Tuesday, April 9, 2013

I made buys

You know the saying, « do as they say not as they do», well it makes some sense in my case. Not so long after writing that one shouldn't be buying at the moment I turned around and made not only one but two buys. Shocking! 

They were small buys, mind you, if that can salvage what is left of my impeccable reputation. The worst part is that I actually bought some more of Barrick Gold. I am now at a whooping 275 shares. I'm close to own this freakin' company. Watch out! The stock was down to 26$ I had to buy some in order to average down my share price. But that's it, no more Barrick Gold, I swear. Or do I? 

Next move was buying a tiny bit of Power Financial. For people outside Canada, Power Financial is part of a conglomerate name Power Corporation. This is a link towards an actual chart of the organization. As you can see, Power Financial (PWF) overlooks a fair share of exquisite companies that operates in various sectors, such as Finances and Insurances. It also holds a fair share of Parjointco, which holds via Pargesa big stakes in some of the biggest companies in Europe like GDF Suez, Total and Pernod Ricard. Granted, it's not like Europe is doing crazy well at the moment. Still, these are A1 companies. So big names like Great-West, IGM Financial, London Life and so on are all part of Power Financial and, of course, Power Corporation (POW).

The major difference is that POW has a separate branch for Communications and Media (it owns a lot of newspapers in Canada -- almost 80 % of the ones in Quebec). It also holds and actively manages a portfolio of investments in the US, China and Europe. PWF strictly operates within the Great-West, IMG Financial and Parjointco triumvirate, if we can summarize it. The dividend is also a little bit higher than the conglomerate «head of state», Power Corp. PWF has a 1.40$ dividend per share, unlike POW which has a 1.16$. They both yield over 4%.

The fact is, POW et PWF are undervalued. Although they are closely linked, I figured it made sense to split my holdings between these two, especially since PWF bought Irish Life. Some analyst say it's better to hold the actual operator, iPWF in this particular case. Some will say, on the other hand, it's better to hold some shares in Berkshire Hathaway (BRK) than to, for instance, buy shares of Coca-Cola (KO)directly. In this case, you would actually miss out on the KO dividends, since BRK don't have a dividend policy. But you get the point, right? Of course you do. By the way, Forbes once called Power Corp. the Berkshire Hathaway of Canada. Just saying.

So, basically, this new position in PWF means I would like to buy some more of it in the future (if it goes down to 25-26 $) to eventually have a distribution of 35 %-65 % between the two stocks, so roughly 130 shares for PWF and 370 for POW (like I have right now). 

Hence my buys this past week. Do you think I'm nuts?

All in all, I still remain on the lookout, but yet very cautious.Take care fellows.

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