Earlier this week I purchased shares of five separate companies: Match Group (MTCH) and 3M (MMM) were new additions to the family portfolio; Under Armour (UA) and Novo Nordisk (NVO) are positions that were reinitiated after waiting for a month to pass and avoid wash sale status (I harvested short-term capital losses); Proctor and Gamble (PG) is a position to which I added new capital.
Match Group is a small position in our portfolio (roughly 0.38% of total assets), but as a leader in an industry poised for growth I expect the position to grow as a percentage total assets. The company was recommended by the Motley Fool and I am intrigued by the company’s impressive margins.
The capital committed to 3M was just under one percent of the portfolio and provides reliable dividend income and the opportunity for capital gains. An industrial conglomerate best known for making Post-it Notes and Scotch tape, 3M is a dividend aristocrat that I intend to hold in our portfolio for many generations.
Under Armour is an exciting company which I am glad to bring back to our portfolio. Kevin Plank is a leader I am happy to rally around, and, after reading “Shoe Dogs” by Phil Knight, it is easy to compare him to the founder of Under Armour’s top rival, Nike. The new position in UA is a smaller position (1% of assets compared to almost 2% before we sold the initial stake) to allow our portfolio to be more diverse across industries.
Novo Nordisk is another position that has rejoined our portfolio after a month away. The leader in treating diabetes, I like NVO’s future prospects and, while out of the position, we were fortunately not hurt by the poor reception to the company’s most recent earnings report and guidance. Though more volatile than 3M, NVO is another company that helps me sleep well at night.
Adding to the position in Proctor and Gamble allows me to increase the portfolio’s exposure to the consumer defensive sector without the burden of owning another company. I appreciate PG’s renewed focus on its core brand through sales of ancillary businesses, and like its dividend aristocrat counterpart, 3M, I plan this position to be a cornerstone of our portfolio for many generations.
Portfolio Overview and Direction Moving Forward
With the new commitments of capital the portfolio’s cash position has approached my target of 15% of total assets; see the chart below. I have broken out Berkshire Hathaway into its own sector because Burlington Northern, Berkshire Energy, and other non-financial subsidiaries have become such large portions of the business I find it more informative to separate Berkshire from the financial services companies.
A more thorough analysis of the portfolio is forthcoming, but large legacy positions in Wells Fargo, JP Morgan Chase, and U.S. Bancorp remain 18.5% of the portfolio. Despite a recent resurgence in its stock price, I still plan to trim our position in Wells Fargo (currently 10.7% of assets). More capital should be available within the next four months as a few fixed income positions are due to be called; I plan to initiate new positions in companies in the Consumer Defensive and Healthcare sectors; to provide more upside potential, I am also interested in small positions in high growth companies new to the portfolio.
