35

Then and Now – TransAlta

This post is a continuation of my series Then and Now where I revisit some older blogposts and either rip them to shreds (because my thinking has changed) or I’ll confirm my position on some personal finance topics or specific investments.   My previous post was about Enbridge where this stock has gained over 100%.  Today’s post will be about TransAlta.

Then

  • I started writing about TransAlta on this site back in 2010.  I actually purchased some TransAlta stock earlier that year.
  • TransAlta stock was just over $20 when I purchased it.
  • I purchased enough stock to start running a synthetic DRIP, whereby when the dividends are paid, the money is reinvested to buy at least one more full share each quarter commission-free.
  • I ran the DRIP for a couple of years then stopped.
  • Since early 2012, TransAlta stock has been a mess.
  • TransAlta cut their dividend in February 2014 by 50%.

Now

  • TransAlta share price is just over $13.
  • I continue to hold some TransAlta stock but I’ve lost money.
  • I continue to collect the TransAlta dividends paid in cash.

My decision to buy (and hold) TransAlta was downright foolish.  I will probably continue to own this company until a) there is a buyout and/or b) until I can use the money to offset capital gains incurred.  At least I don’t own very many shares of this stock but that’s little consolation.  Not every investing decision comes up roses and this is my best example of a stock selection mistake in recent years.  Potentially if I hold the company long enough things will work out (for a buyout) but I have my doubts.  I would have been much better off owning an equity indexed fund over the last few years instead of TransAlta.

Did you ever own TransAlta stock?  Do you still own TransAlta stock?

What do you make of this investing blunder?  What should I do?

Filed in: Stocks

35 Responses to "Then and Now – TransAlta"

  1. Gary says:

    don’t be sad mark. i bought penn west petroleum for around $14. and kept it for 3 years. my wife made me sell it last month for $10.90 — yuk. if thats the only loss i ever take i guess i’m very fortunate. it was in my tfsa so that was a double whammy!!! don’t keep ta too long.

    • Mark says:

      Thanks Gary. I’m tempted to hold it for a bit before selling to offset some gains that I’ll incur next year, moving some holdings from non-reg. to max out the TFSA in 2015. Then again, maybe I will just collect the 5.5%+ dividend and use the cash elsewhere for a few years. *sigh*

  2. Robb Engen says:

    I owned this stock very briefly when I first started investing in individual stocks. I was focused more on high yield than on the ability to grow dividends, but quickly came to my senses.

    I know it’s hard to sell your losers, but you have to ask yourself if the $5000 (or whatever) you have invested in TransAlta right now wouldn’t be better served somewhere (anywhere) else. Forget what you paid, forget what you lost, and pretend you just have that money sitting in cash and need to decide what to do with it.

    • Mark says:

      I think we thought the same about this stock early on Robb..you got out, I didn’t. I have just over 100 shares in the TA stock, I’ll consider your decision…you sound like another reader Gary. :)

  3. HarveyM says:

    If you owe XEI or XDV dividend etfs or the broader market XIC you own TA! It is a large company included in the S&P TSX 60 Index so probably most people have it in their portfolio such as everyone who likely has its etf replication XIU. But, if you’re diversified and not concentrated in your equity portfolio you shouldn’t have lost much and still you’re getting a sizeable dividend which is likely now sustainable! Alberta’s economy is sizzling and electricity requirements will increase and so will the price.

    • Mark says:

      Yes, XEI, XDV, XIU and XIC and many more dividend and equity ETFs have TA in their portfolio, you are correct. I suppose if you look at it that way…owning it directly as long as the amount isn’t too much, isn’t a bad thing since the downturn of TA is largely, well, it is, offset by other major gains in my portfolio.

      I own about 30 CDN stocks, most of XIU actually, so I am somewhat diversified from the CDN perspective. I need more U.S. and international holdings though.

      Alberta’s economy is humming along nicely, I wonder if TA will rebound?

      Thanks for the comment Harvey.

      • HarveyM says:

        It was (still is) investment dogma to own foreign domociled companies. That made good sense when countries had isolated economies! But now, most companies are multinational since we have become a global village in business practice and free trade. Consequently, I own only Canadian companies because many of them even utilities carry on business in many countries. True, I may be missing certain sectors but nothing is perfect. I find it simpler and there’s much solace in that :)! Do you feel strongly that you need international equities since stock exchanges move together and it’s far easier to learn the domestic market?

        • Mark says:

          Well, I feel I need to own more US and International stocks/equities since Canada is such a small market on the big stage. I think if I can get about 50% of my portfolio into US/International equities and the other 50% in CDN assets, that’s pretty good I think.

          You’re right, there is no perfect portfolio but diversification is always a good thing. That’s just my take.

          The problem I see going forward for me, is how to manage the U.S. stocks and ETFs. I will probably hold the U.S. stocks eventually in an US-dollar TFSA, pay the 15% withholding tax on dividends but everything else is tax-free dividends and capital gains are sheltered.

          Oh, it is easier to understand our domestic market…I don’t have time to follow the others truth be told!

          • HarveyM says:

            You have to find your own way in investing. As you know, it’s simple but not easy! BTW, I think it will take TA 5 years to turn around. It all depends on so many things: interest rates, fuel prices, economic demands. Don’t know if you can open this URL, but it’s a good read re: TA.
            https://solutions.standardandpoors.com/SP/spreports/StockReport.do?pc=BMI&tracking=BMI&type=URL&company=TAC&auth=235112018228000073205148016212024183097091092138

          • Mark says:

            I think TA will come around, but it will take time, energy needs aren’t going anywhere…

            I couldn’t open the link though HarveyM.

          • Definitely sucks to have a loser, especially in a TFSA since you cannot claim capital losses within it:(

            I would suggest if you wanted to go into US stocks, to hold them within an RRSP instead, since you will avoid those pesky US withholding taxes within it from US companies. So long as you are still accumulating the assets for the next 10years or so its probably worth it since your investments will be able to grow for a decent period of time 100% tax free.

          • Mark says:

            Thanks for the comments Wisp! The loser is in my non-reg. account, so I can claim capital losses (eventually). The TFSA has ETFs and REITs. The RRSP has U.S. stocks but I do not include the RRSP in these updates since I must eventually sell or withdraw some RRSP money. I’m not forced to wind down the non-reg. or TFSA – which is a great thing :)

        • Richard says:

          International markets still have big differences in their performance over a period of a few years. In the long run their returns are fairly similar so if you didn’t look at your portfolio for 20 years you probably wouldn’t notice much difference. Investors who have that much patience (especially when another market has done better) are very rare. Personally I could wait but I like the idea of being able to rebalance when one market is lagging.

          • Mark says:

            Excellent point about the long run Richard, markets are very predictable but in the short-term, things can be painful. I guess that is where investors get into trouble…short-term thinking, either in domestic markets or international markets.

  4. No but I own some Pfizer and I held on to Power Corp for way too long as well, we all have collective skeletons in our investing closets

    • Mark says:

      PFE has been doing well BCM?! I would continue to hold POW as well, that’s just me. I guess we all have some investing skeletons, well, most of us do!

  5. I don’t own Transalta but if I did, I’d probably continue to hold until I could collect enough in dividends to recoup at least part of the (potential) loss. You mentioned capital gains – if you have some gains in non-registered accounts, then that makes it even more tempting to sell since the capital loss could offset the capital gains

    • Mark says:

      I’m tempted to hold TA and collect the cash for now. Yes, I have capital gains (non-reg.) so if I decide to claim some gains, then I will sell TA to offset those. That is the plan for next year when I potentially move some non-reg. stocks to my TFSA.

  6. Peter says:

    TA was a good stock that was recommended by many pundits. I had some and lost about 20% before I sold it. Yea, it sucks but I figure that 1 or 2 out of 10 investments won’t work out, so you have to accept that and cut your losses when you start to see them stinking up the joint. If your winners outperform the losers, then you should be OK in the long run.

    • Mark says:

      You’re right Peter, it was recommended. I’ve been fortunate to be way up in many cases with my picks with no intention of selling them, so to your point, far more winners than losers. TA is my biggest loser in recent years, and it just sucks to see the loss but this can be a good thing to offset some major gains next year if I decide to sell. I guess there is a silver lining… :)

  7. I don’t own Trans Atlanta individually but I do own some ETFs that have it, so I guess through that, I do!

    I do own one stock that has dropped significantly since I bought it. Luckily I’ve not had it that long so there is hope for it yet, and it seems to be creeping back up. I’ll just hold it and see what happens for awhile.

    • Mark says:

      For sure, many CDN ETFs own TA and probably win for the yield, that is 5%+. That is a challenge with stocks Daisy, some go up, some go down and you have to be willing to hold such stocks for many years, otherwise, the stock isn’t worth buying in the first place.

  8. I’d probably hold it to until I could collect some of the loss then run. It’s interesting to read how you go back and evaluate what you once thought was great. Investing is risk like anything else no matter what way we look at it. Sometimes we win, sometimes we lose. We just hope we don’t lose more than we win or don’t lose the shirt off our backs. Don’t sweat it though, you’re a smart guy and I’m pretty sure there is a learning curve with investing just like everything else in life. At least, you are doing it on your own. I envy that. Cheers mate.

    • Mark says:

      This is where I’m leaning…hold it until I could collect some of the loss on my gains. I need to claim some gains next year, which would be the time to sell.

      I’ve won with many stocks far more than I’ve lost, so that’s a good thing in the last 5 years. I’ll make some more mistakes in the future but I’m hoping I’ll make less and less of them over time.

      Thanks for the comment Mr. CBB!

  9. Been lookin at Transalta but it makes me nervous. The dividend cut raised a big red flag and scared many off. I would still hold it because energy stock on the whole have a great long term outlook so I would def ride it out especially since they are paying still a good dividend.

    Good Day and Grind On!

    • Mark says:

      This is where I struggle as well…I can see TA churning out dividends for another 10+ years, if not more. Maybe a buyout and I get a premium. Thanks for the ride it out advice!

  10. Think Dividends says:

    TransAlta is a basket case!

    … but, my bet is that Warren Buffett will buy them (don’t expect a big premium) …

    Why Buffett? Berkshire Hathaway has partnered with TransAlta on some initiatives over the last couple of years… I think he is kicking the tires right now….

  11. Hemgi says:

    I give up with TA last week. I sell it with a profit of $32 over a three year period including dividend.

  1. […] to your Weekend Reading list.  Rob Carrick mentioned this article in The Globe & Mail recently, there’s now a cool DIY mortgage lending service available for Canadians and I answered a few […]

  2. […] dividend paying stocks with no intention of selling any of them in the short-term, including this one that has cost me a few hundred bucks in losses to date. (I’m tempted to hold this lame duck […]

  3. […] to talk about their winners, but you never hear about their losers.”   Not true on this site.  I enjoy the reality checks actually, they keep me […]

  4. […] risks.  Individual companies first of all can go belly-up, probably the worst-case scenario.  Individual companies can also cut their dividend or eliminate their dividend entirely; hopefully this does not happen to any of our holdings […]

  5. […] You may recall I wrote about this stock and wondered what the heck I should do with it.  Well, I decided to sell it this fall and “realize” a capital loss in doing so.  Because this stock was in a taxable account I could realize the loss now since I expect to pay some capital gains on some investments in future tax years.  I think this was a good call but I suppose I’m biased, otherwise I wouldn’t have done it.  I decided to cut the loser, pick myself off the ground and move on.  What did I do with the funds?  Nothing for now.  Did I make the right move?  What do you think? […]

Leave a Reply

Submit Comment
*

Top of Page

Copyright © 2009 to 2014 by My Own Advisor. All Rights Reserved. Admin
Powered by Theme Junkie  •  Designed by Dividend Ninja