There are companies that tend to always trade with significant premiums. Sometimes it’s because of the undisputed quality and 3M Company sure fits that description. Today however we saw significant drop in the share price after slightly lowered guidance. I wasn’t really planning to buy anything especially since I already increased my stake in Philip Morris but since this is a rare occasion, I decided to open a new position with a purchase of 20 shares for 199,80 USD per share. This barely fits under the debt balance limit I’ve defined in my strategy but barely is enough in this case.
I’ve been thinking about my Philip Morris position for quite some time now as it has been quite modest but there really hasn’t been any great possibilities to steal additional shares with cheap enough prices. Today they reported results and, despite quite OK results, the share price tanked over 12%. This presented a situation where I had to make up my mind. It has plenty to love as a company: it’s an addiction business with strong R&D with their heated tobacco line. They do business outside of USA which perhaps provides some protection from legal issues. Though it should be noted that the very same protection might hurt in short term should they build a business out of weed as it’s probably going to happen first in the US. Factoring in all this I decided to buy additional 25 shares for 88 USD per share.
Small maintenance purchase as I bought 40 Loudspring shares for 1,478 EUR per share. This is a high risk position which I intend to build up with extremely small orders. It’s difficult to value a company such as this as there’s not much data available from the companies they own. Therefore I’ll keep the position small and will analyse the results in 10+ years.
First quarter was red one and surprisingly full of event as the trade war rhetoric increased towards the end of the quarter. Other than that there wasn’t really major changes in the portfolio – mainly unplanned Apple and Citycon purchases, exits from General Mills and Yara and move into portfolio maintenance mode. In general these events have been the long awaited for market correction – on personal level that is. Global economy will be hurt from such stupidity but it’s robust enough to survive the way it always has. Meanwhile we are getting closer to valuations triggering once again multiple purchases. Let’s see if we get there during the next quarter, until then I’ll remain in maintenance mode.
Dividend income increased quite nicely from 929,31 EUR to 1 224,73 EUR (before taxes). This consisted of new purchases but also from quite solid dividend increases from existing positions. This dividend income together with new capital has reduced the portfolio debt quite quickly. If there are no surprises I expected to eliminate portfolio debt during third quarter.