Purchased 114.9557 Shares of Union Pacific

From my Lessons Learned article posted a few days ago, I stated that I needed to have greater dispersion with my buy/sell trigger points in my model. Last year I wrote that my buy/sell triggers for Union Pacific were a 17% market price decrease from the prior peak and to sell at 100% of prior peak. This year, I reset those points to:

  • Buy Point – 18% market price decrease from prior peak
  • Sell Point – 102% of prior peak

On 10/16/2020 around 2:40PM the market price peaked at $210.95 per share. This means my buy/sell points are as follows:

  • Buy Point – $172.98 
  • Sell Point – $215.17

At market opening this morning, the price dropped past the $172.98 to a low of $171.66 at 10:01 AM. However, my orders are prearranged and thus, I purchased 114.9557 shares of Union Pacific at $173.98/share including trading costs of $1 per share. Thus, I now have a $20,000 position with Union Pacific.

Altogether, the Value Investing Fund has two pools currently. The REIT pool has $60,000 invested over 3 stocks and the Railways pool has $40,000 invested between Norfolk Southern and Union Pacific. None of the other four railways are close to the preset buy/sell trigger points.

As of this morning (11:30 AM), the Value Investing Fund has the following values:

REIT Pool                               # of Shares                    Cost Basis              FMV
– Equity Residential                    574.459                        $30,000             $26,654.90

    – Essex Property Trust             48.9644                         10,000                 9,695.93
    – UDR                                    606.9803                         20,000               18,355.08      
       Sub-Totals                                                                 $60,000             $54,705.91
Railways Pool
     –  Norfolk Southern                98.2849                         20,000                19,849.62

     – Union Pacific                     114.9557                         20,000                19,880.44
        Sub-Totals                                                                $40,000             $39,730.06
        Totals                                                                     $100,000             $94,435.97

In addition the fund has $330.40 in the cash account for the PUTs sold on Union Pacific for $170 per share. 

Altogether, this appears not so good; in effect the fund is down $6,000. Its OK though; again, I remind readers that with value investing, the key is to maintain patience. The underlying business ratios tell me that the respective prices will recover to their prior peaks within a reasonable period of time. Now it is just a matter of waiting. Act on Knowledge.

Value Investing

Do you want to learn how to get returns like this?

Then learn about Value Investing. Value investing in the simplest of terms means to buy low and sell high. Value investing is defined as a systematic process of buying high quality stock at an undervalued market price quantified by intrinsic value and justified via financial analysis; then selling the stock in a timely manner upon market price recovery.

There are four key principles used with value investing. Each is required. They are:

  1. Risk Reduction – Buy only high quality stocks;
  2. Intrinsic Value – The underlying assets and operations are of good quality and performance;
  3. Financial Analysis – Use core financial information, business ratios and key performance indicators to create a high level of confidence that recovery is just a matter of time;
  4. Patience – Allow time to work for the investor.

If you are interested in learning more, go to the Membership Program page under Value Investing section in the header above. 

Join the value investing club and learn about value investing and how you can easily acquire similar results with your investment fund. Upon joining, you’ll receive the book Value Investing with Business Ratios, a reference guide used with all the decision models you build. Each member goes through three distinct phases:

 

  1. Education – Introduction to value investing along with terminology used are explained. Key principles of value investing are covered via a series of lessons and tutorials.
  2. Development – Members are taught how pools of investments are developed by first learning about financial metrics and how to read financial statements. The member then uses existing models to grasp the core understanding of developing buy/sell triggers for high quality stocks.
  3. Sophistication – Most members reach this phase of understanding after about six months. Many members create their own pools of investments and share with others their knowledge. Members are introduced to more sophisticated types of investments and how to use them to reduce risk and improve, via leverage, overall returns for their value investment pools.

Each week, you receive an e-mail with a full update on the pools. Follow along as the Investment Fund grows. Start investing with confidence from what you learn. Create your own fund and over time, accumulate wealth. Joining entitles you to the following:

  • Lessons about value investing and the principles involved;
  • Free webinars from the author following up the lessons;
  • Charts, graphs, tutorials, templates and resources to use when you create your own pool;
  • Access to existing pools and their respective data models along with buy/sell triggers;
  • Follow along with the investment fund and its weekly updates;
  • White papers addressing financial principles and proper interpretation methods; AND
  • Some simple good advice.

Value Investment Club

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