Monday, November 8, 2010

Trade: Bought Chubb Corporation, Sold NYSE Euronext

Bought Chubb Corporation (CB) today for the Net Payout Yield Portfolio. CB has a current yield of 13.6% based on a 2.5% dividend yield and 11.1% buyback yield. More importantly CB has been more aggressive in the last 6 months on the buyback leading to an attractive investment potential.

CB provides property and casualty insurance for both business and individuals. Interestingly insurance companies seem to have the best yields these days whether via Wellpoint (WLP) in health insurance, Medco Health Solutions (MHS) in pharmacy benefits, or CB in property and casualty insurance. CB is the only one of the three with a dividend that has the 10%+ yields in the insurance sector.

Sold NYSE Euronext (NYX) to partly pay for this purchase, but mainly due to NYX no longer buying back stock leaving the yield low for this portfolio at just 4%. Also, for the new Covestor model it's a requirement for stocks to have a market cap of $10B leaving NYX short of that requirement so we've chosen to trim them to leave the portfolios in sync as much as possible.

The Net Payout Yield Model will be officially launched on Covestor.com towards the end of this month. Covestor allows investors access to this model with as little as $5K (though it requires $10K to establish an account with Interactive Brokers). Via Stone Fox Capital the minimum will be $100K.

Please contact Covestor directly about investing via them or Mark Holder at stonefox27@ymail.com with any questions about investing directly with Stone Fox Capital.

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