Tuesday, November 20, 2018

Recent Sale / Recent Buy, November 2018

Caffeinated Gremlin here to discuss a recent sale and buy (I never used to drink coffee, then I became a dad... so it happens sometimes).  I have mentioned the sale before, but I am going to give it a brief discussion here.  The proceeds of the sale, combined with new capital, fueled my new stock purchase.  I like to think of the new stock purchase as my Thanksgiving Day gift, to myself.  The spirit of the holiday is being appreciative for everything around you, so I am just showing some love to the portfolio that will build wealth and passive income for me.

The Sale:

I sold out of my General Electric (GE) position about two weeks ago.  GE.  GE has been on a spectacular downward slide, presenting a cautionary tale for both investors and company executives.  The first lesson is to not over expand beyond logical competencies.  The second is do not load up on debt or buy back shares at terrible valuations.  The third is that any company cannibalizing its holdings to pay off debt has major problems.  GE did all three.

Those lessons are generalizations to an extent, but think about a couple of ludicrously stupid red flags that GE presented the world.  The biggest being flying two corporate jets, you know in case one breaks down.  This company is literally known for its jet engines, so this totally inspires confidence.  GE's aviation group, along with healthcare, is one of their strongest arms; but still it is so dumb.  Then the CEO claimed he did not know about the practice; good job.

The other issue was that of GE's TV ads.  Their ads featured a young girl who has a knack for engineering and grows up to be a GE engineer OR a guy explaining all the coding he does for GE locomotives and wind turbines.  Why on earth is a company that sells jet engines, wind turbines, power systems, and large health machines advertising on regular TV?!  People who are buying those items are not influenced by watching TV.  "Ohh I like the GE turbofan, lets put that on our next plane," said Joe the Aircraft designer - approximately zero times.

If you're going to do things like that, what are the odds your company is installing continuously running toilets in the C-Suite so they can flush money down the drain faster?  So I sold out, and put the cash in a better place.

The Purchase:

Yesterday*, I added to an existing position by purchasing shares of Eastman Chemical (EMN) in my taxable account.  I bought 13 shares, with a total cost of $1,067.75 ($82.12 / share, includes commission).  The current yield is 2.7%. For a detailed summary of their history, etc. please visit: EMN's Seeking Alpha Profile.  This is my second purchase of EMN this year, and I am now at approximately 6% of my portfolio in basic materials between EMN, SON, and WLK.  At this point I am maxed out in this sector, but its one that is clearly underrated.  For all the reasons in that earlier entry, plus a better price, I added to EMN.  My total share count now stands at 25 for EMN.

This purchase will add $29.12 to my forward 12 month dividend income, the sale will decrease my forward income by $21.52.  Net is $7.6 gained.

I will update my portfolio page at the end of the month.

What do you think of EMN?

Happy Thanksgiving!
- Gremlin
- Long EMN, SON, and WLK
* - had I waited a day, the price would have been even better.  Time in, not timing, the market.


  1. GE is my biggest dog and I have thought about selling it before the year is up and move on to something else. We'll see if I actually do sell it. In fact this is the first time I'm thinking about selling several stocks before the year is over. I hold a few that pay no dividends from spin offs and figure the money could be put to better use elsewhere. Don't blame you for selling GE. This is why we diversify and hold dozens of stocks.

    1. Keith,

      I feel your pain, and I agree that is why we hold a diverse group of stocks. I had 2 that did not pay dividends, and scrapped them moving all the cash into dividend payers. I feel comfortable owning quality dividend payers, and those non-payers and GE just seem to not fit that bill.

      Thanks for the comment and good luck with GE.
      - Gremlin