Following are the activity from the previous month:
The cash coverage requirements on the puts account for about 44% of our cash position. The cash position in our portfolio is high at around 42%. We will continue to use cash-covered puts along with direct purchases spread-out over a period of time to build the portfolio.
Below is our updated portfolio – the overall portfolio is up 5.22% compared to our cost basis:
Below is a summary of transactions during the year:
We have covered calls written against one-third of our ICICI Bank (IBN) shares (Jan 2012 55). We also have cash covered puts on Ameritrade (AMTD) shares (Feb 2011 15), Cisco (CSCO) shares (Jan 2012 20 at $2.64), Berkshire Hataway (BRK.B) shares (Jan 2012 75 at $7.15), Itron (ITRI) shares (May 2011 60 at $6.90) , Quality Systems (QSII) shares (June 2011 60 at $5.50), Noble Corporation (NE) shares (June 2011 33 at $2.62), Abbott Labs (ABT) shares (Jan 2012 45 at $4.40), Johnson & Johnson (JNJ) shares (July 2011 60 at $2.47), H&R Block (HRB) shares (Jan 2012 10 at $1.60), Alcoa (AA) shares (Jan 2012 15 at $1.70), and Nutrisystem (NTRI) shares (June 2011 17 at $1.30) with a cash coverage requirement of about 44% of our cash position.
We added Almost Family (AFAM), K12 Inc (LRN), 3M Company (MMM), and GOL Linhas (GOL) to our watch list while removing AgroFeed (FEED), Caterpillar (CAT), Cresud (CRESY), Nutrisystem (NTRI). Caterpillar & Cresud were removed as they returned well above 40% each while in our watch list thereby increasing the valuations. AgroFeed (FEED) along with Nepstar (NPD) went the other direction and the performance was ~40% down – Chinese micro-caps have low valuation but continue to underperform due to other concerns. Our updated watch list follow – Almost Family (AFAM), Applied Materials (AMAT), Air Products & Chemicals (APD), Brown-Foreman (BF-B), BHP Billiton (BHP), Disney (DIS), Darden’s Restaurants (DRI), GOL Linhas (GOL), Goldman Sachs (GS), Home Depot (HD), K12 Inc (LRN), McDonalds (MCD), 3M Company (MMM), China Nepstar (NPD), Pitney Bowes (PBI), Procter & Gamble (PG), Rovi Corporation (ROVI), UPS Corporation (UPS), VF Corporation (VFC), and Waste Management (WM).
- The following cash covered puts expired worthless: Glaxo (GSK) Jan 2011 35 written on 3/26/2010, Nucor (NUE) Jan 2011 40 written on 3/26/2010, Automatic Data Processing (ADP) Jan 2011 40 written on 6/21/2010, and Costco (COST) Jan 2011 55. These added up to a total of 0.5% in return as a percentage of total portfolio value.
- Wrote cash covered puts on the following: Johnson & Johnson (JNJ) July 2011 60 at $2.47 on 12/27/2010 with ~2% of portfolio, H&R Block (HRB) Jan 2012 10 at $1.60 on 12/29/2010 with <1% of portfolio, Alcoa (AA) Jan 2012 15 at $1.70 on 1/13/2011 with ~2% of portfolio, and Nutrisystem (NTRI) June 2011 17 at $1.30 on 1/21/2011 with <2% of portfolio.
- Bought Nucor Steel (NUE) at $44.96 on 1/21/2011 with around 2% of portfolio.
The cash coverage requirements on the puts account for about 44% of our cash position. The cash position in our portfolio is high at around 42%. We will continue to use cash-covered puts along with direct purchases spread-out over a period of time to build the portfolio.
Below is our updated portfolio – the overall portfolio is up 5.22% compared to our cost basis:
| Stock | Buy Date | Buy Price | Current Price | Current % Of Portfolio | Unrealized % Return | Yield as % of Portfolio Value |
| Altria (MO) | Various | 19.19 | 24.09 | 1.83 | 25.23 | 0.16 |
| Philip Morris International (PM) | 1/4/2005 | 32.19 | 59.70 | 1.72 | 76.13 | 0.12 |
| Kraft Foods (KFT) | Various | 26.33 | 31.35 | 1.91 | 19.08 | 0.09 |
| Pfizer (PFE) | Various | 22.13 | 18.36 | 1.95 | (17.03) | 0.09 |
| ICICI Bank (IBN) | 5/18/2006 and 08/01/2008 | 25.28 | 46.01 | 2.10 | 93.60 | 0.11 |
| Central Europe & Russia Fund (CEE) | Various | 39.23 | 43.33 | 2.31 | 10.46 | 0.01 |
| Itron Inc. (ITRI) | 11/07/2007 | 85.01 | 58.63 | 0.89 | (31.11) | None |
| iRobot (IRBT) | 12/18/2007 | 18.65 | 27.13 | 1.65 | 46.72 | None |
| LDK Solar (LDK) | 01/22/2008 | 30.49 | 13.15 | 1.20 | (35.39) | None |
| Aegon N.V. (AEG) | 04/28/2008 | 15.99 | 7.23 | 0.88 | (26.28) | 0.00 |
| Frontline Limited (FRO) | 10/06/2008 | 36.95 | 24.93 | 1.14 | (24.15) | 0.08 |
| DryShips Incorporated (DRYS) | 02/09/2009 | 6.96 | 5 | 0.53 | (28.20) | 0.00 |
| Plum Creek Timber (PCL) | 07/23/2009 | 30.50 | 40.56 | 2.47 | 32.99 | 0.14 |
| CPFL Energia S.A. (CPL) | 07/28/2009 | 50.45 | 76.74 | 2.33 | 52.11 | 0.18 |
| BP plc (BP) | 08/05/2009 | 51.49 | 47.61 | 1.45 | (7.53) | 0.09 |
| AT&T (T) | 08/27/2009 | 26.38 | 28.33 | 1.72 | 7.38 | 0.12 |
| Sysco Corporation (SYY) | Various | 25.92 | 29.94 | 2.28 | 15.49 | 0.10 |
| Exelon (EXC) | 12/30/2009 | 49.38 | 43.21 | 1.97 | (12.50) | 0.16 |
| Telefonica SA (TEF) | 02/09/2010 | 68.74 | 74.61 | 2.27 | 8.46 | 0.30 |
| Vonage Holdings (VG) | 04/06/2010 | 1.51 | 3.17 | 0.96 | 109.33 | 0 |
| Archer Daniels Midland (ADM) | 04/23/2010 | 28.27 | 33.45 | 2.03 | 18.30 | 0.09 |
| Intel Corporation (INTC) | Various | 21.91 | 20.82 | 2.53 | (4.98) | 0.12 |
| Google Inc. (GOOG) | 05/03/2010 | 528.36 | 611.83 | 1.86 | 15.80 | 0 |
| Cardinal Health (CAH) | 05/06/2010 | 34.42 | 41.30 | 1.88 | 19.98 | 0.06 |
| Pearson PLC (PSO) | 05/06/2010 | 14.32 | 16.83 | 1.79 | 17.50 | 0.16 |
| Nokia (NOK) | 05/14/2010 | 10.35 | 10.78 | 1.64 | 4.16 | 0.16 |
| Harris (HRS) | 06/07/2010 | 45.65 | 47.56 | 2.17 | 7.13 | 0.08 |
| Beckton Dickson (BDX) | 06/23/2010 | 70.20 | 83.20 | 2.53 | 18.52 | 0.10 |
| NYSE EuroNext (NYX) | 10/22/2010 | 30.38 | 32.38 | 1.97 | 6.58 | 0.15 |
| Owens & Minor Inc. (OMI) | 10/22/2010 | 28.11 | 29.77 | 1.81 | 5.91 | 0.08 |
| Encana (ECA) | 11/8/2010 | 29.22 | 32.23 | 1.96 | 10.40 | 0.10 |
| Nucor Steel (NUE) | 1/21/2011 | 44.96 | 44.55 | 2.03 | (0.92) | 0.12 |
| Cash | 42.24 | |||||
| Total Portfolio | 5.22 | 2.70 |
Below is a summary of transactions during the year:
| Stock | Buy Date | Buy Price | Sell Date | Sell Price | % Gain (Loss) | % Portfolio Return* |
| GSK Jan 2011 35 Put | 1/22/2011 | NA | 3/26/2010 | NA | NA | 0.14 |
| NUE Jan 2011 40 Put | 1/22/2011 | NA | 3/26/2010 | NA | NA | 0.17 |
| ADP Jan 2011 40 Put | 1/22/2011 | NA | 6/21/2010 | NA | NA | 0.10 |
| COST Jan 2011 55 Put | 1/22/2011 | NA | 8/16/2010 | NA | NA | 0.10 |
| Realized Gain/(Loss) YTD | - | - | - | - | - | 0.51 |
- % Gain/Loss Relative to Portfolio Value at Beginning of Year + Deposits
- The table assumes realization of profits associated with selling options only after the option is exercised or expiry.
We have covered calls written against one-third of our ICICI Bank (IBN) shares (Jan 2012 55). We also have cash covered puts on Ameritrade (AMTD) shares (Feb 2011 15), Cisco (CSCO) shares (Jan 2012 20 at $2.64), Berkshire Hataway (BRK.B) shares (Jan 2012 75 at $7.15), Itron (ITRI) shares (May 2011 60 at $6.90) , Quality Systems (QSII) shares (June 2011 60 at $5.50), Noble Corporation (NE) shares (June 2011 33 at $2.62), Abbott Labs (ABT) shares (Jan 2012 45 at $4.40), Johnson & Johnson (JNJ) shares (July 2011 60 at $2.47), H&R Block (HRB) shares (Jan 2012 10 at $1.60), Alcoa (AA) shares (Jan 2012 15 at $1.70), and Nutrisystem (NTRI) shares (June 2011 17 at $1.30) with a cash coverage requirement of about 44% of our cash position.
We added Almost Family (AFAM), K12 Inc (LRN), 3M Company (MMM), and GOL Linhas (GOL) to our watch list while removing AgroFeed (FEED), Caterpillar (CAT), Cresud (CRESY), Nutrisystem (NTRI). Caterpillar & Cresud were removed as they returned well above 40% each while in our watch list thereby increasing the valuations. AgroFeed (FEED) along with Nepstar (NPD) went the other direction and the performance was ~40% down – Chinese micro-caps have low valuation but continue to underperform due to other concerns. Our updated watch list follow – Almost Family (AFAM), Applied Materials (AMAT), Air Products & Chemicals (APD), Brown-Foreman (BF-B), BHP Billiton (BHP), Disney (DIS), Darden’s Restaurants (DRI), GOL Linhas (GOL), Goldman Sachs (GS), Home Depot (HD), K12 Inc (LRN), McDonalds (MCD), 3M Company (MMM), China Nepstar (NPD), Pitney Bowes (PBI), Procter & Gamble (PG), Rovi Corporation (ROVI), UPS Corporation (UPS), VF Corporation (VFC), and Waste Management (WM).
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