Sun Life (SLF) – Model Price Performance Update Blog

“One of your ‘Coming Out of the Blue’ stocks has hit your target level, what happens now?”

Great question?  Let’s do a review.

First, some background.

Back on February 28, 2012 I highlighted Sun Life Financial as a candidate for our unique investment strategy called ‘Coming Out of the Blue’.

What is this investment strategy?

A stock that has a positive transit of our last line or EBV-3 we call ‘Coming Out of the Blue’.  We color our last line, EBV-3, blue giving us the name of the strategy.  Model Price Theory (MPT) stipulates when a stock crosses or occurs a positive transit of EBV-3 the market, through the equity price of the stock, is communicating to model price users the market is starting to form a connection to the balance sheet of the company.  In other words the market is starting to believe the value of the stated corporate assets on the audited publicly released balance sheet of the company.

For investors this event, positive transit of EBV-3, represents two independent pieces of information interacting together that rarely, if ever, happens in the conventional world of modern financial analysis.  Once a ‘Coming Out of the Blue’ event occurs model price users can make an investment and patiently wait for possible ‘Jumbo’ Gains‘ to accrue.  The only proviso is if the company has a negative transit of the same EBV-3 level the investment position should be sold.

Back to Sun Life (SLF)

Sun Life had a positive transit back on February 28, 2012.  I alerted readers of this event here in this blog.  Here was the model price chart back on February 27, 2012.

Sun Life with weekly price bars, EBV Lines (colored lines) and model price (dashed line)

Subsequent to this original blog on February 28, 2012 I updated the Sun Life model price chart for readers on March 26, 2012 and annotated my target price for SLF at $36 per share.

Sun Life Financial with weekly price bars, EBV Lines (colored lines) and model price (dashed line)

Here is the current model price chart of Sun Life as of last night’s computer run.

Sun Life Financial with weekly price bars, EBV Lines (colored lines) and model price (dashed line)

Sun Life Financial with weekly price bars, EBV Lines (colored lines) and model price (dashed line)

Rate of Return Analysis

I would have (and did) purchased SLF back on February 28, 2012 at $21.60 – plus or minus – and it’s currently $37.56 representing a simple gain of 77% approximately.  But wait, Sun Life pays a nice dividend as well!  With dividends reinvested at say 1%, Sun Life has returned almost 90% in the last 21 months.

Not bad!

So smart guy when do you sell?

I have blogged previously 99% of investors buy at the right time and the right price.  Selling is another story entirely.  One of my early investment mentors suggested only 5% of investors sell at the right time and price.

Do you want to be one of the 5% who sell Sun Life at the right time and the right price?

Model price to the rescue!

I wait for a negative transit, any negative transit.  Sun Life could have a negative transit of EBV (Green Line) tomorrow and I would be a seller.  Three years from now, hopefully I’m still an investor in SLF; the company could have a negative transit of EBV+2.  Yes, I would be a seller.  Simple.

Do I care how long this takes to play out – a negative transit? Not in the least!  Remember I purchased Sun Life at the right price and I’m still receiving a nice dividend.  SLF is currently paying a $1.44 a share in dividends – possibly higher three years from now – and my purchase price was $21.60.  I’m receiving 6.7% dividend yield on my original purchase.  So I can be patient for my sell signal or negative transit to occur.

Would I have put my whole portfolio in this ‘Coming Out of the Blue’ situation?

No.

You don’t have to.  Our Model Price App covers and has model price charts for over 2,000 companies.  As a rule I only put 2% to 5% of my portfolio in each ‘Coming Out of the Blue’ situation.  Also I am very mindful of industry concentration as well.

Conclusion

‘Coming Out of the Blue’ investment strategy is unique to model price.  No other investment firm or research house has this very easy to use investment strategy.  With our extensive model price database there always seems to be companies trading below our last EBV line or EBV-3 that I view as raw material for substantial future investment gains.  Also I try not to over analyze the corporate name and what the business press has to say about the company.  The less I know about the company the better – remember you want a portfolio of these names not one or two.  Diversify and be patient.

Not a bad way to run your portfolio, Yes!

P.S. Psst….Don’t tell anybody!

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