Portfolio structure

Before I get to my valuation of Vivendi and the reasons I decided to buy it I want to go over how I am structuring my portfolio now.

I have structured my portfolio into two different categories: Long term value holds which I intend to hold for years and hopefully decades. The second category is special situations which as of right now I am mainly learning about spin offs, but eventually hope to include some bankrupt/distressed debt, right offerings, etc and plan to hold for 6 months to 3 years.

Current portfolio list from previous post and my plans for them:

Stocks that I bought without doing valuation or as much research as I am doing now:

Intel (INTC) Long term value hold. This was where I started to do what I am doing now.

Philip Morris (PM) Long term value hold. One of my highest conviction picks along with Intel and Vivendi in the long term section.

Altria (MO) Long term value hold, like the potential of the smokeless tobacco segment and their stake in SAB Miller.  I am worried about their high amount of debt though.

Kinder Morgan Management (KMR) Likely long term value hold.  Bought before their merger with El Paso.  Worried about the debt.  Most likely going to keep position at least for a while to see how the new merged entity plays out.

Main Street Capital (MAIN) Long term hold with high monthly dividend.

Vodafone (VOD) Long term value hold.  Wish I would have done the valuation on this and waited till it was a bit cheaper but like the dividend that it is the biggest phone company in the world. Most important non core asset is they own 45% of Verizon.

Universal Insurance Holding (UVE) not sure what to do with this one yet. Greatly under valued, by my estimate has $6.40 net cash per share with full dilution of options, and I get a minimum value of $9.85 per share, current price is $3.68 per share.  Normally that would lead me to buy more shares but now that I have done more research on the company a few things worry me. First obviously is Florida and the hurricanes that hit there every year.  Second and most importantly I had a couple questions for their IR department which were pretty straight forward and easy questions to answer and they wouldn’t answer them for me, which bothered me more than the hurricanes. So conflicted on this one.

Got kind of lucky with most of the above in that I bought them when they were selling cheaper than what they should be selling at. Now for the not so lucky portion with the old way of what I was doing.

Taseko Mines (TGB) holding for now and waiting until November to see if their Prosperity mine is approved, if it is I am going to likely sell, hopefully at a small profit, will reassess at that time if I am going to hold or not.  Bought way overpriced, but like future potential in the mines they own and aren’t operating yet.

Have already weeded out other previous overpriced and bad stocks that I would have never bought with the valuation and research I am doing now, again at a total loss of around $600. Live and you learn.

Now onto the two companies with my new philosophy of doing things and what my new philosophy is.

Undervalued by at least 50% for long term holds, at least 25% undervalued for special situations. Some kind of catalyst involved or catalyst that I can predict might happen Examples: Big time value/activist investor involved, strategic review, spin off, etc. Insiders are buying or already own a big chunk of the company. Some kind of sustainable competitive advantage for the long term holds, bonus for the special situations. Will continue to add to this list above. Low debt and a lot of cash.  Investment does not have to reach all of the criteria above but the more the better.

Dole (DOLE) Spin off potential and grossly undervalued by my estimate.  Company is under strategic review right now deciding on whether they want to sell assets or do a spinoff or spinoffs to get their debt under control. Will give my valuation, reasons for buying into them, and risks in future post.

Vivendi (VIVHY) Long term hold, possible spinoff situation as well.  My next post will be my valuations of Vivendi, reasons for buying, and risks.

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