Raising Cash, Selling Dead Weight

Over the last two weeks I sold a couple of things. First, as I mentioned in my articles, I sold my small position in Johnson & Johnson (NYSE: JNJ). It's getting well above its average valuation and I wanted to lock in those gains.

I also sold half of my position in Aflac (NYSE: AFL) in a different account which I manage. I'd been long Aflac for several years, and as the company nears its ten-year average valuation, I've lightened up some and raised cash. I am still long Aflac and, in fact, I think it might have some more gains ahead of it.

I've also been selling some "Dead weight" in legacy energy positions. I got rid of a tiny position in Kinder Morgan Inc (NYSE: KMI) which was lingering in an IRA which I manage for myself. Glad to be rid of that. Also, I sold a legacy position in Mid-Con Energy Partners (NYSE: MCEP). Frankly, I don't believe things are looking too well for that name if crude oil is going to remain in the 40s long-term, which looks increasingly likely. I may put some of the remaining capital into Williams Partners (NYSE: WPZ), or I may just hold onto the cash.

In this environment I am valuing cash more and more, and raising it where I can. There are some good values out there, such as AbbVie, British Telecom, Williams Partners and IBM, but I personally do not have much dry powder, so I am inclined to hold onto the cash I have at this point.

Sold KMI, bought EPD

On Friday I swapped out Kinder Morgan Inc (NYSE: KMI) for Enterprise Products Partners (NYSE: EPD). As I mentioned on Seeking Alpha, I believe that Enterprise is much better capable of maintaining its dividend in this difficult time. The reason is twofold: 1) Higher coverage ratio and 2) A much more manageable maturities schedule.

Kinder Morgan's dividend is likely going to be cut in half or just eliminated altogether, because the company has not only very significant capital needs but also a swath of maturities coming due, each year, through 2020. Enterprise has far fewer maturity commitments coming due, and Enterprise has substantial cash flow in excess of dividends by which to pay debt down or fund projects.

In short, I have evacuated to higher ground. I took a big dividend haircut on this, but at least I live to fight another day.

Some Major Moves This Week

This week I made some big moves in an IRA that I manage. I liquidated two positions and rearranged the proceeds into three. Here is what I did:

1. Sold all shares of Home Properties (NYSE: HME). I've held onto this apartment REIT for several years, but the company recently sold out to private equity at $75 per share. When I sold, shares were $73 or thereabouts. Home Properties was already a little above fair value, and with the mini-pullback, last week there were a good number of stocks well below fair value, so it was really time to sell. I got in at the $50s and am happy to have logged a nice capital gain in addition to the generous dividend.
2. Sold all shares of Occidental Petroleum (NYSE: OXY). I originally got into Oxy believing that there was significant upside from the breakup of that company. Then the oil crash happened. I expected Oxy to rise to $140 some. I got in at $100 and now it's under $70. I chalked it up as a victim of the bear market in oil. Time to put money in better places.
3. I put roughly 40% of the proceeds into Kinder Morgan Inc (NYSE: KMI). I never thought this pipeline would yield 5.6%, but sure enough it now does, and I increased my position in this company by 60% or so. Kinder Morgan Inc is now the second largest holding in my portfolio just behind AT&T.
4. I put the other 40% of the proceeds into Ventas Inc (NYSE: VTR). I've been adding to my Ventas position here overtime. While Ventas isn't the screaming deal Kinder Morgan is, this name is still undervalued and I am happy to get that dividend at 4.8%-4.9%. I'll take it. Ventas is now my third largest position in this IRA.
5. I put the remaining 20% of proceeds into ConocoPhillips (NYSE: COP). If I'm going to be in an E&P, it might as well be the best one. I doubled my position in Conoco and it is now the fourth-largest holding in this IRA. 

 I made these moves to either shift into better value or cut out of a thesis that was not working. All-in-all, this move significantly increases my dividend income as Kinder Morgan, Ventas and ConocoPhillips each have yields significantly higher than that of Home and Oxy. 

I Bought Ventas Yet Again

To anyone who may regularly read this 'finance journal,' I apologize for being boring. Well, actually, no, I don't apologize for it. Finance is often at its best when it's not exciting. 

Anyways, on about the 26th of June I went ahead and bought Ventas (VTR) yet again for an account that I manage. This senior living medical REIT yields over 5%, and as long as that yield stays there, I will continue to not only recommend this stock but will buy it as well.

Some other 'runners up' that I gave serious thought to were:

ConocoPhillips (COP) and Kinder Morgan Inc (KMI). However, all of my portfolios are still overweight energy, and so I went with Ventas.