December 10

My Portfolio Is Leaking Oil


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This year has been a tough one for the energy sector. I honestly thought we would see recovery in Q4, but it might be another year away. All year I have been buying positions with familiar names – Chevron, National-Oilwell Varco, Kinder Morgan, ConocoPhilips, BP, etc. I am long oil, but my portfolio is energy heavy. I decided to sell a few positions today to diversify my portfolio. Added up, my energy sector stocks represented 16.2% of my portfolio. Today I decided to sell of some shares which dropped my energy allocation to 14.4%. I plan on making 2 more stock buys this month which should drop my exposure to 10%, which is the level of diversification I am looking for.

Kinder Morgan

I sold 100 shares of Kinder Morgan (KMI) today at $17.23 per share totaling $1714.47. I was overly excited earlier this month when KMI was falling off a cliff. I bought 100 shares at $20.52 and 100 more shares at $17.79. These two buys took my KMI share total to 350 shares. Fast forward a few days and a 75% dividend cut announcement. I still like KMI and I am holding 250 shares. I think the company will right the ship and start increasing dividends again. Additionally, the business as a whole will be much healthier which I see as a signal of a stock price increase.

Given the dividend cut, I decided to sell my last lot of 100 shares that I bought for $17.79 a share. This sale resulted in a loss of $72.38. Considering all the negative press surrounding KMI, this is in my opinion a manageable loss. I plan on selling covered calls to cut my cost basis over the next 6-months.


I have bought and sold Petrobras (PBR) several times this year. This stock has bounced between $4 and $10 dollars this year. I sold my last 100 shares today at $4.88 per share, totaling 967.25. I sold for three reasons, 1 – Petrobras doesn’t pay a dividend, 2 – My energy sector exposure is too high, 3 – I wanted to sell now to protect my gains. This year PBR has netted me $1,632.39 in income.


In my excitement to get deals, I bought too much stock in one sector. This excitement was also premature; had I waited to buy I would have seen much cheaper prices on some of the stocks I bought this year.  Because of my trigger happy buying spree, my overall portfolio value has taken a negative hit this year. In retrospect, I would have stayed the course and invested some of my money into other sectors. However, I am still long on energy and I know I will get my money back in the future. In the meantime, I’ll collect dividends and DRIP my energy holdings.

What are your thoughts on energy? Do you think the sector will recover in 2016?


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