Besides oil stocks, Cheney has a large position in Morgan Stanley Dean Witter. While it’s unclear when he bought the stock, it’s been an excellent performer, rising in the past three years from a split-adjusted price of $20 per share to $80 today. Other, smaller holdings are mostly Old Economy blue-chips, like Procter & Gamble, Union Pacific, Reader’s Digest and Lockheed Martin. More tech-oriented holdings include Motorola and EDS.
Cheney also apparently got in on some lucrative IPOs in 1999. According to a recent New York Times report, he quickly resold stocks that had skyrocketed from their offering price, racking up an 80 percent return valued at close to $46,000.
Equities make up 61 percent of Cheney’s portfolio, with the balance in cash.
Zabalaoui suggests Cheney boost his equities allocation another 10 percent, while redirecting some of the cash into municipal bonds. He recommends an overall weighting of 70 percent equities, 20 percent muni bonds and 10 percent cash, although he says the exact proportions would depend somewhat on Cheney’s cash needs.
He’d also like to see Cheney sell some oil holdings and funnel the money into diversified no-load mutual funds. On Zabalaoui’s shortlist of fund buys: an S&P 500 index fund, Rydex OTC, Strong Growth, TIP Turner Midcap Growth, Strong Growth 20, Fidelity Growth and Janus.
Setting aside the problem of overconcentration, Zabalaoui says, Cheney’s portfolio is basically “in line with a wealthier retiree who’s not in a position to need to take a lot of risk.” That’s a relevant concern, he adds, particularly in light of recent market volatility: “When you have $12 million, how much risk do you need to take?”