, it is cheap.

BFI Income Fund $10.97 currently $10.92, should throw off $1.20 in divs so as long as it stays close to purchase price will be happy.

Manulife $45.95 currently $43.65, (also wrote covered July 3 calls $47.50 $1.20 credit) and $45 uncovered Oct 3 calls for .75. the July calls will expire worthless, the $45 oct were probably a mistake. Manulife is an Cdn. insurance company with operations in US, Europe, Asia. 15% ROE is good enough for me. had trouble in Indonesia but is fighting a bad ruling and is showing why this company is worth owning.

options

CP 5 Oct $30 will expire worthless, wrote quite a few, stock is at $37.01. CP and CNR (CNI) have had good performance, own both Cdn. railway companies. one "expert" said why do you want to own a company with only 5% revenue growth (referring to CNR). I will own any company with good managment trading at under 15X earnings.

TD $37.50 P 4 Oct
TD $40 OCT 4 uncovered calls
TD is at $35.92 is along at it does not break down below $32 both trades should work out.

XIU Dec 3 puts $42.50
XIU are trading at $40.38 hopefully the market can rally 5%.

Encana July $45 p 2 contracts
Encana is at $46.70, so it looking good that the put contracts written will expire worthless.

Would consider writing more CP puts but will wait to see what happens to the Encana puts before doing anymore trades.

note: the portfolio has done well and I believe it will easily return more than 2.5%, despite the market conditions. actually my goal is quite a bit higher.

thanks
selkirk

 

[selkirk]

sell contrans

sell contrans

will sell 300 shares of Contrans at $39.25. thought it would hit $40 and it did, was willing to keep it, but the portfolio may need more cash in this market, TD, XIU, and Encana puts are all in the money.

if it hits $39.25 will sell and add to cash.

Encana put is in the money, so will wait, if it gets put to me will write a covered call, may roll out and down on the option if I do it will be updated on Thursday.

thanks
selkirk

 

[selkirk]

just a quick update sold 300 contrans yesterday, hit a high on the day of $39.90, will record the sale as $39.25, closed at $39.05. Like the company and may buy it again; but in this market never stupid to take profits when you can and the portfolio could use the cash.

Will sell 2 calls ECA Ecana Jan $47.50 (bid $2 ask $2.20) closing prices yesterday. will take the lowest prices always for record purposes.

Jan $47.50 $2X200 shares = $400 credit
$400 will be added to cash position.
will probably have Encana put to me the $45 July, stock held up well but broke through $45cdn and is now at $43.

natural gas is weak below $3, and oil could fall, still like the company just believe it will not move past $47.50 in the next few months.

thanks
selkirk

 

[Myron]

Selkirk how close are we to the bottom of the market? Looking at buying a few value stocks and would love your opinion

1. Loral Space and Communications at 61 cents U.S. Company is reeling from its failed investment in Globalstar and also the slow demand for DSL but I still believe satellites are going to be a boom industry in the future. Digital cable is turning out to be a bust and of course cable internet will never work. I think right now with the slowdown in the economy people are buying cheaper services, but once a recovery occurs, satellite technology will benefit greatly. Also satellites will be important in the "fight on terrorism".

2. Royal Bank of Canada at $48.75. All bank stocks are shaking as a result of Worldcom but RY had very little invested in it. Also I have no doubt we'll soon hear about these billion dollar profits the banks put up every year and RBC will go up again.

What do you think?

 

[selkirk]

Myron do not know enough about Loral space to comment, but only have a couple of investments in telco/communication sector. SBC/BCE, looking at Verizon. use to own Bell South but sold, thankfully. the sector is getting destroyed, and may come back, I will wait for better things until I commit more money to the group. I have covered calls August $30 on BCE which should expire worthless.

As for Royal Bank they along with the other cdn. banks have come off. as a long term investment I like Royal Bank, their move into the US buying Regional banks and brokerages, (insurance companies) seems to be smart. expand slowly in the US. they may have some trouble loans but probably not as much as TD. I would also start following Manulife and Sunlife as they have gone down in this correction. At these levels could slowly build a position in Royal Bank. will have a write up on some of the financials soon.






Portfolio update

Portfolio
Saxon small cap $5000 invested at $17.237 to buy 290.073 units.

XIU I 60s Dec $42.50 puts 3 contracts (300 X $1.70= $510)

Summit Reit (smu.un) 500 shares (purchase price $14.98/yield 10%) divs= $127.50

Manulife Financial 300 shares ($45.95) divs= $42


Manulife $45 Oct Calls 3 contracts (.75/.90) .75 X 300 = $225 credit

CP $30P Oct 5 contracts $475 credit (500 shares)

500 shares Russel Metals RUS ($4.31 05/06/02)

TD $37.50P Oct. 4 contracts $480 credit

TD $40 Oct. Calls uncovered 4 contracts (.40/.50) 400X.40= $160 credit

200 Encana Shares

2 calls Jan $47.50 S

500 BFI Canada Income Fund BFC.un$10.97

cash balance $11784.50


update sold 300 contrans at $39.25, bought 200 (put to me Encana $45), sold 2 Jan $47.50 Calls credit $400. net cash $3175

Manulife $47.50 July expired worthless.

will buy something and lower cash position hopefully.

thanks
selkirk