Saturday, October 13, 2007

Investment update

I thought I'd do a quick investment update. I only own shares in 4 companies right now: AAV, GE, PFE, and JNJ (that's in order of investment size, with AAV being the largest).

AAV has done very well and I have had nice returns both in price and in dividends. With oil so high and natural gas prices heading up for the winter, I'm going to hold this position for the foreseeable future. AAV recently bought another energy company called Sound Energy Trust. This is probably a good move since all of the Canadian Royalty Trusts took a big hit in stock price in the last year (which is why I invested to begin with). So AAV is eating up some of the low hanging fruit, which makes them more valuable in the future.

GE has done better than I imagined, up almost 15%. I wrote before about why I liked GE and some of the issues I talked about have already started to bear out. As the Associated Press notes:

General Electric Co.'s profit rose 14 percent in the third quarter on strong global sales of airplane engines, locomotives and other equipment that have led to a record order backlog.

That's fairly obvious, I guess, but it still is nice to know that I wasn't completely off base. They have over $50 billion in their order backlog, which means they have a pretty safe revenue stream for the next few years. I wonder how big their dividend increase will be this year.

Pfizer has recovered a bit from its low, as I suspected. Recently there have been rumors that Pfizer is going to buy the French company Sanofi, which is the 3rd largest drug company in the world (Pfizer is #1). Well, a lot of people think that's unlikely if only because the French government probably wouldn't allow it. But it seems like Pfizer is definitely looking to buy *something*, which is good since it will give them a future revenue stream once their most profitable drugs lose patent protection. Pfizer currently has about $40 billion in cash just sitting around waiting to be used.

Johnson and Johnson has been rising slowly but steadily. I don't have huge expectations for it since it's a very long term play, and I'm happy so far. One of the silly things I do these days is look out for J&J products at the store. I started using Aveeno shaving cream, which is made by them. When I had to restock on band-aids, I eschewed the store brand for the original BAND-AID brand (by J&J). Every bit counts!


stealthy said...

Are you AAV dividends being reinvested each month? or are you receiving the dividend?

Jon said...

Scottrade doesn't do dividend reinvestment, so no :(

But in my IRA they are!

Mrs. Micah said...

So you have to reinvest your own dividends? I suppose it might be nice to have the flexibility if you wanted to add more to your IRA instead of your Scottrade account.

Cblogger said...

Do you just have investments in 4 company stocks?

Sounds like a problem waiting to happen. Why did you not put money into a broad based index? like SPY?

How has your returns compared to SPY over the last 1, 3, 5 years?

Jon said...

Hi Cblogger,

I don't own any index funds because:

1. I do not mind risk, especially since I don't have a lot of money invested.

2. I enjoy doing research on individual stocks, and currently I have the time to do it.

3. I don't think you need to own 500 different companies to be diversified (my goal is to get maybe 6-10).

4. There is too much overlap -- why buy Exxon, Chevron, AND ConocoPhillips when with some research you can just buy the best.

I don't have long term results but so far I'm beating SPY.

That said, as I invest more and more money, and as other things in my life take up more and more time, I probably will begin using index funds, just to keep things simple!