Value Investment Fund Status Week 13 – No Change From Prior Week

Value Investment Fund

During the week ending January 22, 2021, the Value Investment Fund was stagnant; it decreased $54 off of $119,496. Whereas the DOW reported a slight uptick of .6%. 

At the beginning of the week, the Value Investment Fund’s status stood at $119,496 (see Week 12 report). During the week, Wells Fargo released its preliminary results for the prior quarter. Even though profitable, overall revenue was down and the company recorded a $781 Million restructuring charge tied to the historical legal issues incurred a few years ago. Thus, the company is positioning itself for improved results in 2021. The share price went down about $1 per share overall. Therefore, all we can do at this juncture, is continue to wait.

The Fund 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             $60.56                      $34,789.24

    – Essex Property Trust (Tranche #1)             48.9644           10,000             242.45                         11,871.42
     – Essex Property Trust (Tranche #2)            43.2994           10,000              242.45                        10,497.94
    – UDR                                                    606.9803           20,000               38.42                        23,132.02      
       Sub-Totals                                                                   $70,000                                              $80,290.62
Railways Pool
– No Current Holdings
Banking Pool

     – Wells Fargo Bank (Tranche #1)              292.0560           10,000                30.90                           9,024.53
.    – Wells Fargo Bank (Tranche #2)              558.9715           20,000                30.90                         17,272.22
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                                               $119,442.15

*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 thirteen 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. 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. This week, it looks like the Fund is going to buy stock in the Bank of New York. The purchase will be made tomorrow at opening of the market. The next article in the bank series will discuss and explain the financial purchase of the Bank of New York.

New Activity During Week 13:

No Activity

New Information Released During Week 13:

All said, just a reasonable week.

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.

Value Investing Episode 1 – Introduction and Membership Program

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

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