As we celebrate the birthdays of our country's early presidents, the Holiday Portfolio is exhibiting some leadership of its own. With large-cap names dominating the group, performance has been solid in the first 45 days of the year.
Before we take a look at the individual names, let's review the process and purpose of the Holiday Portfolio.
All Year Long
The concept of the Holiday Portfolio is simple. I select a group of five stocks that I think deserve watching over the next 12 months, and I follow them -- regardless of their performance -- throughout the year. I'll revisit the portfolio on each market holiday and, at times, make comments about the stocks on
Columnist Conversation. The only way a stock is removed from the portfolio is if it merges with another company or ceases to trade on a major exchange.
The portfolio serves two purposes. First, it follows the fundamental progress of a group of stocks over a longer period of time. My hope is that the portfolio will serve as a forum for in-depth discussion of investment decisions and company strategy, and reinforce the importance of ongoing portfolio analysis. Second, it provides an opportunity to look at both short-term trading strategies and longer-term investment strategies with the same stocks.
This year's twist is the readers' selection. On
New Year's, I asked you to review the stocks you routinely follow and send me your best idea for the portfolio. I then listed the top five in a poll on
Martin Luther King Jr. Day and asked for your final vote. As a result,
added to the Holiday Portfolio.
Here's a summary of the performance so far:
I'll begin with the only name that isn't up so far this year:
Equity Office Properties
. Run by real estate mogul Sam Zell, it's the largest office real estate investment trust in the U.S. Like other office REITs, Equity Office has felt the pinch of a slow economy, with occupancy-rate and lease-rate declines. Even as the economy picks up, Equity Office is likely to see more rent rolldowns as space remains vacant.
After the fourth-quarter conference call, concerns linger about the company's ability to meet its dividend payout with cash flow. That may be a valid worry, but I believe Equity Office will use cash from property sales or other transactions to keep the dividend steady. That isn't a reason to buy the stock, but support for the dividend is important for current shareholders.
Equity Office is a longer-term play on a recovering economy. There's little reason to get excited about short-term prospects, but the dividend is certainly one reason why some investors -- including me -- choose to hang around and wait for Zell to reinvigorate office real estate investors.
There isn't much to say about the other four names in the portfolio.
remains a solid play on higher energy commodity prices, as well as the company's ability to keep finding new sources of natural gas and oil. In addition, I'm intrigued by its interest in liquefied natural gas, or LNG, through its purchase of capacity at the Freeport, Texas, facility being developed by
. Look for additional ConocoPhillips investments in LNG facilities in the U.S.
is still a broad bet on a U.S. economic recovery. A better-than-expected fourth quarter and a rosy outlook have boosted the stock. I don't look for a home run here, but I also don't expect any big negative surprises. The stock should work higher as the economy firms.
I devoted most of
a January column to Pfizer, and the story remains about the same. It's nice to have a drug company in the portfolio that can provide some stability away from the economy. The key to Pfizer in the coming year remains its pipeline and ability to keep new ideas flowing.
The final name is
, a regional bank in -- you guessed it -- Tennessee. There has been a lot of discussion about the business outlook and merger possibilities, all of which are well worth reviewing. However, my sources tell me management is keenly focused on cutting costs this year, and that could boost the bottom line as well.
On this Presidents' Day, the portfolio looks pretty good. I'll take another look at the portfolio on Good Friday, April 9.
Happy Presidents' Day!
At time of publication, Edmonds was long Equity Office and ConocoPhillips, although holdings can change at any time.
Christopher S. Edmonds is vice president and director of research at Pritchard Capital Partners, a New Orleans energy investment firm. He is based in Atlanta. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. While Edmonds cannot provide investment advice or recommendations, he welcomes your feedback and invites you to send it to