Last week, the real-money Inflation-Protected Income Growth portfolio lost a little more than $150 of its market value from the prior week’s update, dropping to $34,347.29. That drop of slightly less than 0.5% in a week is well within normal market variation — for instance, the S&P 500 dropped more than 1.4% on Friday alone. Still, that overall small movement in the portfolio’s worth hides what was actually a surprisingly active week.
What happened?
The biggest news of the week for the iPIG portfolio came from none other than Warren Buffett. Buffett’s Berkshire Hathaway Inc. (NYSE:BRK.A) announced on Tuesday that it was going to buy out Nevada electric generator and iPIG pick NV Energy, Inc. (NYSE:NVE) for $5.6 billion. Both because it’ll be a cash buyout and because Berkshire Hathaway Inc. (NYSE:BRK.A) does not currently pay dividends, the iPIG portfolio will have to part ways with NV Energy, Inc. (NYSE:NVE), either at the acquisition or before.
That said, the week did turn into something of a mutual admiration society, as the iPIG portfolio returned the favor on Thursday, picking up shares in banking giant Wells Fargo & Co (NYSE:WFC). Buffett has also been recently buying Wells Fargo & Co (NYSE:WFC) shares. Aside from Buffett’s stamp of approval, what made Wells Fargo attractive to the iPIG portfolio was the fact that the Federal Reserve has been allowing its dividend to rise faster than that of most other major banks. Strength like that is worth noting and appreciating.
Yet in spite of all that commotion, it’s also important to acknowledge the primary tactic of the iPIG portfolio:collecting dividends from companies that pay and regularly increase them. And on that front, iPIG selection United Parcel Service, Inc. (NYSE:UPS) continued its streak of dividend payments that stretches back pretty much to its IPO. For the second consecutive quarter, United Parcel Service, Inc. (NYSE:UPS) paid the iPIG portfolio $0.62 per share, a payment that it increased shortly after being chosen for the portfolio.
What comes next?
Aside from the money currently allocated to the stock that might get away, the iPIG portfolio is fully invested at this time. The portfolio needs to figure out a replacement holding for the money currently sitting in NV Energy, Inc. (NYSE:NVE) due to the pending Berkshire Hathaway Inc. (NYSE:BRK.A) takeover. Beyond that, it’s largely a matter of collecting the dividends, reviewing the holdings, and pruning and replacing the stocks of companies that no longer look like they fit.
iPIG Portfolio snapshot as of May 31, 2013
| Company | Purchase Date | No. of Shares | Total Investment (including commissions) | Current Value |
|---|---|---|---|---|
| United Technologies | 12/10/2012 | 18 | $1,464.82 | $1,708.20 |
| Teva Pharmaceutical | 12/12/2012 | 38 | $1,519.40 | $1,451.60 |
| J.M. Smucker | 12/13/2012 | 17 | $1,483.45 | $1,716.32 |
| Genuine Parts | 12/21/2012 | 23 | $1,476.47 | $1,788.02 |
| Mine Safety Appliances | 12/21/2012 | 36 | $1,504.96 | $1,797.12 |
| Microsoft | 12/26/2012 | 55 | $1,499.15 | $1,919.50 |
| Hasbro | 12/28/2012 | 43 | $1,520.60 | $1,912.64 |
| NV Energy | 12/31/2012 | 84 | $1,504.72 | $1,968.96 |
| United Parcel Service | 1/2/2013 | 20 | $1,524.00 | $1,718.00 |
| Walgreen | 1/4/2013 | 40 | $1,501.80 | $1,910.40 |
| Texas Instruments | 1/7/2013 | 47 | $1,515.70 | $1,687.77 |
| Union Pacific | 1/22/2013 | 6 | $805.42 | $927.72 |
| CSX | 1/22/2013 | 34 | $712.50 | $857.14 |
| McDonald’s | 1/24/2013 | 16 | $1,499.64 | $1,545.12 |
| Becton, Dickinson | 1/31/2013 | 18 | $1,518.64 | $1,775.16 |
| Aflac | 2/5/2013 | 27 | $1,466.35 | $1,503.63 |
| Air Products & Chemicals | 2/11/2013 | 17 | $1,510.99 | $1,604.97 |
| Raytheon | 2/22/2013 | 27 | $1,473.91 | $1,799.28 |
| Emerson Electric | 4/3/2013 | 28 | $1,548.12 | $1,608.88 |
| Wells Fargo | 5/30/2013 | 37 | $1,525.48 | $1,500.35 |
| Cash | $1,646.51 | |||
| Total Portfolio | $34,347.29 |
Data from the iPIG portfolio’s brokerage account, as of May 31, 2013.
The article Buffett Buyout and Bank Buy originally appeared on Fool.com.
Fool contributor Chuck Saletta owns shares of Aflac, Texas Instruments, Microsoft, McDonald’s, Genuine Parts, United Technologies, Teva Pharmaceutical Industries, Emerson Electric, Becton Dickinson, Walgreen Company, Union Pacific, Hasbro, United Parcel Service, CSX, J.M. Smucker, Air Products & Chemicals, Mine Safety Appliances, NV Energy, Raytheon, and Wells Fargo The Motley Fool recommends Aflac, Becton Dickinson, Berkshire Hathaway, Emerson Electric, Hasbro, McDonald’s, Mine Safety Appliances, United Parcel Service, and Wells Fargo. The Motley Fool owns shares of Berkshire Hathaway, Hasbro, McDonald’s, Microsoft, Raytheon, and Wells Fargo.
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