September was a strange month in that on several occaisions of the stock I owned was rumoured to be interested in buying another stock I own. I don’t think I’ve ever had that before as it pertains to my stocks. In September I decided to take advantage of some these exuberant moves, both to the upside and downside to further add and take some profits inmy portfolios.
Sold position in Twitter (TWTR) for 36% gain
I originally bought into Twitter as speculative investment and invested minimal funds as I thought their pivot to layer video over their real-time news feed was unique and had some potential. Since I bought it, rumours have been circulating that SalesForce and Google were looking to put offers for the company. Sure enough Disney was said to be interested. Even with no tangible offer the stock popped almost 22 percent which was the highest gain since its IPO a few years back.
I was going back and forth on this one. Do I sell and bank the profit as it had crossed my 20 percent return threshold handsomely or do I keep riding it out and wait for tangible offer and potential bidding war to ensue. I decided to bank the profit as their now seems to be a fair bit of hysteria on the stock. I’m not down on the business. I think their pivot towards layering live video content on top of their twitter feed can be a game changer for the company. The fact they locked up the NFL and other sports leagues as well as teaming up with Apple to get their app on Apple TV could open up serious revenue streams.L Live streaming the US debates was also a new wrinkle. There has already been one false start on buyout rumours and the stock fell back. If there’s another then I may buy back in.
UPDATE: Sure enough the rumours of potential suitors continue to be that, rumours. After I penned this, Disney, Apple, and Google mused that they would not be interested at this point. SalesForce continues to play coy. The stock proceed to fall back almost where I bought in at $16.88. If it gets below there and starts looking at the low to mid teens, I might be compelled to open another speculative position.
Added to position in Disney (Ticker: DIS)
In September the stock dropped to under $92 so I used the dip to average down my costs which are now down from $98 to $95. The company continued to see selling pressure on the stocks as their cable properties continue to see pressure. Despite this I think the company is still the dominant brand in entertainment. If it continues to go downward I would be fine to add to the position. Disney continues to be one of my long term holdings.
Update 1: After I bought more shares, more rumours of Disney making an offer for Twitter. At first I thought this would be a good thing as if there is a good company that has the concept of content distribution down it is Disney but then I thought if Twitter was in the hands of a single media company, could this dilute or even destroy the Twitter brand and value proposition. The cool thing about Twitter is it is not controlled by a monolith media company which enables the content to flow organically and free from editorial bias. This is a good thing and a bad thing, but I think from my experience using Twitter the good has so far outweighed the bad. Then I thought from a perspectivea Disney shareholder how much would they overpay for the stock (assuming I still owned my Twitter shares)? Twitter would benefit more from being taken over by another technology firm like a Google or Apple or even Amazon as the editorial purity would I think remain more intact.
Update 2: Sure enough as I was ponderingthese elements in play, more rumours came out that Disney was not interested in buying Twitter. Maybe they saw the same potential issues I was seeing or maybe they didn’t want to overpayor maybe the culture wasn’t the right fit which is a big deal for Disney.
Added to position in Imperial Oil (Ticker: IMO)
As oil prices treaded water around the $40’s, oil stocks like Imperial were taking a bit of dive. The stock was trading in the $37 range and so I decided totakethe opportunity to buy more stock to average down the position, which is now $43.33 for me versus $51 when started out in December 2014. At some point oil prices I believe will settle in a price range which could be in the $50’s, geopolitical issues not withstanding. With the US election coming, I wouldn’t be surprised to see the US dollar track lower which puts a bit of tailwind for commodity prices.
Added to position in Potash Corp (Ticker: POT)
After I bought more shares in Potash, big news came. The big news in the agriculture industry was the announcement of an agreement to merge between Potash and Agrium. It was presented as a merger of somewhat equals so it wasn’t setup as one company buying another. Agrium is another company I really like and have had on my List for many years, but I never could pull the trigger because I thought it was too pricey. Now if I decide to hold the stock I may end up getting shares of Agrium which is a bonus. At first the stock popped a bit and went as high as $23.76 and I was in a profit position. Over time it has been deflating a bit and is now almost where it was before the merger was announced. The analysts have been scratching their head figuring this deal out because they pretty much don’t see the point. In fact Agrium stock was falling as well. It will be interesting to see if the regulators let this one go down. The precedent with the Federal Government denying BHP Billiton to merge with Potash could give us some clues. On the other hand given what is now the ridiculous offer in the $60’s, you have to wonder if this will be blessed a bit more easily. The story for Potash in the short to medium term is gloomy with potash prices continuing to be depressed. I still maintain that over the long term the fundamentals and socio-economic demographics are there for the company to evolve rather healthy. My cost base is now $22.32.
Added to position in Whole Foods (Ticker: WFM)
The stock broke below the $30 level and was trading in the $28 range so I decided to buy more stock to average down my costs to $29.08. Not much has changed with the company. The company continues to be out of favour by the analysts. The smaller scale 360 stores are slowly going online so all eyes are on if the company can go down market without cannibalizing it's core value proposition.
I'm happy to add these positions and of course I'm always happy to bank some extra cash and from a hindsight perch it looks like it was the right thing to do.