Boulder Income Fund Is My Berkshire Proxy Trade

By James Roberts

My Stockdiagnostics model has 14 positions and about 12% cash as of April 30, 2013. Two of the 14 positions are what I term multi-industry investments: Leucadia (LUK) and Boulder Income Fund (BIF). Boulder Income Fund is a traditional closed-end fund invested around 25% in Berkshire Hathaway (BRK.B).

With Boulder trading at approximately a 15% discount to NAV, it seems like an attractive way to invest in Berkshire, in my opinion. Leucadia and Berkshire are in a joint mortgage venture called Berkadia. The Berkshire annual meeting is held in May, and we are starting to see some of Buffett's comments in the media.

Berkshire Hathaway has a long term position in Wells Fargo (WFC).  Portfolio’s holdings in Wells Fargo were sold on May 6, 2013 in an attempt to eliminate overexposure while recognizing that the banking sector is not much more attractive than average these days.

JP Morgan (JPM) was sold in the last 60 days, as well. The portfolio has been in and out of Safeway (SWY) at a loss, but continues to hold Kroger (KR) in the grocery sector. Fast growing Service Now (NOW) was bought and sold at a loss.  The volatility of NOW is a bit too high, and the cash flow characteristics of NOW are not yet appropriate for the model.

J.M. Smucker (SJM) is a brand name food company, as is J & J Snack Foods Corp. (JJSF). Crocs (CROX) and Hanes Brands (HBI) are name brand sellers in the shoe and apparel fields that have earned a place in the portfolio.

Cigna (CI) is a recent addition to the portfolio offering exposure to the healthcare and insurance sectors. Comcast (CMCSA) has been in the portfolio for quite a while. Between the multi-industry companies and the consumer staples companies like Kroger, Crocs, Comcast, J&J Snack Foods, J. M. Smucker and Hanes, I personally believe that Jim Cramer would agree that the portfolio is diversified.

There has been a bit too much turnover lately in the model, but I believe the turnover rate will moderate as most of these companies will  become core holdings.

The investments discussed are held in client accounts as of April 30 , 2013. These investments may or may not be currently held in client accounts. The reader should not assume that any investments identified were or will be profitable or that any investment recommendations or investment decisions we make in the future will be profitable.

Covestor Ltd. is a registered investment advisor. Covestor licenses investment strategies from its Model Managers to establish investment models. The commentary here is provided as general and impersonal information and should not be construed as recommendations or advice. Information from Model Managers and third-party sources deemed to be reliable but not guaranteed. Past performance is no guarantee of future results. Transaction histories for Covestor models available upon request. Additional important disclosures available at http://site.covestor.com/help/disclosures. For information about Covestor and its services, go to http://covestor.com or contact Covestor Client Services at (866) 825-3005, x703.

James Roberts

James Roberts

I worked for a micro-cap value hedge fund as a research analyst for 8 years and then opted for semi-retirement

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