Value Investment Fund Status Week 12 – Principles are Working.
During the week ending January 15, 2021, the Value Investment Fund grew a whopping 1.3%. Whereas the DOW reported a slight downward change of .6%. Exceptional growth for the fund was boosted by the results tied to the REITs Pool. REITs grew 5.8% in one week. The principle of patience is beginning to show itself with this pool of investments. Altogether, this pool has expanded $10,226 in 12 weeks off of an investment of $60,000. However, this is an unrealized gain at this point in time. This coming week, all of the REITs will report their 4th quarter preliminary results. If results are positive, the REITs Pool will continue to grow. If results mirror the 3rd quarter, there will be slight drawback of three to four percent. If results are significantly lower than the 3rd quarter, the REIT’s Pool balance will most likely drop back to its basis. Thus, the principle of risk reduction protects the actual core principal with value investing. Based on intrinsic value and the current market conditions, it is unlikely that the REITs Pool of investments will go negative in comparison to the total amount invested to date.
At the beginning of the week, the Value Investment Fund’s status stood at $117,894 (see Week 11 report). On Thursday, the Fund sold Comerica Bank and made a nice return of 18.38% in a mere 35 days as that particular stock soared that day to the market recovery price set in its buy/sell model. In total, Comerica Bank earned $3,929 off a $20,000 investment; this includes dividends earned in Mid-December. This was another successful full transaction. Total realized returns equal $12,855 including dividends in 86 days of a $100,000 starting balance. This is tracking for more than a 40% annual return. The Investment Fund is still adhering to the expected return of at least 34% during 2021.
The current status is as follows:
REITs Pool # of Shares Cost Basis Market Price* Fair Market Value
– Equity Residential 574.459 $30,000 $60.59 $34,806.47
– Essex Property Trust (Tranche #1) 48.9644 10,000 239.52 11,727.95
– Essex Property Trust (Tranche #2) 43.2994 10,000 239.52 10,371.07
– UDR 606.9803 20,000 38.42 23,320.18
Sub-Totals $70,000 $80,225.67
– No Current Holdings
– Wells Fargo Bank (Tranche #1) 292.0560 10,000 31.04 9,065.42
. – Wells Fargo Bank (Tranche #2) 558.9715 20,000 31.04 17,350.48
Dividend Receivables (UDR) 218.51
Cash on Hand (Sales of Union Pacific, Comerica, Options & Dividends) 12,636.27
Totals (Starting Cost Basis = $100,000) $100,000 $119,496.35
*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. Therefore, the total fair market value is net of fees and reflects actual cash in the bank if fully liquidated.
The Investment Fund’s overall status for the twelve weeks to date for the new year against three of the top indices is as follows:
DOW Jones Industrial Average 2.1X Higher
S&P 500 2.0X Higher
S&P Composite 1500 2.1X Higher
Overall, the fund is outperforming the market. One of the core four principles of value investing is patience. Since the COVID-19 vaccine has started distribution to the country, it is just a matter of time to see recovery and acceleration with REIT stocks. While most of the market has already displayed market price recovery from the market decline back in March of 2020, REIT’s have not recovered due to the higher than normal unemployment status nationwide. As this begins to turn positive, REIT investments will accelerate with their market price recovery back to pre-COVID prices. It is just a matter of time.
In addition, the Fund has opened up the third pool of investments with banks. This week saw the sale of Comerica Bank and the purchase of two separate tranches of Wells Fargo stock. The current market price of Wells Fargo is trading at or near $33 per share based on tangible assets. In effect, there is a lot of security against a steep depression or an extended deep depression of the market price associated with Wells Fargo. Wells Fargo reported positive net income for the 4th quarter of 2020.
New Activity During Week 12:
- Sold Comerica Bank and earned $3,929 in 35 days off a $20,000 investment.
- Purchased the Following:
- Essex Property Trust Tranche #2
- Wells Fargo Tranche #1
- Wells Fargo Tranche #2
New Information Released During Week 12:
- Sold Comerica Bank – Earned 18.38% Return in 35 Days
- Purchased Wells Fargo – 292.056 Shares
- Purchased Wells Fargo – 558.9715 Shares
- Purchased Essex Property Trust – 43.2994 Shares
All said, a really good week; time to celebrate a little as patience is beginning to reward the hard work with developing the respective buy/sell models.
As covered in multiple articles and lessons, patience and adherence to the respective buy/sell models within the Value Investment Fund will generate far superior returns with value investing over any other investment model. Act on Knowledge.
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:
- Risk Reduction – Buy only high quality stocks;
- Intrinsic Value – The underlying assets and operations are of good quality and performance;
- 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;
- 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:
- 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.
- 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.
- 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.
© 2021, David J Hoare MSA. All rights reserved.