Value Investment Fund – January 31, 2022 Results (Monthly Report)

Value Investment Fund January 2022

This site’s Value Investment Fund easily beat all major indices during the month of January 2022. This is due to the primary principle of risk reduction tied to investments. When a value investor buys a security at less than intrinsic value, there is dramatic resilience against continued losses or sudden market downturns. In effect, there is less volatility. The value investor does give up instantaneous value growth due to the greater than normal stability of the respective investments. However, when you buy low and wait patiently for the market price recovery, the returns are still considered outstanding. Again, expect returns above 30% on average per year. Do not expect returns greater than 40% as again, these are highly stable companies and well respected; thus, their market prices will rarely deviate dramatically in either direction.

Value Investment Fund – End of January 2022 Report

                                                                                                         January 31, 2022        December 31, 2021       January 31, 2022
REIT Pool                                          # of Shares     Cost Basis       Market Price*         Fair Market Value*     Fair Market Value*
   – No Stock Holdings (All six REIT’s are at or near their all-time highs)
Railways Pool
– No Stock Holdings (All five railroads are well above intrinsic value)
Insurance Pool
.   – No Stock Holdings (All five insurance companies are at or near their all-time highs)
Military Contractors Pool
.    – Huntington Ingalls Industries         112.9943             20,000               186.20                     $20,987.56                      $21,039.54
Banking Pool
.    – Wells Fargo (Tranche #1)                   292.0560             10,000                 52.80                      $13,720.79                      $15,420.56
.    – Wells Fargo  (Tranche #2)                   558.9715             20,000                 52.80                        26,260.48                        29,513.69
.    – Wells Fargo (Tranche #3)                           234.3292             10,000                 52.80                        11,008.79                        12,372.58
.       Sub-Totals                                                                  40,000                                                 50,990.06                        57,306.83
Dividend Receivables                                                                                                                        -0-                                   -0-
Cash on Hand (Basis, Gains, Dividends, PUTS)                                                                         97,579.94                        98,153.04
Totals (Starting Cost Basis = $100,000)                      $60,000                                              $169,557.56                     $176,499.41

*Net of transaction fees of $1.00 per share; thus the amount in the schedule equals the actual market price per share at closing less $1.00 per share.

On 01/14/2022, the Fund’s end of week balance hit the highest point during January 2022 at $182,329 reflecting the dramatic improvement tied to Wells Fargo; read Wells Fargo One Year Report for additional clarification. Wells Fargo stock price peaked at $57.08 net of fees to dispose.

During the month of January, the Fund did sell PUTs on Huntington Ingalls Industries to earn $573.10 net of fees. This was immediately added to the cash balance. Also, during January, PUTs sold in 2021 on Norfolk Southern Railroad expired. Thus, the current exposure related to PUTs is as follows:

  • Union Pacific Railroad – purchased in Feb 2020 with a strike price of $155/share and an expiration date of January 21, 2023                 $20,000
  • Huntington Ingalls Industries – purchased in January 2022 with a strike price of $170/share and an expiration date of June 17, 2022      $20,000

Market prices on January 31, 2022 are:

  • Union Pacific Railroad                           $246.00  (Strike Price of $155.00)
  • Huntington Ingalls Industries                 $186.20  (Strike Price of $170.00)

Overall, the Fund is performing very well heading into the balance of 2022. As noted in the Wells Fargo one year report, if the Federal Reserve does increase the interest rates and releases Wells Fargo from the growth penalty, this company’s market share price should soar into the mid 60’s. Currently, it is set to sell at $63 per share and $68 per share once the Federal Reserve releases their penalty. Act on Knowledge.

© 2022, David J Hoare MSA. All rights reserved.

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