HalalDividend @HalalDividend: "Dear Copiers and Followers, I have..."

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Dear Copiers and Followers, I have recently opened three new positions in $BKR (Baker Hughes Company), $FCX (Freeport-McMoRan Inc) and $MSCI. Baker Hughes is an engineering company primarily serving the oil and gas sector, though their expertise extends to other areas as well. With a PEG ratio of 0.5, it’s currently an attractive investment. Freeport-McMoRan is a copper mining company that should do better with rates coming down. $MSCI (MSCI Inc) is a financial sector data analysis firm. While its growth potential isn’t high, I wanted to boost our financial exposure, and MSCI is a solid choice. Please note that I was not expecting much growth from $SPGI (S&P Global Inc) either. I closed the $HD (Home Depot Inc) position and reopened it with a larger commitment. I may do the same for other positions if I decide to increase their weighting. Many PIs open multiple small positions, which can clutter portfolios. This approach should make copying easier for you. Home Depot has been sluggish due to high interest rates, but with the FED signaling a shift toward monetary easing, it looks like a strong long-term play. Now, let’s talk about two positions I recently closed. $PSA (Public Storage) became non-compliant due to insurance premium and interest income reported in their latest 10K (December 31, 2023). Although total revenue grew 7.9% year-over-year, insurance revenue outpaced that growth at 8.13% due to new properties (while same-unit premiums only increased by 3.7%). Additionally, interest income tripled year-over-year, largely driven by higher rates from the FED. It doesn’t make much sense to me to consider interest income for a company with debt (it does to Zoya). Combined, these items now account for nearly 6% of PSA’s revenue. I was optimistic that new unit revenue would offset this ratio, but the latest 10Q (ending June 30, 2024, released July 30) shows that insurance premiums are still rising due to expansion (same-unit premiums still 3.7%). PSA remains a good company, and this revenue growth is a positive for them. However, it no longer aligns with our criteria, so I sold the position. I don’t have a replacement lined up yet, but hopefully, we’ll be able to include it again in the future. $NSC (Norfolk Southern Corp)’s debt ratio was hovering around 30%, and I was watching to see if it would improve. Unfortunately, it has worsened (now at 34%), so I decided to exit and replace it with $CNI (Canadian National Railway Co), which has a more manageable 20% debt ratio. It is difficult to find a company in this sector with low debt. Thanks to @chorfan007 for reminding me to review these. $VALE (Vale SA-ADR) has just turned non-compliant with 31% debt ratio. It has been falling for a while due to 3 aspects. 1- Iron demand has slowed especially with China’s real estate, 2- Internal problems within the company (damn dam issues) 3- Brazil has seen a change in leadership. With valuation going down, due to these, and other, reasons, dividend kept increasing. Currently, Vale has a whopping 12% yield. Despite high yield, payout ratio is only 58%. Once again, let’s wait a quarter to see if Vale can pull itself up. $PCH (PotlatchDeltic Corp) has just turned non-compliant as well. It is one of the small market cap plays I had. If the trend continues for another quarter, we will close the position. Don’t be too concerned by the recent volatility. With rates at these levels, I’m actually surprised we haven’t seen more. A pullback could be around the corner. If FED does 25 basis points, we might have "why not 50?" drop, if FED does 50 basis points, we might have "oh, is labor market that bad?" drop... Declining prices could give us the chance to pick up some of our favorite stocks at a discount. I will be ready to add more names if that happens. Future is never certain though. Happy Investing, Mehmet

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