Marco & Community,

I ran across an issue while reviewing one of Parker Binion’s (KernsCapital) Designer Models: The Dividend Investor

In the “Closed Trades (30 days lag)” table it shows that the Port held MO for 4186 days and had a -3.18% return. I was curious why a Port might hold a stock for 11+ years and have no gain so I checked MO’s chart. Subtracting out dividends MO had over a 200% gain in the 11+ years. I asked Parker about it and he responded in part:

“The model bought 591 shares of MO at $74.06 on October 24, 2005. In 2007, MO spun off Kraft, and the model received a $21,89/share dividend. In 2008, MO spun off Phillip Morris, and the model received a $52.40/share dividend. The model purchased an additional 1536 shares of MO in April of 2009 at $16.93. The model sold 2146 shares of MO on April 10, 2017 at $71.71. During 2005-2017, MO generated a ton of regular dividends. P123 apparently went back to the first purchase price in 2005 to calculate the gain for all shares without regard to spin offs or dividends. $71.71 divided by $74.06 = 3.16% loss.”

We understand that P123 reflects the dividends paid in the equity curve of the Port, but to show a stock that rewarded an investor in it as a loss instead of a 200+% gain is very misleading for members that are reviewing Designer Models for possible systems to subscribe to.

I would like to recommend that P123 add a column Dividends Paid to the “Closed Trades (30 days lag)” table. (It may need an * to explain why it is there)
Results: Total score: 6 , # of Votes: 2 , Average: 3.0
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Requested by: DennyHalwes
On date: 06/06/17
Category: Portfolio