Bell Aliant (BA.UN)

I recently took the opportunity to sell (commission free) my very small amount of BA.UN. I was able to do this through Bell Aliants “Small Unitholder Selling Program”. Bell has decided to allow unitholders who own less than 100 units to “sell all, but not less than all, of their Units without incurring brokerage charges.” You might be wondering why BA.UN would go out of their way and absorb the cost of this initiative...well the answer is easy, money. Bell is anticipating that this initiative will save them money by reduce the administrative burden and cost associated with having so many unitholders. It takes the same amount of administrative resources to issue distributions, annual report etc...to a unitholder with 5 units as it does to one with 200. Well your next question might be “who would buy only 5 units of BA.UN?” well...the answer is nobody. However, thousands and thousands of BCE shareholders were issued units of BA.UN when it was spun off last year. If I remember correctly you received around 7 shares of BA.UN for every 100 shares of BCE that you owned. This resulted in thousands of people receiving a very small amount of BA.UN.

Here’s why I decided to take advantage this offer:

1. BA.UN is an insignificant portion of my portfolio (less than half a percent)
2. Like thousands of others I acquired my shares when they were spun off of BCE.
3. Although I believe the distribution is stable I invest for the long term and don’t see any growth in the landline business.

If you’re interested in selling your units the offer is open until January 17,2008. The official press release by BA.UN can be found here.

ZED - Sold & Lesson Learned

I recently sold my position in ZED for about a 30% loss. If you’ve been following this blog for any length of time you’ll know that ZED accounts for only 0.4% of my portfolio so selling at a 30% loss will certainly not affect my portfolio in any meaningful way. However, my brief foray into speculative, cyclical, micro-caps has taught me a couple valuable lessons.

1.I should stick to large companies that I’m able to properly analyze. Before buying ZED I used the same techniques that I use for large caps. However, with small caps the earnings are often much more volatile and the accuracy of earning estimates is often low as there are usually very few analysts following each name.

2.I have been developing and using a value oriented dividend growth based investment strategy for the past 8 years that has been working successfully for me. I should stick with what I know and continue to invest in what I’m comfortable and successful at.

Sold Barrick (ABX)

I sold ABX yesterday after the large rise in gold prices. I’m the first to admit that I don’t really understand in this day and age what drives gold prices. I originally bought ABX because fundamentally it appeared to be good value and it provided some diversification in my portfolio. Historically gold has always been viewed as a safe haven, a place to park your money during times of uncertainty with the US dollar and during times of political and economic instability. I decided to sell because personally, I don’t think we are in a less stable environment than we were a month ago and I get a little worried when any commodity rises rapidly during a short time period. Additionally, the price move appeared to be driven primarily by funds and investors and not by demand for the physical commodity. This means the price of gold could fall whenever the funds and investors decide to take profits.

Investing in gold stocks is certainly not part of my core strategy of dividend growth. However, whether it’s justified or not investors still flock to gold for safety and then pile out of it when they perceive it’s safe again. I may have sold to early (which is a common theme of mine)... but I guess time will tell. If ABX slides back to the low 30’s I’ll certainly start taking another look at it.

When Do you Sell?

For some stocks I know the answer – never. Companies I own such as TD, GWO, POW, CSH.UN, TRP and PFE I don’t ever plan to sell. Now some of you may be wondering “Why on earth would I plan on holding those to the grave? Won’t there be an optimum time to sell and rebuy?” Well ya there probably would be an optimal time but if your smart enough to figure that out than stop reading this stupid blog, go make a few hundred million dollars and retire in luxury. Additionally, I plan on holding the above stocks for their cashflow. For example, I’m now making 6.1% in dividends from TD (based on my initial buy price 5 years ago). What kind of yield will I be making in 2012? I’m betting significantly higher than 6.1%, not a bad return in my opinion plus the share price has appreciated about 150%. Now compare that to a 10 year government bond maybe 5% (if your lucky).

Now that brings me to all my other holdings. The more cyclical, resource based companies. Historically, I’ve been pretty good at buying (and mediocre at selling) but how do you know when to sell. Who hell the hell knows? But if you want my opinion on it I think that oil and gas stocks are going to be range bound for the next little while. So after writing this I’m going to take a good hard look at TLM and decide if selling some might be in order.

Remember you don’t make anything until you sell and there is no shame in taking a profit.

(Disclaimer: I’m not your boss or your spouse so do you own research and make your opinions on when to buy or sell. Nothing I say should be bastardized or construed in any way to be advice.)