Recent Sell – ADM, SBUX

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A quick update on three sales in my portfolio. Both companies below are still great companies to hold for the long haul, and I may consider re-initiating a position in them during the next cycle. In addition, part of the reason for also selling is to move some of these funds towards passive investing as I want to reduce my number of holdings and focus on a smaller group of companies.

Archer Daniels Midland (ADM)

A dividend champion that I’ve held since 2013. The food/commodity business is a tough sell and there are some very good bullish and bearish cases for holding this company. However, the company has continued to increase payout ratios over the past few years as it wants to grow its dividends, just for the sake of record. This is not the right move imo, and I will look for a better home for my investment dollars.

Total profit (including dividends): 32.8%. 

Holding period: 4.5 yrs

Starbucks Corp (SBUX)

This is one of those investments that has traded sideways for me. With the founder Howard Schultz stepping down from CEO position, the spark has gone from this stock. However, the company is still functioning pretty well. I am not as confident in the growth story of this company as I was a couple of years ago. I have decided to exit this position, esp this late in the market cycle and re-evaluate in coming months/years.

Total profit (including dividends): 9.2%. 

Holding period: 2 yrs

What do you think of these sales? Let me know with a comment below.

12 thoughts on “Recent Sell – ADM, SBUX

  1. Thanks for sharing this with us. They are some good companies. Do you have a number in mind in terms number of stocks you want to hold? This is idea that I might start thinking about reducing my stocks as well.

    Thanks again.

    • Not sure, Matthew. Most research suggests that owning as little as 12 companies provides you with enough diversification that you need from a risk management perspective. However, that means it would have to be one stock per sector — which is a really hard job to do. My comfort level would be close to 20-ish. And just put the rest of my money in index funds.

      I am however still aggressively putting money in some individual companies in commodity, weed and blockchain companies — some are sound investments that I want to hold, but some are more speculative and swinging-for-the-fences kind of moves. I will be looking forward to reduce some of the holdings there too, but just not yet.

      R2R

  2. Own both and will continue to hold both for the foreseeable future. One thing you said did strike a nerve with me and that was, “…reduce my number of holdings and focus on a smaller group of companies.” After looking at my own portfolio I realized that it too has grown to quite a few more holdings than I first ever anticipated owning. Part was because of the several spin offs and part was my wanting to further spread my dividend income stream. No plans for me to sell anything for now but that may change down the line.

    • Both great companies to own, and Im sure they will do well in the coming years. Managing the number of holdings is also hard, as there is always something exciting that comes up and you want a piece of the action. I know I have had the same problems.

      Best
      R2R

  3. Adm you did good with. Im surprised starbucks only returned 9% over 2 yrs including dividends. Alot of people love that stock. Good reason to sell tho if you liked that ceo. I have thought of selling one of my lesser known holdings to lower my amount of different companies. But its 7% yield is hard to pass up! Looking forward to hearing about your purchases.
    Cheers

    • Thats a pretty good yield these days and probably warrants holding on. I got a pretty good return with ADM, and will be interesting to see where things go from here. But this is where I hop off and watch from the sidelines.

      Thanks for stopping by
      R2R

  4. Hi R2R, No problems with the sales, especially if you are looking to reduce your number of holdings. I own SBUX. I was disappointed to see Schultz step down as CEO, as he’s had a positive impact on the company, and the last time he stepped down from that role, things went south. However, I’m willing to see how it plays out. I’ll be interested to see what you do with the sale proceeds.

    • Hi ED, yes…it was sad to see Schultz step down, even though I thought he had more years left with him at the helm. Lately, they are also shedding some assets that seems odd to me (they sold their Tazo brand). Will be keeping an eye to see how things work going forward. The growth story has been from EU and Asia — if things play out, the stock should do fairly well.

      R2R

  5. I understand the fear with SBUX.

    Losing a CEO like Schultz should put any investor an edge.

    Tough to bet against what amounts to a legal drug in caffeine, though.

    I think SBUX is doing the right thing by closing all their Teavana locations. While there is a huge market for tea, I don’t think those stores were going to be big winners.

    Nothing wrong with taking a step back and re-evaluating later, though.

    • Yeah its interesting to see these moves from the current leadership team. Definitely needs some time to reevaluate and this late in the cycle, I dont want to be caught off guard with these investments. Taking some money off the table for now.

      R2R

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