I decided to sell off a portion of my shares of Lorillard (LO). There's a few reasons I decided to do this.
- First, I previously mentioned that I'm buying a third rental property and I'll need some extra funds for that closing that should happen on 04/04.
- I also took advantage of the recent pop that shares of LO have seen due to the buyout rumors from RAI.
- Finally, since my LO shares are planned to be a half position with MO, they were overweight anyways. Part of my reason for having them as a half position happens to be their dependence on one blockbuster brand, Newport. There's still uncertainty about a possible menthol ban.
I sold off my initial purchase of 78 LO (26 shares that had a 3:1 split) late last week for $52.58. My cost basis on the original purchase was $2999.69 back on 10/11/12 and my proceeds were $4091.17 for a profit of $1091.48 that will be taxed as long-term capital gains.
I also received dividends this entire time and will still receive the dividend payment today since I held shares on the ex-dividend date of 02/26/14.
These 78 shares will reduce my forward dividend income by $191.88. I still own 52 shares valued at about $2750.
Good for you AAI. Too many people are afraid to sell, but it sounds like this will work out great for you. You sold after the big pop in the LO stock price and you're investing in your real estate assets. Great work
ReplyDelete-Bryan
Income Surfer,
DeleteThanks, I'll need these extra funds for closing and taxes for sure. I just hope I don't have to liquidate anything else.
Take care!
I'm certainly not to the point where I will sell any of my holdings in Lorillard, but am certainly intrigued by the potential buyout from RAI. There are some big concerns with the methanol ban issue and over-dependence on Newport, a methanol product, however, given the overall tax dollars and other implications of such a ban, I don't see it actually occurring in the near future. Too much money providing pressure on those in the FDA.
ReplyDeleteHI W2R,
DeleteIt is interesting about the rumors. I like RAI and wouldn't mind it but I decided to go ahead and lower my position while raising some money. If the RAI buyout rumors go away I feel like the stock will retreat back some. I'm honestly not too concerned about the menthol ban but I don't like one product making up the majority of their revenue.
Thanks for stopping by!
Does that mean we'll finally find out if the water flowing from the creek that originates on Lorillard Tobacco Company is non toxic? http://greensboroperformingarts.blogspot.com/2014/02/whats-up-with-community-gardens.html
ReplyDeleteHi Billy,
DeleteI'm sorry to hear about the water issues. I'll have to read through that article. I hope you do get clarification on what's going on.
Thanks for stopping by!
Oh, wait....
ReplyDeleteI have also Lorillard - and the acquisition by Reynolds gives me also thinking...
In my portfolio I have only 25 shares from LO but they are currently 13% in profit.
I don´t know, if I could sell the shares...
A tough decision.
If RAI get LO, it could be, that I received new shares and then I have to pay taxes in Germany...
Because of the Vodafone / Verizon transaction - I have received new shares from Verizon - and this amount was completely taxable...
Best regards
D-S
Hi D-S,
DeleteIf I didn't need the money, it would be tough for me to sell right now even with LO near a yearly high. You definitely would have to think about possible tax consequences of a buyout just like the VZ/VOD deal.
Thanks for stopping by!
I'd love to see the RAI/LO buyout/merger but I don't expect that to happen. In my opinion, getting the #2 & #3 domestic tobacco companies together would be pretty difficult as far as antitrust concerns. Although I'd like to see that happen. It's a prudent move to sell off some winners every now and then, especially if they aren't part of your core portfolio. Given that it was overweight vs MO it's a good move. Best of luck with closing on Rental #3.
ReplyDeletePIP,
DeleteYou make a good point, the merger could take a long time with all the regulations involved. I felt like I had a few good reasons to sell so I went ahead and won't look back.
Thanks, it should close early April. I'm pretty excited about it.
Cheers!
LO has had a very nice move recently. I bought some PM to finally get some exposure to tobacco. What I know from selling stock for real estate, you have to put it behind you with no regrets. I sold GOOG to help refinance my home. Unfortunately that was at $612 just before it doubled. At the time it made sense to get the lower house payment.
ReplyDelete-RBD
RBD,
DeleteI really like PM and they are much more diversified and also have the international exposure. I agree with you about not looking back. Whether LO goes to $30 or $80, I won't worry about it. I know this is the move I needed to make right now.
Take care!
AAI,
ReplyDeleteSeems like a prudent move here.
I'm also weighing a move on LO. I was *this* close to selling when it popped above $55/share, but got busy at work and didn't get a chance to revisit it. LO is interesting in that it's got so many great things going for it, yet so many potential issues as well.
Best wishes!
Hi Jason,
DeleteThanks, I think the sell was justified. I definitely left some money on the table as the price had come down a few dollars before I sold. Oh well, it's hard to time the market.
I agree with you about the risk though. I'm not comfortable having a full position in a company that's so reliant on a single product.
Thanks for stopping by!
That's a nice gain on LO there and I don't blame you at all for selling at this point. Nobody ever went broke making a profit. Best of luck on the third property !
ReplyDeleteHi Captain,
DeleteI agree, I had a very nice return, especially after considering all the dividends I collected. I can't complain about that! My taxes will also be minimal since it was a long-term capital gain.
Thanks, the closing is set for 04/04. I'm excited!
Take care!