Saturday, March 5, 2016

Why I sold some $BNS and some $SU

Hey Financial Freaks,

Well, yeah, my first two moves of March consisted of selling small portions of two of my main holdings : Suncor (SU) and Bank of Nova Scotia (BNS).

This is a rare move on my part since I am (or pretend to be) a buy and hold investor. I still think the best way to make money is too hardly make any moves at all -- apart from b
uying obviously.

This is why I feel I have to justify these two moves.

First, Suncor (SU).

This is a stock I have been holding for more than 5 years, never minding all the ups and downs. Suncor is the best old integrated company in Canada. But I, like most oil investors, remain cautious about the present situation. This sector is clearly facing headwinds. It remains too see if the company can maintain its current dividend policy. The stock is now yielding at 3,44%. This is pretty high considering other peer companies have had to slash their dividends. Another question mark : will the acquisition of Canadian Oil Sands put the dividend in jeopardy? Maybe.

Last month, I bought 30 shares of SU at around 27$ I was then trying to average-down my cost-price. It worked. Recently, the share price went back up (around 34$). This stock then crossed the 5% weight in my portfolio next to other big names like Royal Bank (RY), Johnson and Johnson (JNJ) and Power Corporation (POW). Given the current state of oil prices, I thought it would be wiser, especially in my RRSP, to diminish a little bit my exposition to oil.

This is why I decided to sell 25 shares of SU at 33,85$. This adds 836$ for other buys. It also means I have to withdraw (25 X 1.16$) 29$ in dividends from my Passive Income.

I still hold 225 shares of Suncor. This stock accounts to more than 4,67% of my portfolio.

Second, Bank of Nova Scotia (BNS).

This is purely a move meant as rebalancing my portfolio as well as my exposition to the financial sector in general.

I sold 20 shares of BNS at 59$, so at approximatively my cost-average price. This provides me with 1 169$ for other buys. It also means I have to withdraw (20 X 2.88$) 57,60$ in dividends from my Passive Income.

Like I said, I still very much like this stock. It remains part of my big five. I just felt I held too many shares and the weight vs my portfolio was too great at 6%. How did I get to 6%? I kept buying and buying as the stock was dropping to average down my cost. I ended up owning 170 shares worth more than 10K$!

I now hold 150 shares of Bank of Nova Scotia and I intend to keep them for a long time. This stock accounts to more than 5,49% of my portfolio.

What do you think about my move? Was I too cautious ? Should I have been more patient even though the stocks represented big chunks of my portfolio? Hit me with your best shots if you think I was a fool. I can take it ! ;-)




6 comments:

  1. It not common to see bloggers write posts about shares sold so this makes a great change :). I can see from your point of view why you trimmed down your positions in both SU and BNS. Rebalancing your portfolio is important and there is no reason you should not take profit once in a while - even as a buy and hold investor.

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  2. Thanks mate! Yeah, selling is not very popular indeed. I didn't take a profit in this case. I simply just rebalanced. But it doesn't mean I can't take profits from time to time. Thanks for passing by UK friend! Good luck over the #Brexit thing.

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  3. Interesting moves... I can understand getting out of Suncor after 5 years, especially since a dividend cut seems all but inevitable. It's hard to imagine the situation improving in the short term (or even the long term).

    As for BNS.. I'm a little surprised considering their recent (surprise) increase in profits.

    It's true, you don't see very many posts about sales.. thanks for sharing :)

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  4. Hey GoGoAssets! I'm not out of SU. I still own a big chunk of shares and I'll see where it goes from here. Same for BNS. I just sold a tiny bit. It still is part of my Big 5. All in all, it was more a question of rebalancing. Thanks for your comment mon ami!

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    1. Yeah sorry, I misread that part of your post about Suncor. I thought you had sold all of your Suncor stocks. I was actually reading up some more on Suncor today as well, and apparently it's unlikely they'll be lowering their dividend, which is good news. You can never tell right? If only we had crystal balls ;)

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  5. Yeah, good news for me and all of Suncor's shareholders. Take care mon ami!

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Thanks a lot for your comment.