Many of you will recall that I used to track a portfolio here on ModernGraham.Â Unfortunately, the last time I checked the portfolio was November 6, 2006.Â As a result, I’ve decided to start over.Â This mock portfolio will be based on $100,000, and will be entirely based on companies I feel strongly about and strategies I have in mind.Â On the first Thursday of every month, I plan on reviewing the portfolio and making any changes that seem necessary.
You can see the portfolio in this google spreadsheet.
When constructing the portfolio, I began by deciding on asset allocation.Â I knew I wanted to stick to companies that we have in our database with a target allocation of 10% per company.Â However, I also feel that the market is currently well overbought and I am hesitant to put much into equities.Â As a result, the first decision I made was to start out with 50% in bonds.
Specifically, I am a fan of the iShares Barclays 10-20 year treasury bond fund (TLH).Â I believe this is a strong bond fund to invest in at this time and hopefully it will hold up well once the market starts coming back down.Â I started with a purchase of 312 shares of TLH, for a cost of $35,034.48.
Next, I wanted to invest the remaining 15% of the bond portion.Â I am a fan of high yield bonds – and the iShares fund for that is HYG.Â Currently it yields about 9%.Â It tends to move with equities so it isn’t a great place to diversify away, but I like the yield too much to stay out of it.Â I purchased 173 shares for $14,938.55.
On to the equity portion.Â I’m a big fan of National Presto Industries (NPK).Â I absolutely love their balance sheet, history of growth, and dividend rate (about 6.4% yield).Â I bought 115 shares for $9,948.65.
Olin Corp (OLN) is another great company.Â Strong balance sheet and another strong dividend (about 4.5% or so).Â I have concerns about their earnings, but I think they can bounce back from a rough 2009.Â I bought 573 shares for $9,993.12.
Emerson Electric Company (EMR) is an intriguing prospect.Â It looks a bit better on the defensive investor side than the enterprising investor, because of a current ratio below 1.5.Â However, it is strong everywhere else.Â I bought 250 shares for $10,020.00.
B&G Foods Inc (BGS) was next.Â Probably the riskiest company of the 5 I have in this portfolio.Â Good balance sheet, but questionable earnings.Â Hopefully it will hold up and do well.Â It has a nice dividend that I hope will not be cut (about 8.3%).Â I bought 1221 shares for $9,999.99.
Finally, I bought International Shipholding Corp (ISH).Â Another potentially risky choice, ISH had some negative years in the last 10 and failed to pass the defensive investor tests.Â However, I believe it has found stability and like its 6.5% dividend.Â I bought 325 shares for $10,013.25.
That’s it for this portfolio update.Â Next month we’ll see how these have done and possibly have some transactions to either rebalance or change allocations.
Photo provided by zzzack.