More Portfolio Changes: BF.B, GOOG

We've made further adjustments to our US portfolio. If the share in our portfolio of any position goes above a certain threshold, we tend to consider selling some of that position in order to realize gains. At the same time we free up cash that allows us to increase a different position or to start a new position.

Brown-Forman (BF.B) had a good run and we sold some of the shares. We bought them in October 2016 at USD 46 and sold them at USD 69.22, a gain of 50.5% in about 16 month which is not a bad result. BF.B is a dividend aristocrat and we believe that they continue to be a good story. Liquor may have ups and downs but long term human mankind always gave in to the craving as history teaches us. They increased the dividend again in fourth quarter of calendar year 2017. On 23 Feb they declared a special dividend of USD 1.00 per share and also a 5 for 4 stock split. The dividend of USD 0.158 declared on the same day is already adjusted for the stock split, so is equal to the USD 0.1975 amount pre-split. BF.B has been paying dividends for 77 years and has increased the dividend in each of the lasts 33 years.

After realizing gains with selling some of our shares in Microsoft (MSFT) and AbbVie (ABBV) and after also selling our entire HCP Inc (HCP) position we used the proceed and some cash to start a new position with Alphabet Inc Class C (GOOG) at a price of USD 1,115.77. Alphabet with Google being it's biggest subsidiary and cash producer has a healthy growth rate of over 20% year-to-year. They are particularly strong in the artificial intelligence (AI) space and are also making very good progress in cloud computing. Obviously the other big guys in these markets are no push-overs. However, with the amount of cash Google produces and with the vast amount of the data they already have and continue to collect they have a lot of training data to make their AI technologies smarter as this additional data comes in. We believe GOOG is a great opportunity to participate in the commercial success of these exciting technologies.

Happy investing!

Disclosure: We hold shares in BF.B, MSFT, GOOG and ABBV. We do not hold a position for HCP. We have no plans to change any of these positions or create new positions in the first 48 hours of publishing this post.

Portfolio Changes: HCP, MSFT, ABBV, DOV, KMB

As of today we have re-adjusted our US portfolio selling one position, reducing two positions and adding two positions. This post outlines these changes.


We sold our HCP Inc. (HCP) position. Initially we bought them many years ago for their status as dividend aristocrats and high dividend yield, which at times was greater than 6%. However, a couple of years ago they somehow got the wrong end of the stick with some of their properties. Those were then spun off as HCR Manor Care. Also, they reduced the dividend from USD 0.5750 per share to USD 0.3700 per share. As consequence HCP lost their status as dividend aristocrat. With an expected growth of funds from operations (FFO) in the single digits percentage, we don't see how the dividend will start growing at a rate that would make it interesting to keep at the moment. At the same time interest rates in the US have already increased. For example the effective federal funds rate increased from more or less zero percent to 1.4% since fourth quarter of calendar 2015 to 1.42% as of 20 Feb 2018. In the same time frame HCP's share price went down accordingly from about USD 33 to USD 22. As the Fed is expected to increase the interest rates at least another 3 times this year, we believe that HCP's share price will continue to behave more like a bond. This means as the interest rates increase, HCP's share price will decrease. We reduced our HCP position over the years, all with a gain, and sold off the remaining ones with a gain of 21%.

We reduced our position in AbbVie (ABBV). ABBV were added to the portfolio in 2016 and have had a very good run since then. We sold the shares with a gain of 84.78%, also taking some money off the table and generate cash. They have increased their dividend in calendar Q1/2018 and then again for calendar Q2/2018. They also have increased their share buy back program. All of this is very positive and encouraging. They remain part of our portfolio with an adjusted position as we think that they will continue to deliver good results.

The other position that we reduced is Microsoft (MSFT). We bought them in 2012 when we realized that their cloud business strategy and their embracing of the open-source ecosystem started to pay off. We believe their success story is not finished but as with ABBV we wanted to realize some of the gains. We sold these with a gain of 237.56%.

With the additional cash available we decided to add two more dividend aristocrats to our portfolio. One is Dover (DOV) and the other position is Kimberly Clark (KMB).

In summary this means that we closed a position that we believe had become a non-performer (HCP) and replaced them with two new positions, DOV and KMB. In addition we reduced two positions, MSFT and ABBV, that had an excellent run to reduce our exposure somewhat.

Happy investing!

Disclosure: We no longer own HCP. We own shares of ABBV, DOV, MSFT and KBM. Apart from what is mentioned in this post we have no plans to change these positions in the next 48 hours of publishing this post.