Consolidate Small Investment Holdings

A recent comment from a reader:

I was struck by how many small holdings (<$2K) you have. They are so small that even if they went up 50% you'd barely notice. You obviously spend time every month updating these spreadsheets so getting rid of these little fish would simplify life. Why not sell them all and put it into VTI or the like?

Its a good question and something I've looked at before. I think many folks end up like me - with small investment holdings that can stem from direct investing, stock gifts, investments that at some point peaked your interest, then waned over the years, or company spinoffs. Over the past 15 years I've had occurrences of all of these that are now in my investment portfolio.

Over the years I've tried to make an effort to consolidate small investments and even transfer investment holdings into a couple key stock accounts to make it easier to manage.

However our portfolio still has a number of small holdings in it. Check out our latest monthly investment report to see the exact list of stock holdings. Now is as good a time as any to take another review of the smaller holdings (say < $2,000) and see what our plans are for them:

  • Edison International - I've had this since high school. Has a bit of emotional attachment. I do did look at it and think its probably a good time to sell at this point. The P/E is high and I don't see much growth opportunity (above the general market) with this stock. Its in a DRIP account so could be a bit of a pain to liquidate.
  • Argo Group International Holdings - I bought one a whim and its really a non-strategic holding for us. We should sell this and move the proceeds to an index holding or one of our primary insurance holding (like Fairfax Financial).
  • LRAD - I've sold most of the position already in this holding and the stock has declined significantly. I've put a sell order in to liquidate on the next stock rally.
  • Dryships - This has a tiny bet on the market recovery that just hasn't paid off. Its a cyclical stock that I expect will recover significantly when the global economy recovers. I'm in no rush to sell and will liquidate if it rallies significantly.
  • Berkshire Hathaway - I establish a small position when the stock dipped below 110% of BV last year. I'd love a larger position, but need to wait for when the stock is on sale. Will be holding onto this for now and see it as a long term investment.
  • Spectra Energy - a spinoff holding from Duke Energy. Im not sure if its time to consider selling this holding. It pays a healthy 3.9% dividend, and has plenty of growth opportunity, but its P/E is very high and natural gas prices are at rock bottom for the foreseeable future.
  • Phillips66 - a very recent spinoff from ConocoPhillips of its refinery operations. I do need to study this holding further. Not sure what to do with it yet.
  • Johnson & Johnson - This is a small, but long term holding for us. I'm not inclined to sell unless the stock appears very overvalued.
  • Proctor & Gamble - This is a long term, but small investment. The holding has had significant unrealized gains and I still see it as a strategic long term investment. I'm not inclined to sell unless the stock appears very overvalued.

The net of this analysis was I've decided to sell at least 3 holdings (Edison International, Argo, LRAD) and sell a 4th once its valuation recovers (Dryships). That still leaves a lot of small holding to manage, but its another step in further consolidation.

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A personal finance weblog of my journey to reach my goal of $2 million + the value of my primary residence.
Current Net Worth: $1,938,393


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