Review of Argus Model Portfolio Changes For November (MDT, EPD, KRFT, MDLZ, FE, ADI, ED, HPQ, HCP, ACN, CAKE, UTHR, PAY, JCP)
For equity-income portfolios, i.e. dividend portfolios, the changes were to add Medtronic Inc. (NYSE: MDT) with a 3.5% portfolio weighting and to add to the existing position of Enterprise Product Partners L.P. (NYSE: EPD) for a 4.1% weighting. Now that the break-up has been exacted, Argus is recommending for profits to be taken in shares of Kraft Foods Group Inc. (NASDAQ: KRFT) and Mondelez International Inc. (NASDAQ: MDLZ). Argus is also recommending that the position in FirstEnergy Corp. (NYSE: FE) be liquidated entirely.
For the growth and income portion of the model portfolio, the changes were as follows: purchase Analog Devices Inc. (NASDAQ: ADI) for some 3.5% of the portfolio and to purchase Consolidated Edison Inc. (NYSE: ED) for 3.1% of the portfolio; it recommends selling all of the position in Hewlett-Packard Co. (NYSE: HPQ) position and also to sell all of the HCP Inc. (NYSE: HCP) position. Argus recommended selling one-fourth of a position in Accenture plc (NYSE: ACN).
As far as the mid-cap growth arena, Argus made the following changes: purchase Cheesecake Factory Inc. (NASDAQ: CAKE) for a 2.9% weighting and to purchase United Therapeutics Corp. (NASDAQ: UTHR) for a 3% weighting; shares of VeriFone Systems Inc. (NYSE: PAY) and J.C. Penney Company Inc. (NYSE: JCP) are listed as positions which should be liquidated entirely.
Implied yields for each of the income-oriented additions are as follows:
- Analog Devices, Inc. (NASDAQ: ADI) at 3%;
- Consolidated Edison Inc. (NYSE: ED) at about 4%;
- Enterprise Product Partners L.P. (NYSE: EPD) at 4.7%;
- and Medtronic Inc. (NYSE: MDT) at 2.2%.
Unfortunately, a couple of these positions have not turned out too well. Hewlett-Packard Co. (NYSE: HPQ) has been a disaster with a loss of 60% since it was added to the portfolios in November 2010. The addition of United Therapeutics Corporation (NASDAQ: UTHR) was also earlier in October when the stock was at $57.00 versus Friday’s close of $45.25.
As a reminder, these are model portfolios and each asset group of equity-income, growth and income, and mid-cap growth each represent their own portfolios or asset classes.
JON C. OGG