Hello all!  I’m super short on time this month, so this is going to be an abbreviated Portfolio Thoughts.

The pullback in the market continues… and I don’t like it… at least not when it comes to my Portfolio value.  Even worse, my Portfolio experienced another dividend cut this month.  My fears with regard to V.F. Corp (VFC) from last month came true in October.  VFC dropped a 70% dividend cut on us at the end of the month… delivering something scary for Halloween.

The sad part is VFC had already cut its dividend earlier in the year (February).  Could there be any other negativity lurking in my Portfolio with other holdings?

I’ll be covering my usual topics for this month’s Portfolio Thoughts post…

• Price Movement – I’ll look at my top advancers and decliners in my Portfolio during the past month.
• Top 10 Review – I’ll update my Top 10 Portfolios stocks and how they changed rank this past month.
• Weightings – I’ll examine the sector weightings within my Portfolio and let you know where I’ve made progress with regard to getting into my preferred weighting ranges.
• Watch List – I’ll share which stocks I’m looking at as I prepare to invest my capital in the coming months.

Here are my Portfolio Thoughts for October 2023…

 

Price Movement

Note – my price changes cover closing prices from 9/29/23 to 10/27/23.

My ratio of stocks with price declines compared to price gains was a tad worse than 3 to 1.  This meant that for my 59 holdings (no longer counting WBA, but not yet counting ENB), 45 moved lower in price, while only 14 moved higher.  This was better than the ratios posted by my Portfolio the last two months, but it felt worse.

Here were the stocks with the biggest moves to the upside and downside…

 

Of my 14 stocks that rose in price, none topped a 20% gain, or a 10% gain (the usual threshold I monitor for).  However, there were 3 stocks with at least a 5% gain – something positive!  October is typically a rough month in the stock market and that held true in 2023.

My top gainers in October were:

• Lockheed Martin (LMT), gaining 8.42%
• General Dynamics (GD), rising 7.82%
• Fastenal (FAST), advancing 5.44%
• Quest Diagnostics (DGX), climbing 4.78%
• American Tower (AMT), elevating 4.58%

 

A pair of defense stocks led the way in October: LMT and GD.  The conflict in the Middle East was a big factor in this upward movement.  LMT was on my worst decliners list last month.

 

Of my 45 stocks that fell in price, one declined more than 20% and another dozen fell more than 10%.  To top that off, yet another 17 stocks fell at least 5%.  It was ugly out there.

My worst decliners in October were…

• Whirlpool (WHR), plummeting 23.64%
• Hormel Foods (HRL), tanking 17.46%
• McCormick & Co. (MKC), diving 16.74%
• T. Rowe Price Group (TROW), sinking 15.71%
• FedEx (FDX), dropping 13.62%

 

WHR was my top decliner by a wide margin.  Its reduced earnings guidance overwhelmed its good Q3 earnings.

A couple of my Consumer Staples stocks didn’t fare well this month in HRL and MKC.  These stocks didn’t feel too safe despite their presence in a defensive sector.

FDX was one of my top gainers last month… how quickly things can change!

 

Note – a couple of Cyclical sectors in my Portfolio had all their holdings in the red: Financials (6) and Materials (3).  The number in parenthesis is the number of stocks I own in that sector.

 

Top 10 Review

Amazingly, 6 of the 10 stocks in my Top 10 didn’t change ranking this month, including the entire Top 5.  I don’t think that’s ever happened.

There was one new entrant to the Top 10, and thus one departure.  Interestingly, the yields of the two stocks are roughly the same, thus there was not much change to my Top 10 dividend weighting.

My biggest mover to the upside was the newcomer Fastenal (FAST), which rose 3 spots to gain entry into the Top 10 and settle at #8.  One stock managed to tumble 3 spots as well, and that was Lowe’s Companies (LOW), which slipped, but managed to hold on to the #10 spot.

 

 

Falling out of my Top 10 (as a result of FAST moving in) was Union Pacific (UNP).  UNP is now lurking outside the Top 10, with eyes on getting back in.  No other stocks outside of UNP look like they’re close to gaining Top 10 entry.

 

From the table above, my Top 10 holdings now comprise 37.12% of my Portfolio value.  This is an increase of 0.30 percentage points compared to last month.

As for the dividend weighting of my Top 10, this finished the month at exactly 30.00%.  This was an increase of 0.27 percentage points compared to last month, driven by recent dividend increases from RPM International (RPM) and Visa (V).

 

Weightings

 

In general, for the Sector Diversification, I target being within +/-3 percentage points of the sector weightings of the S&P 500.  For the SuperSector Diversification, I target being within +/-5 percentage points.

The “Weight Diff.” column shows which sectors sit outside my preferred weighting ranges.  If I’m overweight a sector, it’s shaded green.  If I’m underweight a sector, it’s shaded red.  If I’m within my target weighting range, then no shading exists.

Hey, look at that, I’ve got some representation in the Energy sector now after I replaced Walgreens Boots Alliance (WBA) with Enbridge (ENB) in my Portfolio during October.

My number of overweight and underweight sectors remained the same as last month.  I have 3 overweight sectors (Industrials, Materials & Financials) and 2 underweight sectors (Information Technology & Energy).

I’m farthest off in my preferred weighting in the Industrials & Information Technology sectors.  Industrials became my sector with the largest weighting in October after poor performances from my Healthcare stocks during the month, and those aforementioned good performances from LMT and GD.

As always, I’ll keep all these weightings in mind as I continue to adjust my Portfolio, and my watchlist.

 

Watch List

Plenty of stocks adorn my watchlist after a 3rd consecutive month of stock declines.  Many stocks have prices not seen in 2-3 years.

I find myself adding small chunks in multiple positions in an effort to make sure I at least add something to as many of my holdings as I can.

I’m still focused on enhancing my smaller Portfolio positions.  I did this during October with additions to my MKC and Cummins (CMI) positions.

 

Within my Portfolio, here are a few stocks that I’m watching for possible additions…

Information Technology stocks Skyworks Solutions (SWKS) and Amdocs Ltd. (DOX) keep declining and garnering more of my attention.  SWKS below $87 is tempting.  The same can be said for DOX below $80.

After my CMI add this month below my previous $220 target, CMI has gotten a bit less expensive.  Should it dip below $210, I’d consider another small addition.

Adding more MKC is an option, too, with the stock dropping like a stone to settle in the low $60s.

Whirlpool (WHR) was a stock I wanted to grow last month, but its big drop in October due to a reduced earnings forecast has me re-thinking that idea.  I’m going to wait a bit despite the stock trading below $105.

 

As for non-Portfolio stocks that I’m watching…

Corning (GLW) crossed below my price target of $30 last month and is now trading at a 10% discount to that at ~$27.  More tech in my Portfolio wouldn’t be a bad thing.

 

Thoughts?

Do you have any stocks like VFC in your Portfolio that have disappointed you with their recent stock price or dividend performance?  Do you think the stock market can post positive results in the seasonally strong months of November and December to help the S&P 500 finish the year in the green?  Please share your thoughts!