Somehow April Fools’ Day seems like the perfect opportunity to discuss my stock picks.
Aquila (ILA-NYSE) has tanked so hard that it’s made the Titanic look buoyant by comparison. Those of you who’ve enjoyed this ride to the bottom with me can draw solace from this simple fact: I’m right there with ya. I started recommending ILA at $16. Then $10. Then $6. Then $2.65. Since then it’s been as low as $1.07. Presently it’s at $2.18. I’ve sold about 150 shares at a massive loss (to offset a massive capital gain from the forced sale of American Water Works stock). I still hold a couple hundred Aquila shares. Losing money turns out not to be so much fun.
If the company can get their short-term financing situation handled, I think they’ll be OK. If not, then it’s been good knowing ya, hello bankruptcy court. ILA’s got a book value of about $12 a share, and even if that’s inflated, I’m as confident as I can be, given that I’ve been just about totally wrong every step of the way, that ILA is worth something north of $6 a share.
Optimist that I am I think we’ll see a turnaround. Bush is likely out of office in late 2004, so I’m guessing we’ll see a rally after that if not a little sooner. In the long run, I think Aquila will turn out OK. It’s gonna take a couple years, but I think they’ll get there. If not, we’ll probably know by the end of the month.
I added three stocks to our portfolio recently: Pfizer (PFE-NYSE), the world’s largest pharmaceutical company; Piedmont Natural Gas (PNY-NYSE), a utility; and Sasol (SASOY-OTC), a South African oil company soon to be listed on the New York Stock Exchange. The first two I’m using a dividend reinvestment program (DRIP) to put money in. With Sasol, I just bought a block of shares. Pfizer and Piedmont can be considered safe, conservative, core holdings. Sasol’s a little more risky, but I think there’s very good upside.
These stocks join Aberdeen Asia-Pacific Income Fund (FAX-NYSE), Genuine Parts (GPC-NYSE), Heinz (HNZ-NYSE), MDU Resources (MDU-NYSE), Scherling Plough (SGP-NYSE), and Zweig Total Return (ZTR-NYSE) in our non-retirement portfolio. On the retirement side, we’ve sold out of Scudder International, a fund that’s done little but disappoint since Scudder was bought out. We’ve switched our international monies to Fidelity Diversified International (FDIVX). We’ve also got Fidelity Dividend Growth (FDGFX), Fidelity Growth Company (FDGRX), Fidelity Growth and Income (FGRIX), Fidelity Low Priced Stock (FLPSX), and a little bit of Apple (AAPL-NASDAQ), the last one mainly because I’m a doofus when it comes to the company. I’m comfortable recommending all the Fidelity funds, Pfizer, Piedmont, Genuine Parts, Heinz, and MDU Resources. The others are OK and may even do very well, but they’re not necessarily conservative investments.
From here on out, I’m looking to pay more heed to my own investment criteria. One would think I must have developed it for some reason. No more Aquilas for me.
[UPDATE: Actually, I looked back at my records. When I first got into Aquila, it did meet my investment criteria. It was when it subsquently went downhill that I ignored my own best advice. I did that with Apple as well, though in both cases if you look back you’ll see I issued warnings too.]