LaToya’s Blog

Happy Thanksgiving!

The Naples Asset Management Company, LLC Office will be closed November 24th & 25th in observance of the Thanksgiving Holiday.

In awareness that the market is open on Friday we will have a member of our team here for trading purposes.

From us here at NAMCOA, we wish you a wonderful and safe Holiday Weekend.

Business will resume as normal on November 28th, 2016.

Is Your Portfolio Ready to Rumble?

It is hard to believe that tomorrow night the United States will elect a new President, and I believe it worth discussing political risk.  Political risk is the chance a business or industry one is invested in will realize a boost or drag to do external governmental action. I also separate political risk from legislative risk. A pure political risk would be, for example, the nationalization of a mining operation. The management team running the mine may be completely on point but the stock goes to zero because the government claims it for itself. Legislative risk, which we see more often in the US, would be several states legalizing medical/recreational marijuana which may impact some drug manufacturers, and increase sales of pizza and Clear Eyes.

I will say, as a holder of a BA in Political Science, this is a difficult system to successfully game. Instead of trying to reconfigure a portfolio to take advantage of industries that may benefit from guessing the election outcome correctly, folks are typically far better off either sticking to the investment plan they had worked out with an Advisor, or speaking with the advisor to see if the portfolio has exposure to a universally hated industry.

The nice thing with American Legislative/Political risk is that change usually takes a while unlike other countries which may disappear a CEO or two overnight. To sum things up, unless you have an edge stick to your plan. We will be back to examining earnings and other things that make a difference soon. 95% of the noise one hears has nothing to do with one’s portfolio. And lastly, if this election has caused elevated stress and blood pressure, here’s some nice music and pictures of cute animals:

Disclosures

Cashing in on your Household Spending

Feeling a bit frustrated with your spending each month?  Perhaps changing your mindset and approaching your house hold spending as an investment opportunity could be just the silver lining to cheer you up.

When was the last time you saw your cable provider lower their price instead of increasing it?  Also, per the U.S. Department of Agriculture, over the last 10 year’s food cost has risen 30% for a family of four with children under 5 years of age. While the cost of living continues to increase each year so does the earnings and dividends of some of the companies which you buy your products and services from.

The NAMCOA Monthly Needs Portfolio is designed to take advantage of this type spending.

Of the 22 current stocks in the portfolio on average they have raised their dividend 7.07% in 2016. This is 5.57% higher than the inflation gauge of 1.5% (Consumer Price Index for All Urban Consumers 12 months Sept. 2015 to Sept. 2016). As of October 31st, 2016, the dividend yield for the portfolio is 0.51% above the same inflation index, and that is with 21.57% currently in cash.

So, as you know, even in good times or bad folks will eat, drink, drive, cut your lights on, take a bath, and carry your garbage out.

For more information and performance on this portfolio go to: https://namcoa.com/equity-income/

Walter M Hester

Sr. Portfolio Manager

11/07/2016

Disclosures

 

What is a Hedge Fund?

Hedge funds are alternative investments using using pooled funds that may use a number of different strategies in order to earn active return or alpha, for their investors. Active return, or Alpha is the percentage gain or loss of an investment relative to the investment’s benchmark.

An active return is the difference between the benchmark and the actual return. It can be positive or negative and is typically used to assess performance. A benchmark is a standard against which the performance of a security, mutual fund or portfolio manager can be measured. Generally, broad market and market-segment stock and bond indexes are used for this purpose.

Hedge funds may be aggressively managed or make use of derivatives and leverage in both domestic and international markets with the goal of generating high returns (either in an absolute sense or over a specified market benchmark). Because hedge funds may have low correlations with a traditional portfolio of stocks and bonds, allocating an exposure to hedge funds can be a good diversification strategy.

How do REITs work?

As of June 30, 2016, about three quarters of publicly traded real estate companies were organized as REITs. This unique corporate structure provides tax considerations that help level the field for shareholders compared with investors who own real estate directly.

As a result, REITs provide an efficient way for individuals to invest in commercial real estate and benefit from the rental income generated by the properties. To qualify as a REIT, companies must follow specific rules defined by legislation in each country. In general, REITs are required to distribute the majority of their taxable net income to shareholders in the form of dividends. REITs must also adhere to certain restrictions on their operations, organization and ownership.

In return, REITs do not have to pay corporate taxes on the net income and capital gains that they distribute, thereby reducing or even eliminating their tax burden. In the U.S., the requirements are as follows:

  • Distribute at least 90% of annual taxable net income (excluding capital gains) via dividends to shareholders. Since income is not taxed at the corporate level, this rule ensures that taxes are still incurred by REIT shareholders. These dividends are taxed as ordinary income.
  • Invest at least 75% of total assets in real estate, mortgage loans or shares in other REITs. Its principal business must be real estate investing.
  • Derive at least 95% of gross income from rents, mortgage interest or gains from the sale of real property. Its principal source of income must be real estate-related.
  • Be managed by a board of directors or trustees. It must maintain a fiduciary responsibility to shareholders.
  • Have shares that are fully transferable, with a minimum of 100 shareholders and no more than 50% of its shares held by five or fewer individuals. It must maintain a broad investor base.
  • Be structured as a taxable corporation. It must be a for-profit company

REITs and Dividends Due to their minimum distribution requirement and cash-flow-oriented business models, REITs have historically offered higher dividend yields than other equities with similar risk profiles.

REITs pay little or no corporate taxes, but must distribute nearly all of their income to shareholders.

Equity Income

An excellent compliment to most investor portfolios is a transparent managed account of 25 stocks paying dividends. Today investors, especially those seeking income, must be concerned about two things, inflation and interest rate risk.

The NAMCOA Monthly Needs Portfolio, provides a hedge for both concerns. Walter Hester, Senior Portfolio Manager of the NAMCOA Monthly Needs Portfolio, has updated his portfolio performance.

Continue reading “Equity Income”

NAMCO opens new Branch in Ocala, FL

Naples Asset Management Company (“NAMCO”) is pleased to announce the opening of its 9th branch office in Ocala, Florida.  Thomas j. Cooper, CFP, CPPT will head up the branch office. His email address is tcooper@namcobenefits.com , phone 352.857-7273.

NAMCO is expanding its wealth management and retirement plan services to other regions in the US.   NAMCO offers a full range of high end portfolio and planning services for business owners and high net worth investors,  Collectively NAMCO has over 300 years’ of financial services experience.

The Company continues to attract highly experienced Portfolio Managers and Planners who seek institutional level portfolio and planning tools to deliver and manage investors’ portfolios at the lowest cost, with a fiduciary approach, which put the clients interest foremost.

NAMCO’s Office locations include Fort Myers, FL, Greenwood Village, CO, Naples, FL, Sarasota, FL, Lake Oswego, OR, San Francisco, CA, Sugarland, TX . Walnut Creek, CA and now Ocala, FL.  Please contact us for more information about the Ocala office, contact Thomas Cooper at tcooper@namcobenefits.com  or by phone at 352.857-7273.