Portfolio Update - April 2017

       The month of April is now behind us. The price per barrel of crude oil is currently trading below $50.  The oil patch in Western Canada has picked up some, but no where close to it was prior to September 2014.  In Sept 2014, the price of oil was around $95 per barrel for a barrel of WTI Crude Oil.  With the price hovering around $50.00 per barrel, the energy stocks are are trading low and some are struggling to be profitable.

        Last month, I wrote about selling puts in Home Capital Group (HCG.TO) at a strike price of $25.00. I bought to close the 2 put option contracts to reduce my losses. It ended up with a loss of around $355 dollars.

       Was this my last stake in Home Capital Group? I am afraid not.  I got my tax refund back and put the refund in my TFSA.  So with approximately $1200 in my TFSA, I bought 65 shares of HCG.TO at $18.00.  The stock rose a bit and I tried to sell, but the stop limit order was triggered but the stock did not rise up to the limit price I wanted to sell.  The day ended and I still owned my shares.  Prior to the open of the markets the next day,  HCG.TO announced an intent to have a $2 billion line of credit with an interest of approximately 15%.  See, HCG.TO is in the mortgage business.  So people deposit money in saving accounts and interest is paid to these savers.  HCG.TO then lends this money out by writing mortgages at a higher interest rate. Savers have been pulling there money out at record levels in the past month. This company is being investigated by the Ontario Securties commission, fired there new CEO,  and had directors resign.  The stock closed Wednesday at $5.99 per share.

        Back to my postion at $18.00 per share.  When I woke up the next day the stock was trading at $8.00 per share. I set a limit order at $7.00 to sell.  I changed my order to a market order when it was trading at $7.30 per share. As we all know market orders get filled right away.  This did not happen. So I cancelled the market order and made a new one. Still nothing happened.  Then went to Yahoo Finance and typed in the ticker symbol, which said the trading of the stock was halted.

     When the trading resumed of HCG.TO, the sell order was filled at $7.28 but then apparently a buy for 65 shares was executed.  I then placed an order to buy 25 more shares of Dream REIT in my TFSA.  After this order for $D.UN.TO  was filled, I noticed my cash balance in my TFSA was negative by approximately $500.00.  This fiasco of HCG.TO did not show up in my trading confirmations or account summary.  My brokerage Questrade said it seems that order for HCG.TO went through when it was not suppose to go through.  As of April 30, they never got back to me yet.  

      The 25 new shares of D.UN.TO was filled at $19.45 for a total of $491.29 including commissions. D.UN.TO currently pays an annual distribution of $1.50 per unit. This purchase adds
$37.50 to my annual dividend income.

     I wrote previously about wring 2 cover call contracts on Rogers Communications Class B shares (RCB.B.TO)  with a strike price of  $60.00 per share.  I thought my position was safe as RCI.B never traded above $60.  Then earnings was announced on April 18. They stock has risen in value, and I did not want the covered calls to get assigned. I bought to close my covered calls for a loss. 

     On a positive note, my short put in TD.TO expired worthless.  The strike price of this put was $64.00.  I am own 100 shares of TD.TO.


Shares Acquired Through DRIP


3 Unit of D.UN.TO @ $20.0035 for a total cost of $60.01 (Margin Account)

1 units  of CUF.UN @ $14.6435 for a total cost of $14.64 (TFSA)

Please note, that the DRIPs inside my margin account and TFSA are synthetic drips which indicate the distribution or dividend must be enough to purchase whole shares. 

I received the dividend payment of my shares of Bank of Nova Scotia (BNS.TO) with the transfer agent on April 26. It takes a few businesses to show the price of the shares and the amount of new shares.  As of the time of this writing, I do not know the price of reinvestment and the amount of new shares.

As of April 30, the value of the portfolio is $104236.43 . This is a 1.186%  increase over last month's total.  The spreadsheet in the investment tab above has been updated.

 Disclosure:   Long RCI.B, TD.TO, BNS.TO, D.UN.TO

Please Note:  All stocks are from the Toronto Stock Exchange.

DISCLAIMER

I am not a financial planner, financial advisor, accountant or tax attorney. The information on this blog represents my own thoughts and opinions and should NOT be taken as investment or business advice.

Every individual should do their due diligence to make their own financial decisions based on their financial situation and tolerance for risk.

Why Diversification Is Important?

         When most of us started to think about investing, we are told to diversify our assets.  New investors tend to gravitate towards mutual funds as they provide instant diversification. A mutual fund is where money from investors is invested by professional money managers according to the mandate, also know as the objective, of the fund.  If you are like me, you try to buy individual stocks.

         Over the past year or so, a company is Canada has been under hot water. This particular company is called Home Capital Group Inc  (ticker symbol HCG ) and trades on the Toronto Stock Exchange. 

      

Home Capital Group Inc. is a holding Company and operates through its principal subsidiary, Home Trust Company. Home Trust is a federally regulated trust company offering deposit, mortgage lending, retail credit and credit card issuing services. Licensed to conduct business across Canada, Home Trust has offices in Ontario, Alberta, British Columbia, Québec, Nova Scotia and Manitoba. (Source : Home Capital Website ) 

    HCG has had a lot of negative events over the last year or so. Some of these are as follows:

• On Feb 10, HCG discloses that the Ontario Securities Commission sent an enforcement notice after the market closed on Feb 9, 2017
• On March 14, HCG discloses that legal and regulatory matters in regards to the issue immediately above.
• On March 27, HCG announces the departure of their CEO which occurred over night. This CEO was in the position less than a year.
• On April 19, 2017 HCG releases a statement on the Ontario Securities Commission intention to pursue an administrative proceeding against the company and 3 individuals. These 3 individuals are Martin K Reid, former President and CEO, Gerald M. Soloway, former President and CEO and currently a director of the Company, and Robert Morton, the Company's Chief Financial Officer.
• On April 24, HCG annouces the pending retirement of Gerald M. Soloway and appoints Robert Blowes as interim CFO.

Click to Enlarge

        The above chart is a one year chart.  The stock as dropped over 50% in value over the past 365 days.  The dividend was increased over this time span.

Click to Enlarge

      

     HCG is down 44.16% since the start of the calendar year.  I recently sold puts at $25 strike price and bought to close for loss of $353.90, which you can read about here.  On April 24, you can see the stock dropped 9.09% during which they announced the pending retirement of the current director Gerald M. Soloway.  

     This stock over the last year  shows why stock market investors need to diversify.  An investor would be out a lot of money if they bought the stock 6 weeks ago or before 6 weeks.  I do believe HCG has to do more to lessen the fears of investors and to right the ship once again. 

    Diversification helps you sleep at night.  I am sure a lot of investors are worried about where the stock price is heading.  Canadian investors can diversify in Canada, although the degree of diversification does not compare to the US Market. 

DISCLAIMER

I am not a financial planner, financial advisor, accountant or tax attorney. The information on this blog represents my own thoughts and opinions and should NOT be taken as investment or business advice.

Every individual should do their due diligence to make their own financial decisions based on their financial situation and tolerance for risk.

Trading Account Update

As previously stated on this blog, that I have started a trading account with a balance below $1000.00.   I started to add $50.00 every two weeks but that has stopped due to a recent job loss.  The following table shows my stats from the start of 2016:

                                 # of trades :                34
                               Total Capital added:    $250.00
                               Trading Acct Balance:  $3732.82
                               Average Drawdown:   $49.97
                               Average Loss:             $52.02
                               Average Accuracy:    85.29%
                               Average Risk:              $61.02
                               Average Reward:         $105.96
                               Average R/R :             1: 1.736

        I have been trading penny stocks, stocks, REITS and options.  Any dividends that will be received from this account will stay within the account. The accuracy rate is high. Does this mean that I am a super trader? No it does not.  The risk to reward ratio states of every $1.00 of risk there is reward of  $1.736.  Ideally, a trader should aim for a 1:2  risk to reward ratio which causes the accuracy rate to be lower.

      The drawdown above is inter-trade drawdown.  This type of draw down is the dollar amount the trade moves against you.  Why is it important to keep track of inter-trade drawdown?  It helps you know if you are picking good entry points.  It is normal for trades to have inter-trade drawdown. 

Note:  The trades are listed under the Trading Tab above with all the trades listed as of April 21, 2017.

DISCLAIMER

I am not a financial planner, financial advisor, accountant or tax attorney. The information on this blog represents my own thoughts and opinions and should NOT be taken as investment or business advice.

Every individual should do their due diligence to make their own financial decisions based on their financial situation and tolerance for risk.