Month in Review – August 2017

Our total investable assets are just scraping the $400K mark, which puts us right about where we were at the end of 2016.

I think that’s pretty darn good consdiering we put $60K into a new house shortly thereafter.

To be right back where we were 8 months after a major purchase like that feels pretty good. Sure a strong stock market helps, but you’ll notice that the delta between the market value and the total invested has only expanded by a couple grand.

It’s mostly savings.

Anyway now that August is over, let’s talk about it!

Portfolio Summary

Metric

End of August 2017

End of July 2017

Total Invested

$381,168.69

$373,504.08

Market Value of Total Invested

$396,595.06

$388,486.64

Allocation % – Equity

48.58%

44.62%

Allocation % – Bonds

14.37%

13.65%

Allocation % – “Other”

4.14%

3.84%

Allocation % – Cash

32.41%

37.43%

Income Assets – Invested

$201,414.61

$182,562.46

Income Assets – Market Value

$204,026.05

$185,065.70

Projected Annual Income

$12,037.99

$11,626.86

Invested Yield

5.98%

6.37%

Market Yield

5.90%

6.28%

Stock Purchases

5 stocks purchased. 1 is a new position, 4 are additions to existing positions; projected annual income increased by $571.80 based on current dividends.

08/04/17 – EAD: 100 shares purchased @ $11.73/share. This is part of the ongoing construction of my CEF portfolio and was an increase to the 416 shares I already owned in the inherited IRA.

 Annual projected income is increased by $82.20/year based on the projected annual dividend of $0.822/share.

08/04/17 – SBUX: 100 shares purchased @ $57.00/share. Since Mrs. Wizard already owned SBUX shares, this is technically an addition to our existing position. This was the result of an option assignment. I sold the contract at the end of July figuring that if earnings were disappointing and I got stuck with the shares, I would at least pick up the dividend as well.

And that’s what happened.

Annual projected income is increased by $100/year based on the projected annual dividend of $1.00/share.

08/07/17 – DIS: 17 shares purchased @ $106.58/share. This was a limit order that was executed in Mrs. Wizard’s ROTH IRA, so I didn’t twitter about it.

She’s usually very good at having a couple cocktails and coming up with the perfect limit order that gaff fishes the bottom of the share price movement. This one didn’t work out as well as the others.

Technically this is a new position for the Wizards, although I’ve been playing around with DIS put options this month as well, and posted an investment thesis.

Mrs. Wizard’s investment thesis is that she’s very bullish on racism in the current political climate.

Annual projected income is increased by $26.52/year based on the projected annual dividend of $1.56/share.

08/17/17 – DSW: 200 shares purchased @ $17.50/share. Again, Mrs. Wizard already owned 66 shares of DSW in her ROTH, so we’re adding to this position.

This was the result of an options assignment. Observant readers will be confused by this, because I twittered that I had rolled this position forward:

 Actually it turned out that I had been assigned the shares a day before expiration. I didn’t notice this because I didn’t read my Interactive Brokers messages, so I went ahead with the trades I would have needed to “roll the position” (bought back expiring puts, and sold new ones a month out).

Then I noticed that I didn’t need to buy back the expiring puts since they’d been assigned. So I closed the long put position for a nominal loss, but kept the new short puts open since I still like DSW at $17.50/share.

The $0.3781/share I mentioned in the tweet takes into account the extra long put silliness. I decided to just say that I rolled the position because I didn’t know how to explain what really happened in 140 characters. Don’t believe everything you read on twitter I guess.

Annual projected income is increased by $160.00/year based on the projected annual dividend of $0.80/share.

08/25/17 – EAD: 300 shares purchased @ $8.555/share. This is part of the ongoing construction of my CEF portfolio and was an increase to the 500 shares I already owned in the inherited IRA.

Here’s the tweet about it. Pretty cute right?

Annual projected income is increased by $203.08/year based on the projected annual dividend of $0.67692/share.

Choose the Form of the Destructor

Last month, I purchased 2 LEAPS put options with a $25 strike for $13.75425:

On August 10, our idiot in chief almost started a nuclear war and the VIX spiked like crazy. So did UVXY, as it’s designed to do. But a funny thing happened to the LEAPS puts. They went up also.

That’s not how it’s supposed to work, but this is a goofy trade.

The only people trading UVXY LEAPS puts are doing the same thing I’m doing. So when volatility spiked, everyone went out to buy UVXY LEAPS puts, which pushed the price of the premiums up.

I have to admit, even as a careful observer, I was buying too:

That $31 put still hasn’t really made any money yet (even though it’s now in the money), but the lower strikes I bought in July were pretty profitable, so I sold them:

All UVXY put trades are documented in the “UVXY” tab of the Dividend Income Tracker, and all future trades will also be documented on the twitter.

For the uninitiated, I am shorting UVXY because it is the worst ETF ever. I use long put positions so I can avoid the use of margin and do these trades in tax-advantaged accounts.

Additional exploits can be found here, here and here.

Pay Days and Raises

Dividend Income Tracker is published here at the mothership and has been updated.

Total investment income of $1,745.77 with a taxable total of $19.53. We’ll call it 12 “pay days” with 35 individual payments received.

Options premiums represent $448.87 of that total.

Capital gains made up $877.66.

Which leaves $399.71 of actual bona fide dividends (and $19.53 of P2P lending interest).

Lending Club

Lending club income is aggregated into a single income record for simplicity’s sake. It actually arrives as a lot of small payments over the course of the month.

One more loan was charged off this month, although my net income was still positive in spite of that loss. That brings the number of bad loans we’ve invested in to a total of 7 out of 179 or ~3.9%.

Month over month we have the same number and distribution of “late loans”: 1 in the grace period and 2 officially late.

I said last month that I was expecting a reckoning. Somehow it hasn’t happened yet, which is weird.

Month

In Grace Period

Late (16 -30 days)

Late (31 – 120 days)

Charged Off (aggregate)

January 2017

1

1

4

1

February 2017

4

0

2

2

March 2017

2

0

2

2

April 2017

1

0

2

4

May 2017

0

2

3

4

June 2017

1

0

3

5

July 2017

1

1

2

6

August

1

1

2

7

This should be fun to track. This table will grow with each monthly update.

Lending club’s algorithm is suggesting I should write down $47.08 worth of principal for the loans that are late or in the grace period, but as the eternal optimist, I’m going to continue to wait until the loans are actually charged off to recognize the loss.

That is slightly up from what it suggested last month ($44.94), but it represents nearly the full amount of principal currently in the 31-120 days late category, so I guess I shouldn’t hold my breath on those.

I started a new experiment buying late notes on the secondary market at a discount. I’m still figuring out the details of that strategy and how I’m even going to keep track of the successes/failures, so for now that’s left out of the monthly income summary. Stay tuned though. There is more to come from that.

Comparisons

Month over month, investment income was up 147% compared to $707.88 in July. Year over year also represented a strong improvement, up  88% from $927.66 in August of ‘16.

The capital gains from UVXY and the WFM sale to Amazon were a big part of that.

Raises

Two of the dividend distributions received represented a raise:

OHI paid $0.64/share, which is a $0.01 (1.59%) increase over the previous quarter. That is 20 consecutive quarters that the company has increased its dividend, which is mind-boggling. The forward dividend represents nearly an 8% yield on last week’s closing price. Is it time to be worried?

CAT paid $0.78/share, which represents a $0.01 (1.30%) increase over the previous quarter. The distribution had been stuck at $0.77 since July of 2015, but thanks to mid-year raises, the company maintains its streak of calendar year increases and is now on the cusp of champion status with 24 years of raises.

So that’s the month that was. How’d you do in August?

8 thoughts on “Month in Review – August 2017

    1. Hey DD!

      Yest it was a very busy month overall. Just trying to get the puck closer to the goal.

      Thanks for visiting and commenting.

  1. I’d say you are in a good position with $400k after using $60k for a house. Just goes to show how strong the market has been when you can siphon off some cash and see it replenished in a relatively short amount of time. Nice to see some SBUX coming your way as well. That’s a new position for me and quite small for now but I plan to add to it over time. Keep up the good work!

    1. Thanks DivHut. I appreciate you visiting and commenting.

      I am very bullish on SBUX, and excited to finally get assigned a put after over a year of selling contracts that kept expiring out of the money.

      I expect their mobile ordering and loyalty program initiatives to continue to drive same store sales growth, while international expansion into China should continue to increase the store count.

      Add those growth prospects to a healthy, conservative balance sheet and gobs of free cash flow yield, and it’s a no-brainer.

    1. Welp I just picked up another 100 shares of $DIS this weekend with my ITM put that expired, so I’m really swimming in it now.

      I’m actually kinda bullish on the ESPN thing. I think live sports should continue to command top ad dollars in online TV. We cut cable a long time ago, but we watch the ESPN app and they have pretty targeted ads based on our IP address location, browsing history etc. It’s creepy but I suspect profitable and they don’t have to share the profits with the cable company…

      Thanks for visiting and commenting!

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