The stocks I bought and sold during April and June of 2018

An April - June 2018 update on positions I bought and sold

Published on:
July 6, 2018
Written on:

About The Author

Noam Ganel, CFA is the founder of Pen&Paper, a value-oriented, contrary-minded journal of the financial markets. Noam worked as a Vice President in Capital Markets at Silvergate (publicly traded on NYSE under SI since Nov-2019.) At SI, which he joined in 2010, Noam was responsible for advisory services to family offices,  private companies, and financial advisors.

In this article, I detail my activities in the stock market over the past three months. I explain why I bought and sold certain common stocks and how my stock portfolio performed in comparison to the return of the S&P 500 index.

Comparison to the S&P 500

The market value of my portfolio is $40,906 compared to my cost basis of $39,018. This represents an appreciation of 4.8% on my cost basis and a difference of 6.1% compared to the S&P 500. I will remind new readers that to track the S&P 500 index, I bought one share of VOO, an exchange traded fund by Vanguard. I paid $253 for the ETF in the last week of 2017, and as of the second quarter of this year, it is worth $249.  Including the $1.51 of dividend I received, the S&P 500 index declined by 1.50%.

While my portfolio return is not impressive, it is not a poor one either. As a comparison, In a talk to the CFA Society of Switzerland, Guy Spier noted that over the past two decades, after fees, he had beaten the S&P 500 by an average 2.0%. And if you read his letter to shareholders, you will observe the tremendous effect that 2% achieves - that is, over a long period of two decades.


200 shares of Patterson Companies (PDCO) at $23.54. The company operations suffered over the past few quarters, but on a 5-year basis, I thought the company had done reasonably well. I bought the stock because of relative valuation: it traded at a multiple of less than 10 times the earnings, while over the past decade, the earnings multiple ranged from 13 to 19 times.

I am interested in purchasing in companies with a business model that is independent of the economy cycles. I believe Patterson meets that definition, as it distributes dental and veterinary products. You can read more about the position in The one advantage of short term thinking? A cheap stock price

200 shares of Caesarstone at $15.32. I started to purchase Caesarstone in December of last year. At that time, I thought it a bargain at $23 per share. While the Quartz-manufacturer had little debt, it showed deteriorating operating margins which capital markets felt were unforgivable. With the additional purchase, my cost basis is now $17 per share which is less than 10 times the 5-year average earnings of $1.90 per share. Read more about Caesarstone and what I saw in its common stock in My romantic love story with Caesarstone.      

500 shares of Orchids Paper Products at $4. While Wall Street analysts often ignore discussing micro companies - defined as companies with a market capitalization of less than $50 million - yours truly found Orchids to be of quite the interest. The 2008-2017 average earnings per share was $1.15 and Orchids did not report on a single loss over the past decade. I felt my position was safe from any principle loss, even if Orchids was bought by a competitor at a discount to book value. That is because my cost basis is less than 70% its book value. If you don't listen to Wall Street wisdom, I suggest you read about Orchids in Capital markets have reason, which reason does not know.


20 shares of Terra Nitrogen at $84, compared to a cost basis of $80. In the second quarter of this year, Terra purchased all its outstanding shares at $84 and delisted from the New York Stock Exchange. My preference would be to hold the stock for a few years, but Terra apparently did not care much for my opinion. I wrote about this in Terra in Greed in Times of Fear: The Case of Terra Nitrogen in October of last year.     

500 shares of Carver federal savings bank at $6, compared to a cost basis of $3. To my knowledge, there is no apparent rationale for the sudden, unexpected increase in the stock price. I bought the position 8 months ago because I thought Carver could easily improve its operating financials. But it is impossible that operations improved that quickly. Because Carver lends to non-profits – a tricky business to be in - I happily got rid of the entire position. Read the aptly named article from July of last year: If You Need Excitement and Cheap Thrills, Going Long on Carver Federal Savings Bank May Do the Trick.

100 shares of Independence Realty Trust (IRT) at $9 compared to a cost basis of $9, and 50 shares of Hudson Pacific Properties (HPP) at $34 compared to a cost basis of $32. I bought both stocks in October of 2016. While the companies were a decent place to place cash, I wanted to reduce the number of companies in my portfolio.   


This quarter, I was paid a total of $217 in dividends from 9 companies. On a portfolio level, some company’s dividend yield was 3% (DKS, SRG, GE), but for some it was 14% (mainly, CB&L Associates). I expect to receive about $800 in dividends in 2018, which is a 2% dividend yield. While dividend payout policy does not guide my stock investing, it is a comforting, reasonable yield. The annual yield on a Certificate of Deposit in comparison, is roughly 2%. 

A few housekeeping notes

I encourage you to join the Reader Community to receive premium content about stock investing. To 5 subscribers over the next quarter, I will send copies of “The Intelligent Investor.” If you haven't read it, - by far - it is the best book on investing.

By subscribing, you will join a reader base that includes institutional money managers, private wealth advisers, and students of finance.

As it is one of my goals to better explain the world of stock investing, I encourage you to write to me if you have questions.  

Ask Me Anything