My Portfolio Review August 2019

Another month has gone by and it’s time for another review of my portfolio, this time for the month of August. Let’s get into it :

Apple (AAPL) – 8.49%

Freetrade – 5.21%

Unilever (UN) – 4.75%

AT&T (T) – 4.32%

Royal Dutch Shell (RDS.B) – 4.22%

Bank of America (BAC) – 4.14%

Abbvie (ABBV) – 4.10%

Pfizer (PFE) – 3.85%

Caterpillar (CAT) – 3.82%

Vanguard Emerging Markets ETF (VFEM) – 3.75%

Vanguard US Corporate Bond ETF (VUCP) – 3.30%

Cash And Cash Equivalents – 50.06%

New Positions

1. Abbvie (ABBV)

Recently started a position in Abbvie – the large pharmaceutical company that spun off from his parent Abbot Labs a couple of years ago. As many of you can see the share price has been hammered in the last couple of years. It is now down more than 40% off it’s all time higs, currently sitting at less than $65/share.

Of course there is a reason for that – the company’s blockbuster drug Humira’s patent is set to expire in a couple of years. Humira account to 60% of Abbvie’s revenue as of right now – a huge number as you can imagine. Losing so much revenue is not good news to any company and logically the stock price has been suffering.

Also the healthcare sector as a whole has been under scrutiny in the last couple of years and almost all of the companies in the sector are at their 52 week lows. That downward pressure has been because of pressure from the goverment and to some degree of Amazon’s attempts to go into the healthcare business.

In my opinion all of this has been blown out of proportion and many of the companies have been price like they are going to go bankrupt any moment now. If there is a lot of fear regarding a specific sector that is healthcare at the moment.

We see that all the time at wall street – a certain sector goes completely out of favor and the prices go far down south. It happened with the semiconductor companies last year, it happened with consumer staples about two years ago, it happened with REITs around 2016 and so on and so on.

I think now the fear is all on healthcare and I am planning to add some shares in this sector. I didn’t have any exposure to it and I find it now a good time to add some with my last new positions being Pfizer and Abbvie.

As for Abbvie I like them for a couple of reasons. First they have a history with coming up with new blockbuster drugs that generate a lot of cash for them. Second they have been around for a long time and have the resources to develope new drugs in their pipeline.

Their acquisitions of Allergan has also been a good move in my opinion and now Humira is going to account to about 40% of their revenue. It is still a lot, but it is a move in the right direction. Of course they are going to spend a lot of money and it involves risk, but I think this is a good and needed move for them.

They also have a great moat as developing drugs succesfully requires a ton of money and experience in the field and Abbvie is a leader in the field.

As for metrics go I like a lot of them – they are currently sitting at a forward PE of around 7, the dividend yield is almost 6.5% with a payout ratio of around 50%. Their debt is a bit too much for my likings. Still they are generating a lot of free cash flow to be able to pay it down quickly and not be much of a problem for them. Also the FED lowering interest rates is only going to help them with that.

All that being said Abbvie is one of my more risky positions as biotech companies are usually risky and very volatile. Coming up with new drugs is not easy and it is a very competitive field, but I believe that Abbvie are one of the best in this business.

2. Adding To My Positions

I have bought a couple more share in my positions in Shell, Pfizer and the bond ETF. Shell and Pfizer have been down lately following their earning reports and I found that a good time to add a bit more to those positions.

As for the bond ETF I had a little bit of spare cash and decided to just leave it there. It provides me with 3.3% dividend yield and helps mitigate the market volatility.

Plans For The Month

1. Reduce My Cash Position

For those of you following my portfolio review you know this has been on my list for a while now. Still I have finally managed to hit that 50% cash. Some of you may know that I have started the year at almost 100% cash. I am happy to be halfway there and I am also happy with how my portfolio is starting to shape up.

I now have 10 positions and I am confident in any of the companies I am holding. All of them provide me with a nice stream of increasing dividends and the ball is slowly starting to roll now.

Still there is a way to go as I still have 50% of cash that I would like to lower down to 10-20% sometime soon.

With the market getting volatile again I can see more and more good deals out there. I have a good amout of stocks on my watchlist that are getting very close to buying range.

2. Increase My ETF Holdings

It might not be obvious by my portfolio, but I am a big fan of ETFs. As you can see currently I only have around 7% in ETFs. As time goes by I would like to increase that to at least 30%-40%.

I am slowly building those positions, but I am waiting for a bit of a pullback of the major indexes before buying into them.

3. Watch Some Economic Numbers

I don’t really want to talk about politics here so I am just going to say that I will be watching the next moves around the trade war between the US and China and how is that going to affect different countries and companies around the world.

Another thing I will keep an eye on is going to be Nvidia’s earnings next week and more importantly their guidance. A big portion of their revenue comes from China and their numbers are going to show how is the trade war affecting their business and the tech sector as a whole. After all Nvidia are an integral part of a lot of industries – gaming, consumer electronics, cloud computing etc.

Conclusion

This is going to be everything from me regarding my portfolio in the month of August. Thank you all for reading and don’t forget to subscribe if you want to stay updated on future posts.

Full Disclosure : I am/ we are long AAPL, UN, T, BAC, PFE, ABBV, CAT, RDS.B, VFEM, VUCP

Additional Disclosure : This article is meant to identify an idea for further research and analysis and should not be taken as a recommendation to invest. It does not provide individualized advice or recommendations for any specific reader. Also note that we may not cover all relevant risks related to the ideas presented in the article.

Readers should conduct their own due dilligence and carefully consider their own invesing objectives, risk tolerance, time horizon, tax situation, liquidity needs and concentration levels. I am not a financial advisor and this article is for educational and personal accountability reasons only.