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Old 02-14-2013, 10:28 AM  
Rain Man Rain Man is offline
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A little thank you to Warren Buffet

On December 21st I was looking for a stock to buy with some extra cash, and I liked Heinz, the ketchup company. It's pretty stable and pays a nice dividend, and I've really liked dividend stocks the past few years. So I bought $5,000 worth. It's gone up a couple of percent over the last couple of months, and I've been good with that since that's a very good annualized return so far.

Today it was announced the Berkshire Hathaway is buying Heinz. The stock is up 20% today. Blammo. I sold out my initial $5,000 worth, left the profit in, and I now have $1,200 of free Heinz ketchup stock for two months of investment.

God, I love America.
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Old 02-14-2013, 05:03 PM   #46
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Do you track the dividends you receive at all? In theory, if I had limitless time, what I'd like to do is track the dividends I get per stock and that way I'd be able to precisely calculate the "real" return on my investment. That isn't a tool that my brokerage firm seems to have, unless I'm missing something.

But it seems like a heckuva lot of work too.
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Old 02-14-2013, 05:08 PM   #47
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Quote:
Originally Posted by Amnorix View Post
Do you track the dividends you receive at all? In theory, if I had limitless time, what I'd like to do is track the dividends I get per stock and that way I'd be able to precisely calculate the "real" return on my investment. That isn't a tool that my brokerage firm seems to have, unless I'm missing something.

But it seems like a heckuva lot of work too.
I've been going back and forth on dividends. My account is with e-trade, and with a bit of work you can tell it to reinvest dividends, which seems like it would make total return tracking easier. Apparently you can get partial shares of stock by doing so.

I've held off because I'm not sure how rounding works when you only have $1,000 worth of a particular stock, but I'm tempted to do it. Right now I'm not tracking dividends at all other than just saying, "Hmm, 3 percent per year means I should add..."

It's a bit of a gap, because I have one stock that nominally has just been break even for the past five years or so. It's up perhaps one percent. But it's an REIT and it pays some ungodly dividend, around 8 or 9 percent. So it's actually been a good stock for me. If I reinvested, I'd eventually sell it even if it didn't appreciate, and I can't figure out if that's a success or not. I think it is, but I'm not sure.
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Old 02-14-2013, 05:19 PM   #48
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I've been going back and forth on dividends. My account is with e-trade, and with a bit of work you can tell it to reinvest dividends, which seems like it would make total return tracking easier. Apparently you can get partial shares of stock by doing so.

I've held off because I'm not sure how rounding works when you only have $1,000 worth of a particular stock, but I'm tempted to do it. Right now I'm not tracking dividends at all other than just saying, "Hmm, 3 percent per year means I should add..."

It's a bit of a gap, because I have one stock that nominally has just been break even for the past five years or so. It's up perhaps one percent. But it's an REIT and it pays some ungodly dividend, around 8 or 9 percent. So it's actually been a good stock for me. If I reinvested, I'd eventually sell it even if it didn't appreciate, and I can't figure out if that's a success or not. I think it is, but I'm not sure.
Right. The dividends paid ought to be part of the increase in value, I'm thinking. If the company announced a special, one-time dividend equal to 20% of the value of the stock, that's no different than appreciation (other than tax treatment I guess) of 20% really.

You could modify the target to 25% if you're including dividends, so you don't undercut appreciation by selling too quickly if you view the stock as having upside when you buy.

REITs and power companies and sin companies (tobacco) seem good on dividends, overall. I did some quick research online and had some weird results. Companies like Lukoil and some mobile telephone company in Brazil. Could be an interesting diversification approach too, since we're all so US-centric... Of course the risk is higher too. Everyone knows GE and AT&T, but Lukoil?!?
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Old 02-14-2013, 05:24 PM   #49
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Back in the old days when we didn't have internet trading, I had a broker, and I remember that he steered me away from REITs. He said that the dividends were good, but that the stock price deteriorates rather than increases over time. Something about depreciating assets. However, I've got two REITs now and they both pay good dividends and have held their own on price. They haven't appreciated, but they've held their own, and that's fine when you get an 8 percent dividend.

And by golly, I think you're right. I'm going to start reinvesting dividends. I've been back and forth on that, but I'm going to do it.
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Old 02-14-2013, 08:32 PM   #50
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Back in the old days when we didn't have internet trading, I had a broker, and I remember that he steered me away from REITs. He said that the dividends were good, but that the stock price deteriorates rather than increases over time. Something about depreciating assets. However, I've got two REITs now and they both pay good dividends and have held their own on price. They haven't appreciated, but they've held their own, and that's fine when you get an 8 percent dividend.

And by golly, I think you're right. I'm going to start reinvesting dividends. I've been back and forth on that, but I'm going to do it.

I view real estate exposure as important for diversity. Real estate can hold up while other segments of the market suffer. Of course, we're all a bit gun-shy having seen what went down in 2007, so real estate isn't impervious to market forces, but still, it can be very resilent compared to many stocks in certain situations.
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Old 02-14-2013, 08:42 PM   #51
DaKCMan AP DaKCMan AP is offline
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Originally Posted by Amnorix View Post
Right. The dividends paid ought to be part of the increase in value, I'm thinking. If the company announced a special, one-time dividend equal to 20% of the value of the stock, that's no different than appreciation (other than tax treatment I guess) of 20% really.
Dividends absolutely should be included in your return. Total return = interest + dividends + capital gains + distributions.

In my investments I have the dividends reinvested.
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Old 02-14-2013, 08:44 PM   #52
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That profit you made of the sale of that stock? You, you didn't build that!
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Old 02-14-2013, 11:07 PM   #53
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I had some stock options that I received as compensation for serving on the advisory board of a start up. I exercised them a couple of years ago. It was a pretty small investment, but the company has attracted $75M in series C investment since then. The start up still isn't generating any revenue, but the paper increase in the stock value would win this thread by a large margin. The chances are this will be a boom or bust investment: it will either grow significantly more than what it has so far or it will be worthless in a few years.
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Old 02-15-2013, 06:56 AM   #54
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I had some stock options that I received as compensation for serving on the advisory board of a start up. I exercised them a couple of years ago. It was a pretty small investment, but the company has attracted $75M in series C investment since then. The start up still isn't generating any revenue, but the paper increase in the stock value would win this thread by a large margin. The chances are this will be a boom or bust investment: it will either grow significantly more than what it has so far or it will be worthless in a few years.

Not that I do alot of VC work, but good luck. The number of busts for every boom is depressing. Even companies that eventually take off sometimes see the early investors get killed. The dread downrounds and dilution that wipe out all that came before the new money (except for management).

Why in the world did you exercise them, unless the option period was about to lapse? Make the 83(b) election, but otherwise, wait and cross your fingers is the normal rule.

But good luck!
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Old 02-15-2013, 07:02 AM   #55
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Originally Posted by Amnorix View Post
Not that I do alot of VC work, but good luck. The number of busts for every boom is depressing. Even companies that eventually take off sometimes see the early investors get killed. The dread downrounds and dilution that wipe out all that came before the new money (except for management).
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Old 02-15-2013, 09:12 AM   #56
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Not that I do alot of VC work, but good luck. The number of busts for every boom is depressing. Even companies that eventually take off sometimes see the early investors get killed. The dread downrounds and dilution that wipe out all that came before the new money (except for management).

Why in the world did you exercise them, unless the option period was about to lapse? Make the 83(b) election, but otherwise, wait and cross your fingers is the normal rule.

But good luck!
They were about to expire.

About the same time they announced the series C funding, they sent me a notice that they were issuing more stock. I assumed that those shares were to provide equity to the series C investors. If I divide the total series C funding by the shares of stock to determine the "market" price of the stock, I do quite well even with the dllution. I'm not sure if that is the right way to look at it or not.

I'm far from counting any chickens but the investors were fortune 500 companies that are leaders in their field. It was a gamble on my part, but it wasn't much money and I knew I couldn't look myself in the mirror if it turned out big and I had passed on it. So far it has done about as well as could be expected but there is still a long way to go.
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Old 03-04-2013, 07:04 AM   #57
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Interesting article: http://online.wsj.com/article/SB1000...k-Picking+Code

It talks about a 'quality' metric for stock valuation. Basically, trying to look at profit margin instead of net earnings. Nothing new, really, but nonetheless.

Quote:
Picking stocks this way isn't something you could pull off on a weekend morning in your pajamas. For each potential investment, you would need to subtract the company's cost of goods sold from its revenue, then divide by its total assets.

In general, says Mr. Novy-Marx, you want that ratio to be 0.33 or higher. You then would look for a low price-to-book-value ratio, available on most financial websites—ideally 1.7 or below. You would have to stick to big companies and diversify across many industries and dozens of stocks.

I just ran this quickly on a couple of stocks I own to see how they compare and may setup a play portfolio to track results based upon this metric vs. other valuation techniques.
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Old 03-04-2013, 12:00 PM   #58
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I have a question... I'm currently in Sprint stock and have close to 1k shares before they announced the sale to Softbank. Softbank agreed to pay $7 something /share for 70% of the shares. What does that mean?

Does that mean 70% of my shares will automatically be $7+ when the deal goes through or what?

Sometimes google isnt my friend.
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Old 03-04-2013, 12:03 PM   #59
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Also.... does anyone play with put or call options? Any luck?

Been researching and thinking about getting in at some point with companies that give a dividends. What are you guys thoughts or experiences?
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Old 03-04-2013, 12:07 PM   #60
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So you invest your money in the Steelers (Heinz) and not the Chiefs (Hunts)?

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