Portfolio Outperformance Hits Record High!, By Brian Nelson, CFA
The Valuentum Buying Index (our stock-selection methodology) continues to lead our Best Ideas portfolio to significant outperformance (nearly 30%!). Since the previous edition of our Best Ideas Newsletter, the portfolio had one of its best months of relative performance since inception. We credit the strength to capital allocation decisions prompted by the strategy’s significant profit-taking through the course of this year. Said differently, as the market swooned during the past several weeks, our large cash position shielded the outsize gains we had accumulated since inception.
We’re not going to sugar-coat what’s ahead of us through the end of the year. Volatility will be intense as Congress attempts to resolve the looming fiscal cliff (see image on page 11), and the sell-off that we had warned about last month will likely continue. However, as we look forward to 2013, we continue to expect strong fundamentals from the holdings of our Best Ideas portfolio (see page 8), and we think we are well-positioned to demonstrate continued outperformance.
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*The performance quoted in the originally-published newsletter incorrectly accounted for shares of Intel. The corrected share count is 150 (not 200 as originally published). The corrected Best Ideas portfolio return is 34.1% versus the benchmark return of 5.5%, a gap of 28.6% — still a record high of outperformance.
INSIDE THIS ISSUE
1 Portfolio Outperformance Hits Record High!
1 EDAC Tech’s Shares Offer Investors a Huge Bargain (ticker: EDAC)
2 Demand Headwinds Refocus Materials Companies (see article for tickers)
3 Best Idea Precision Castparts Buys Titanium Metals; We Like the Deal (ticker: PCP)
3 Keeping an Eye on Monster Beverage (ticker: MNST)
4 Berkshire Hathaway’s Headline Looks Great But Operating Earnings Down (ticker: BRK.A)
4 Our Long Term Thoughts on Regional Banks and Asset Managers (see article for tickers)
5 AIG Beats Estimates; Shares Remain Attractive (ticker: AIG)
6 Astronics Stuck in Neutral after Profitability Stalls (ticker: ATRO)
7 October Auto Sales Were a Tad Light; We’re Not Worried (see articles for tickers)
8 Our Best Ideas Portfolio
9 Visa Continues to Deliver Top Notch Results (ticker: V)
10 Amazon Continues to Lose Money; Market Continues to Not Care (ticker: AMZN)
11 What Is the Fiscal Cliff?
12 JC Penney’s Strategy Change Was and Is Necessary (ticker: JCP)
13 Abercrombie’s Earnings Surprise Doesn’t Tempt Us (ticker: ANF)
14 Starbucks Posts Solid 4Q (ticker: SBUX)
15 Ideas for Your Radar
17 Featured Reports: Goldman Sachs (GS), Revlon (REV), Synaptics (SYNA)
20 Our Stock-Selection Methodology