Monday, January 5, 2015

Premium Portfolio Changes

When it comes to investing, I have always liked to experiment with different approaches in an effort to maximize income/return. A prime example of this is my Experimental High-Risk, High-Yield Portfolio, which closed 2014 with a current yield of 5.4% (6.5% yield on cost) and finished just a tad under the S&P 500 with a total return of 14.4%.

Not all of my experimental portfolios have been as successful. One that I have never published and never spoke of was my Experimental Ultra-High Yield Portfolio. As you might guess, this portfolio carried an extreme level of risk. The minimum entry point for a security in this portfolio was a 10% yield. Over time all but one of the securities has failed. In addition to the one that hasn’t failed, I hold one that recently announced a significant dividend cut. As you might expect, the share price plummeted.

As I close out 2014, I plan on shutting down my Experimental Ultra-High Yield Portfolio and transfer the remaining two securities to other appropriate portfolios. The failed security will be transferred to a miscellaneous holding portfolio until I decide to liquidate it. The remaining security that has not failed is a more interesting item. Below are some of its key characteristics

- First purchased in March 2012
- Last Purchase in February 2014
- 9.6% Current yield
- 10.0% Yield on cost
- 2014 IRR: 12.5%
- Lifetime IRR: 13.0%

I plan to transfer it to my Experimental High-Risk, High-Yield Portfolio. It seems to be a perfect fit for that portfolio. You may be asking ‘What is this security?’ It is not a well-know name…

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