Happy New Year. We start a new year with hope that the investment decisions we make will lead to positive outcomes, hopefully this year, but if not then at some point in the future. The year has started off with a bang as the markets around the world have surged and continue to set records. This month I did not add any new positions, but added to existing positions.
Added to position in Nutrien (Ticker: NTR)
Nutrien is the newly formed product of merger between Potash Corporation of Saskatchewan (which I used to own) and Agrium. Agrium has been on my List for some time as I think it is a best of breed agriculture business. The merger now allows me to own what I think are two of the best run and managed agriculture companies out there. I still believe with more people in the world shifting upward to the middle class, the demand for high quality food will increase and fertilizer products like potash and phosphorus will seen robust demand. Since the new company started trading in early January, the stock has been going down so I decided to buy a little more to average the costs down which are now at about $68/share. The potash space is starting to show some semblance of life after being in a trough for the past few years as China and India have had bargaining power to keep unit prices low. The company has indicated that this may be changing, which could be good for the stock in the future.
Added to position in Imperial Oil (Ticker: IMO)
Oil prices have slowly been creeping upward and are now in the $60-65/barrel range. Companies like Imperial should be in a better position to generate stronger Economic Profit. The stock hasn’t been moving much in tandem so I thought it would be a good time buy some more shares and lower my cost base which is now down to $42/share. A pressure point for Imperial may be issues with getting oil to market given bottlenecks in the pipelines and distribution. Imperial should be able to work through these problems and create a good margin going forward. A big driver of rising oil prices has been a weaker US dollar and if that dynamic remains, then oil prices could track up even higher which should be good for Imperial stock at some point.
Added to position in Spider US Financials ETF (Ticker: XLF)
As the new year begins, more signs that the Mad King is very intent on rolling back many financial regulations which are not great for consumers but great for financial companies and stocks. I decided to buy the XLF basket of US financial stocks as I really don’t have the time to do a deeper dive. It’s been a good investment decision so far as the position is up almost 15 percent on US$ basis. I think this deregulation drive by the Mad King, while I don’t agree with it and it can encourage the same bad behaviour that delivered us the Financial Crisis of 2007-08, there is short-to medium-term opportunity for this space to grow. Add to this interest rates tracking up which is means bigger lending margins for the banks. Good for stock prices.
Sold shares in Nike (Ticker: NKE) for a 22.5% gain (factoring in currencies)
On a US$ basis I was up 26.8%. I decided to sell my position (I still own a small position in another portfolio) on valuation as it crossed my expected return threshold of 20 percent. I decided given the insanity of the market that I’m ok to bank some profits. I like the business and it looks the doubters in the company that were screaming loud have quieted down. Long term I think Nike has the potential to own the ecosystem for sports apparel. I’ll be keeping the stock on my List and I’ll be happy to buy back in if a lower price point presents itself.
It’s nice to start the year off with a positive investment decision outcome. Gives a little bit of confidence as we move forward. All in all a pretty pedestrian month.