Value Investment Fund – Status on August 31, 2021

Value Investment Fund

“And when the wind did not blow her way, she adjusted her sails.” – Elizabeth Edwards

Although the Value Investment Fund continues to grow, opportunities wane. It has been smooth sailing so far mostly due to an economic downturn in 2020 driven by COVID. Opportunities still existed into late 2020 of which this Fund took advantage. Now I have to add more potential opportunities or growth will amble along. There does not appear to be any storm activity in the near future. The markets indices are all at their all-time highs; there are no negative outlooks from any authority and quite honestly, economic forecasts look robust. Without an economic wide storm, very few potential buys will exist. To counter this, the Fund must expand its selections of pools and the corresponding high quality companies in order to take advantage of an individual company or two falling out of favor with investors.

As stated multiple times throughout the lessons and tutorials, high quality stocks have less risk and thus, resist remarkably well when the market goes down or is stagnant and recover quickly upon market rebound. Furthermore, high quality stocks provide many opportunities to earn good rewards if properly purchased at less than intrinsic value and sold upon market price recovery.

Here is the Value Investment Fund’s status report for the end of August 2021.

Value Investment Fund – End of Month Report

                                                                                                           August 31, 2021           July 31, 2021               August 31, 2021
REIT Pool                                          # of Shares     Cost Basis       Market Price*         Fair Market Value*     Fair Market Value*
    – Equity Residential                            574.459                –                          –                                 Sold                       

    – UDR                                               606.9803                 –                         –                                 Sold                                        
Railways Pool
– No Stock Holdings (All six railroads are at or near their all-time highs)
Banking Pool

     – Bank of New York                        232.9373                  –                         –                            11,723.73                         Sold
.    – Wells Fargo (Tranche #1)                   292.0560             10,000                 45.70                        13,125.00                   13,346.96
.    – Wells Fargo  (Tranche #2)                   558.9715             20,000                 45.70                        25,120.18                    25,545.00
.    – Wells Fargo (Tranche #3)                           234.3292             10,000                 45.70                        10,530.75                    10,708.84
.       Sub-Totals                                                                 40,000                                                  60,499.66                    49,600.80
Dividend Receivables (Wells Fargo)                                                                                                  79.20                         217.07
Cash on Hand (Basis, Gains, Dividends, PUTS)                                                                       103,360.22                  116,018.03
Totals (Starting Cost Basis = $100,000)                      $40,000                                              $163,939.08                $165,835.90

*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 August 12th, the Fund sold 232.9373 shares of Bank of New York netting $54 per share after transaction fees. Net gain earned was $2,578.61. This equates to an annual return of 47%. Original basis invested was $10,000 back in late January, 2021. 

Value Investment Fund – Activity

During the month of August, the following transactions occurred. 

  • Dividends were recorded for Wells Fargo for $217.07;
  • Sold Bank of New York for a realized gain of $2,578.61.

To date, the fund has realized earnings as follows:

Gain on sale of Norfolk Southern                                                          $2,678.26
Gain on sale of Union Pacific Railroad                                                   4,620.06
Gain on sale of Comerica Bank                                                               3,677.40
Gain on sale of Essex Property Trust (06/18/21)                                     7,863.67
Gain on Sale of Equity Residential (07/15/21)                                      17,105.64
Gain on Sale of UDR (07/12/21)                                                           10,956.00
Gain on Sale of Bank of New York Mellon (08/12/21)                           2,578.61
Sub-Total Gains                                                                                    $49,479.64
Norfolk Southern (Nov)                                                                                92.39
Union Pacific (Dec)                                                                                     111.50
Equity Residential (Dec/March/June)                                                      1,039.20
Essex Property Trust  (Dec/March)                                                             294.58
Comerica Bank (Dec)                                                                                  251.57
UDR (Jan/April/July)                                                                                  658.87
Bank of New York Mellon (Jan/May/July)                                                 223.62
Wells Fargo (Feb/May/August)                                                                   387.27
Sub-Total Dividends                                                                               $3,059.00
Sale of PUTs 
Expired PUTs (See Prior EOM Reports for List)                                     1,592.16
Union Pacific (Feb @$155/Sh) Expires January 20, 2023                       1,769.23 – Market price is currently at $218.76.
Norfolk Southern (March @$190/Sh) Expires January 21, 2022                335.07 – Market price is currently at $256.16.
Sub-Total PUTS                                                                                      $3,696.46
Total Realized Earnings                                                                      $56,235.10

Total dividends earned in Year Two year-to-date equals $3,059.00. Realized earnings and dividends receivable plus $60,000 of the original $100,000 of basis equals the total capital available ($116,235.10) for investment in other securities. In effect, the Fund now has a very strong cash position at $116,018.03. Almost all of the available options for investment are at or near their all-time highs. Thus, without more available selections, the Fund will have difficulty with good returns in 2022. 

© 2021 – 2022, David J Hoare MSA. All rights reserved.

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