Holiday Portfolio: Digging In to Year-End

Stronger Into Year-End

While both Microsoft and US Bancorp(USB Quote) have been portfolio laggards this year, things are looking up for both as we enter the 2005 homestretch.

Mister Softee has begun to get some attention with new product announcements and opportunities for innovative offerings into the New Year. While the law of large numbers continues to challenge Microsoft's growth, it remains a cash-generation machine and one that is likely to continue creating shareholder value into 2006. I like the position of the company here as it remains the premier software company and technology service company in the world.

US Bancorp should benefit from the Fed's release earlier this week that it now is focused on making sure restrictive monetary policy does not go too far. In addition, the bank continues to make progress in credit quality and streamlining operations after a series of mergers over the past three years. In fact, it is now just as likely that US Bank would be acquired by a super-regional as it is that it continue its acquisition program. I'm not suggesting that will happen but simply noting that it is of a size and with a geographic footprint that puts it in the mix when such deals are on the docket.

Energize

The two workhorses of this year's portfolio continue to do solid work.

Superior Energy Services(SPN Quote) has been the best performer in the group as energy remains hot. Superior has a balanced business, the largest portion of which is focused on providing completion services for exploration-and-production companies, primarily in the U.S. and Gulf of Mexico. The company has a host of services, from a fleet of work boats to rental tools and complete stimulation services. In addition, the company has a growing, mature production business, where it acquires late-lived production fields in the Gulf of Mexico while at the same time assuming the "plug and abandonment" business -- the deconstruction of infrastructure once all oil and gas have been produced. This business felt the impact of Katrina and Rita with production falling sharply, but it also will gain longer-term opportunities as a result of the storms.

Finally, Equity Office Properties(EOP Quote) has served as a solid citizen in this portfolio for multiple years. And every year it has provided exactly what the portfolio needed: stable growth with a solid dividend. While some will argue the real estate market is getting more difficult, economic growth should continue to benefit Equity Office and its portfolio of high-quality commercial office space. The dividend is solid, and that's why I own it.

Thankful

We will take one final look at the holiday portfolio on Christmas Day and introduce the 2006 portfolio. Hopefully, we'll get a little uptick in Pfizer and finish the year strong.

Until then, I'm truly thankful for a wonderful family -- especially my 1-year-old daughter Margaret Christine -- my colleagues at TheStreet.com and all of the wonderful relationships I have built over the years with readers like you, a real community of people who have come together to learn more about finance and the markets. There couldn't be a better gig in all the world.

Have a very happy and safe Thanksgiving.

Company/Ticker	Recent Price	Price Dec. 31, 2004	Change	Indicated Ann. Div.	Current Yield	Yield at Cost
Equity Office Properties (EOP:NYSE)	$31.49	$29.12	8.14%	$2.00	6.35%	6.87%
Microsoft (MSFT:Nasdaq)	27.91	26.68	4.61%	$0.32	1.15%	1.20%
Pfizer (PFE:NYSE)	21.38	26.89	-20.49%	$0.76	3.55%	2.83%
Superior Energy Services (SPN:NYSE)	22.50	15.41	46.01%	--	0.00%	0.00%
US Bancorp (USB:NYSE)	30.61	31.32	-2.27%	$1.20	3.92%	3.83%
Unweighted Average Return			7.20%		2.99%	2.95%
S&P 500			4.07%
Dow Jones Industrial Average			0.82%
Source: TSC Research