Hey everyone! Within the last 12 days – 2 purchases have been made into my portfolio and they are newly initiated positions into two companies that I have never owned before but had performed thorough analyses over. Looks like I’m getting into Toys and Alcohol? Let’s see what Toys and Alcohol really means…
Purchase One
To begin with the first purchase on August 08, 2014 – Diageo (DEO)! As Bert recently published in his transaction summary, I also purchased the stock that same day. We performed an analysis over the alcohol/liquor company back on August 3 and the timing was prime, ripe and ready. The pros on what I like about them:
- Strong Brand – Ciroc, Johnnie Walker, Guinness, Harp, Crown Royal, Smirnoff, and the list will keep going.
- Announcement of a strong dividend increase of approximately 15% to yield at exactly 3% at time of purchase
- When we analyzed the company they were trading around roughly $119/share, needless to say – I picked them up at 114.75 or for lack of other reasoning – the company slid another 3.5%, therefore – valuations were much better
- Strong quarter and earnings release
In summary – I only bought 10 shares at $114.75 and added $34.64 to my annual dividend income total. Really excited about the dividends to come, as well as pouring a company that I own into my coffee on special occasions – Bailey’s that is. I know my Nona always has it in her cupboard as well. So that takes care of the “alcohol” in my title. I hope we can all share a drink to this purchase! Seriously – go pour some Ciroc and soda for me, thanks! haha Now on to the next topic that goes hand in hand with alcohol – toys?
Purchase Two
My second purchase, phew, was a curveball. This stock has had a, literally, 12 to 6 drop in share price this year to date. I did analyze this company way back on July 12th, so around 6 weeks ago. There was an event for WwE over the weekend with advertisements of these action figures and I went shopping and saw more toys as well associated with this company, and they were all over. Mattel (MAT) is back in business. This was my purchase today on August 20, 2014. The pros on why I purchased Mattel after I analyzed them and passed on buying:
- I believe this has a story to it – as Hasbro (HAS) is the bigger competitor, these two companies are challenged with the international markets to see what sticks but also with the electronic gaming field with younger children now – with the tablets and other handheld devices. I am excited for Mattel to take on this challenge and this is one part to their story I want to see and be a part of, as Hot Wheels, Barbie, Toy Story, WWE, the list does go on – are extremely strong brands to children of all ages.
- Management’s efforts on their inventory problem. It makes me, as a new investor, happy that they are focusing on this Inventory issue that was created in the past year. This is exactly where I want one of their focuses to be – as they need to get rid old inventory and use past history, the current market place and trends to set better expectations on inventories this holiday season. I like their focus and think it will continue to improve going forward.
- On July 12, 2014 they closed at $39.13. Today, I bought them at a rough price of $34.95. 10.68% everyone. Mattel has experienced a 10.68% drop from 6 weeks ago. That’s unbelievable. They had a “blah” quarter. Sales are down with only $0.08 of EPS for the quarter ended for June. They had to decrease their prices, thus reducing margins to get rid of stale inventory.
- One other point – as I quoted from Q1, I will quote from 10Q2 “From the commencement of Operational Excellence 3.0 through June 30, 2014, Mattel has realized approximately $101 million of cumulative gross cost savings. Mattel continues to be on track to realize approximately $175 million in sustainable cumulative gross savings by the end of 2014.” –> this was up $26M from 3/31/14, which is what I like to see. Additionally, this will improve once the MEGA brand acquisition is all cleaned up and integrated. To bring this home and to be honest – I feel very into this company and that I want to see the success, track these projects and see the challenge being taken head on by management the company.
I purchased for my initial investment – 42 shares at $34.95 for a total addition to my dividend income of $63.84.
Summary
Well, total dividends added was $98.48! I am pumped and looking forward to these dividends rolling in. And no – I do not suggest drinking Alcohol and then playing with toys, BUT if you do – make sure you do it responsibly and give back to your fellow diplomats and drink a Smirnoff and play with your WWE figures in the ring that you purchased. I am fortunate to lay out capital into these well-known companies. I am extremely excited about the business-end on both and am Biased in my feelings/focus on Mattel, I want them to succeed and I feel management does too. In all seriousness – how do you, the readers, feel about these purchases? What does your initial take see? Think Mattel is heading to no-wheres land? Think that Diageo is a bad company due to the creation & distribution of Alcohol? Where do you see this investment going? Thanks for stopping by, excited to hear back soon!
-Lanny