{"id":68391,"date":"2023-10-03T19:28:13","date_gmt":"2023-10-03T23:28:13","guid":{"rendered":"https:\/\/ifintechworld.com\/news\/my-portfolio-q3-2023-results-cautiously-positioned-heading-into-q4\/"},"modified":"2023-10-03T19:28:18","modified_gmt":"2023-10-03T23:28:18","slug":"my-portfolio-q3-2023-results-cautiously-positioned-heading-into-q4","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=68391","title":{"rendered":"My Portfolio Q3 2023 Results: Cautiously Positioned Heading Into Q4"},"content":{"rendered":"
\n

<\/picture>
<\/figcaption><\/figure>\n<\/p>\n

Q3 2023 Performance<\/h2>\n

In Q3 I returned +7.9%<\/strong> versus -3.0%<\/strong> for the S&P 500 (SPY). In 2023, I’ve returned +21.1%<\/strong> versus +13.4%<\/strong> for the index. I’ve gone from a fairly large underperformance to a sizable outperformance.<\/p>\n

My performance in Q3 was driven by, well, pretty much everything I owned other than Dole. I sold out of PBF and GEL entirely, and sold the chunk of HRB I added at $33.50. I’m back to my highest level of cash ever, but I made several trades this quarter that did well.<\/span><\/p>\n

Closed Positions<\/h2>\n

PBF Energy (PBF)<\/strong><\/h3>\n

With the benefit of hindsight, I closed this too early, selling in late July for $47.50. But, I used the proceeds to buy more Cenovus at $18.8, so it’s been a wash.<\/p>\n

\n

\"3-2-1<\/picture>
\n

3-2-1 Crack Spread (Energy Stock Channel)<\/p>\n<\/figcaption><\/figure>\n<\/p>\n

I’m bearish on refiners right now. Gulf Coast crack spreads are the lower than they were in the spring, when refiners made their yearly lows (PBF went under $32!) The US has added some additional refining capacity, and we’ve added a significant amount internationally.<\/span><\/p>\n

\n

\"Chart\"
Data by YCharts<\/figcaption><\/figure>\n<\/p>\n

Add to this any risk of a global slowdown and further demand destruction via EVs, and I’m happy to take the win here and move on. I’m more bullish on integrated producers or pure E&P’s here.<\/p>\n

Genesis Energy<\/strong> (GEL)<\/h3>\n

This was a miss and with the benefit of hindsight, a reactionary sell.<\/p>\n

I sold out around $9.3, which was my cost basis. I still like the story here, but my disappointment in the Q2 results, coupled with how overweight energy I already am made me decide to cut this position. The overarching part of my investing strategy is “don’t lose money” and I have less conviction in Genesis now than I did previously.<\/p>\n

Current Positions<\/h2>\n

Cash and short duration bond funds (46%)<\/strong><\/h3>\n

Still holding the most cash I ever have held, while opportunistically deploying it for trades. I still believe this is a time to be defensive.<\/p>\n

Cenovus Energy (8%)<\/strong><\/h3>\n

Still holding my position in Cenovus, and remain bullish on the company long term. Cenovus returning 100% of capital in dividends and repurchases is getting closer.<\/p>\n

I’m considering selling calls against this position. Above $20, I think Cenovus management opts for more dividends over repurchases, and the premiums on the call options look enticing.<\/p>\n

Energy Transfer (18%) units (14%) and preferred shares (4%)<\/strong><\/h3>\n

I added a small amount of common units in the low $12’s, and added more of the Series E (ET.PR.E) under $23 back in Q2.<\/p>\n

I still believe Energy Transfer offers a lot of value, but we may start hitting some near-term resistance after such a strong run. I think the common units are worth between $18-$20 and the prefs offer a lot of value for floating rate securities. The Series E prefs start trading at LIBOR + 5.161% starting in May (nearly 11%!)<\/p>\n

Berkshire Hathaway (10%)<\/strong><\/h3>\n

Berkshire Hathaway (BRK.A) (BRK.B) remains an anchor in my portfolio, though its valuation is certainly on the “high end” of fair. After repurchasing the Jan24 $350 call at a 20% profit, I recently sold a Jan24 $380 call with the stock at $365.<\/p>\n

H&R Block (8%)<\/strong><\/h3>\n

This was a 12% position up until a few days ago. I said it was Time to Reload at $33.50, and when shares hit $43.50 late last week, I decided to ring the cash register on the 30% gain in two months.<\/p>\n

Still have a significant position that I don’t plan on selling.<\/p>\n

Dole (4%)<\/strong><\/h3>\n

Still patiently waiting for the Fresh Vegetable sale to close. FCF will inflect when it does.<\/p>\n

JPMorgan Chase (3%)<\/strong><\/h3>\n

I still hold a small JPMorgan Chase (JPM) position from my original $90 purchase price. I’m considering selling this. I don’t love buying banks in general, and I’m negative on the sector. My dislike of the sector is mostly driven by spiking interest rates.<\/p>\n

That said, JPM is the best of the banks and the valuation is very reasonable.<\/p>\n

NuStar Preferred C Shares (3%)<\/strong><\/p>\n

These get safer by the quarter as the company continues to redeem the privately held class D Prefs, and Nustar’s common units have had a good run this year. I’ll continue to hang on to these 12% floating rate prefs.<\/p>\n

Outlook for the rest of 2023<\/h2>\n

In July I said that, with the S&P500 above 4500, that it was a poor time to be chasing stocks, especially when you can earn 5% in Treasuries. With the S&P around 4300, I still think the risk\/reward in stocks is poor, with the bond market flashing warning signs.<\/p>\n

\n

\"30<\/span>
\n

30 Year Treasury (Seeking Alpha)<\/p>\n<\/figcaption><\/figure>\n<\/p>\n

We are running close to a $2 trillion dollar deficit and just ran past $33 trillion in national debt. We are adding this much to the debt during a non-recessionary period with rates resetting higher. I’m old enough to remember when the “National Debt” was a big concern for far more people than it is today, and it’s a far bigger problem today than it was back then.<\/p>\n

This gets solved through a combination of 3 things:<\/p>\n