John Buckingham (Trades, Portfolio), chief investment officer at Al Frank Asset Management Capital Inc., established seven new positions in the fourth quarter, leaning to investments in U.S. Treasury, international and bond exchange-traded funds (ETFs).
In the quarter, the University of Southern California graduate made only one stock pick in a non-financial services company. He bought 1,700 shares of Fort Worth-based United Technologies Corp. (UTX, Financial) for an average price of $120.63 a share. The company that manufactures jet engines for aerospace and defense contractors is 0.02% of the portfolio.
The guru made an assortment of expansions to existing holdings, including adding to positions in International Business Machines (IBM, Financial), Foot Locker Inc. (FL, Financial), Verizon Communications (VZ, Financial), Halliburton (HAL, Financial) The Kroger Co. (KR, Financial) and Whirlpool Corp. (WHR, Financial).
He reduced stakes in Apple Inc. (ABX, Financial), Barrick Gold Corp. (ABX), Microsoft Corp. (MSFT, Financial) Johnson & Johnson (JNJ) and AT&T Inc. (T, Financial), among others.
Buckingham also sold out of the PIMCO Enhanced Short Maturity Active Exchange-Traded Fund (MINT) and reduced his position in Direxion Mid Cap Bull 3X Shares (DZK) in the fourth quarter. He also sold out of Plano, Texas-based Diodes Inc. (DIOD), which manufactures electronic products. The company’s share price has dropped by 7% since November. It was trading at $28.87 a share Tuesday morning.
Exchange-traded funds
Over one-third of the $908 million portfolio is made up of exchange-traded funds. About one-quarter is in technology and financial services, while the remainder is in industrials, consumer cyclical, health care, energy, consumer defensive and basic materials. Real estate makes up about 1.9% of the portfolio.
Buckingham, known for his “buy and harvest” long-term equity strategy, updated his portfolio to reflect a quarter-over-quarter turnover of 7%.
Buckingham’s new buys for the quarter included the following:
The guru purchased more than 126,000 units of iShares International Aggregate Bond Fund (IAGG) for an average price of $52.05 a share. The transaction boosted the portfolio by 0.72%.
His buy of more than 107,000 units of the iShares International Treasury Bond ETF (IGOV) impacted the portfolio by 0.59%. The average price was $49.23.
The Vanguard Emerging Markets Government Bond Fund ETF (VWOB) is taking up 0.43% of the guru’s portfolio. The average price was $80.43 for each unit of a total of nearly 49,000.
The guru bought Vanguard Short-Term Corporate Bond ETF (VCSH), for an impact of 0.03%. The per-unit price was $79.72 for a total of more than 2,900 units.
Another buy was AXA SA (AXAHY), an insurance company that provides life and savings, property and casualty, international insurance and banking to customers in Europe, North America and Asia. The business holds a 64% stake in AllianceBerstein. Buckingham’s buy involved more than 38,000 units for an average price of $29.95. It sits in 0.13% of the portfolio.
Societe Generale SA ADR (SCGLY, Financial), a European financial services group, also drew the guru’s shopping cart in the fourth quarter. He bought over 96,000 units for $10.70 each. The buy boosted the portfolio by 0.11%.
Paris-based Societe Generale is rated a 7 of 10 in financial strength and 3 of 10 in profitability and growth, according to GuruFocus. Its shares were down by 0.51% in Tuesday early afternoon trading.
Other portfolio highlights
The guru expanded his position in a number of companies, in some cases by more than 300%.
He expanded his exposure in the iShares MSCI Hong Kong Index Fund (EWH, Financial) by over 338% and in Kimberly-Clark Corp. (KMB, Financial) by more than 200%.
Kimberly-Clark was down on Tuesday morning by 0.69%, selling at under $113 a share. The company has lost 8% in the last year.
Buckingham also expanded his position in companies like Foot Locker, Verizon Communications, Halliburton, Kroger and Whirlpool.
He reduced his stake in Boeing Co. (BA), Johnson & Johnson and AT&T.
Portfolio performance
Buckingham is the editor of "The Prudent Speculator," an investment newsletter he publishes for AFAM. He has been part of AFAM since 1987 and is one of the company’s largest shareholders. He became the firm’s director of research in 1989 and became chief portfolio manager in 1990.
He is a graduate of USC and has bachelor’s degree in computer science and a minor in business administration.
His portfolio beat the S&P 500 in 2016, posting a gain of 3.7%.
The portfolio earned 15.62%, up 3.7% over the index’s 11.96% annualized return.
His average annual return for the last five years is 12.9%.
