Portfolio: Q4 2020 Review

by The Compound Investor

A new year marks the end of another quarter for both the Micro Portfolio and Coffee Can Portfolio. The last three months of 2020 was clearly a very eventful period for the world and for markets. The successful vaccine trials made the news in November, and that lifted stock prices considerably. The S&P 500 gained a shade over 11.5% in Q4, not including dividends, if my math is right.

Starting with the Micro Portfolio, and it was business as usual in terms of the $20 per stock monthly contributions. That brought the total book cost to exactly $700 as of the end of last year. In terms of Q4 performance, Disney was the standout name. The media giant recorded around 45% in share price appreciation on its Q3 closing price, while energy giant Exxon Mobil (“XOM”) also had a much better Q4 as oil prices gained circa 20%.

That, in turn, helped power the portfolio back into the black. The market value of securities clocked in at just under $790 at the end of 2020, so a circa 12.8% unrealized gain on that $700 of invested capital. The account also received another $4.26 in net dividend cash, up from $1.26 in Q3.

The Micro Portfolio

As for the Coffee Can Portfolio, you will recall that it was heavy in COVID-sensitive names. XOM has been pummeled due to the collapse in oil prices and refining margins, while global brewer Anheuser-Busch InBev (“BUD”) has been hurt by various lockdowns. Both names clearly stood to benefit hugely on any positive vaccine news, which duly occurred. XOM gained around 20% in share price appreciation over Q4, while BUD put on roughly 30%. Telecom giant AT&T continues to be quiet, albeit still pumping out a 7%-plus annualized dividend.

In terms of new additions, Coca-Cola was added right at the end of the period. An initial 15 shares, for an all-in consideration of $815.42, puts the basis at $54.36 per share. I expect at least high single-digits from that over the long run, made up of a 3% dividend yield plus mid single-digit growth. That addition also brought the book cost of the portfolio to just under $9.5k. The account value at period-end stood at a shade under $10k, so roughly 5% higher than book cost thanks to the positive Q4 performance. The account also received a further $95.24 in net dividend cash in the period, up from $44.37 in Q3.

The Coffee Can Portfolio

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