Month: November 2013

Alpha Central: Alive and Well

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It’s become something of an annual pilgrimage. The Mid-Michigan chapter of NAIC, the umbrella organization for investment clubs, started a stock picking challenge twelve years ago. Clubs and individuals submit their entries and the results are tracked over the course of one “Halloween” to the next. (The annual breakfast is always between Halloween and Thanksgiving.)

This year, a club that goes by the name of Street Smarts (Saginaw, Michigan) took home the top prize by turning $100,000 into $175,000 over the 12-month period. 75%. Yowza. Wowza.

They were joined by another (16) clubs with returns besting 30% — in other words, out performing the market by at least five percentage points. In contrast, only 12-of-28 failed to beat the market … and the average result was 29%. Their consensus selections essentially matched the market — but the track record is strong as the consensus portfolio has beat the market in 10-of-11 years.

Kudos. I attend a lot of these. I watched recently as similar groups in other parts of the country handed winner’s certificates to portfolios finishing closer to 30%. Eddy Elfenbein of www.crossingwallstreet.com is closing in on another victorious year — hopefully his 7th in a row — with a Buy List portfolio tracking at 34-35% YTD.

The leaders of our annual Groundhog Day-to-Groundhog Day Iditarod are no slouches, either. Our defending champion investment club, the Broad Assets (St. Louis) stand at +83% in the current contest. (Since 2/2/2013) We chronicled their exploits for 2012 here as they finished #1 with a +27.5% total return last year. The finish line for our contest (2/2/2014) is still on the horizon, but Broad Assets has a mammoth lead going into the home stretch.

2013 Groundhog Challenge Scoreboard

We’ll be taking entries for Groundhog 2014 during the last week of January. All individuals and groups (clubs) are invited to submit 5-20 investments.

The fact that 57% of the Mid-Michigan entrants beat the market is not unusual. 51.7% of participating Groundhogs have done the same over the trailing 8 years.

It’s how they/we do it that matters. The swinging-from-the-heels is actually kept to a minimum. The list of top performers include Apple (AAPL), Bio-Reference Labs (BRLI), Coach (COH), Cognizant Technology (CTSH), Google (GOOG), IPC Hospitalist (IPCM), Qualcomm (QCOM), ResMed (RMD) … you get the idea. Many of our community favorites represented by our 40 most-widely held companies are present and accounted for, along with a suitable dose of promising small- and medium-sized companies that keeps the overall growth forecast of the portfolio where it should be (12% or more).

Companies of Interest

Would you be surprised if I told you that Edwards Lifesciences (EW) is on the radar screen of these successful Mid-Michigan stock pickers? Because it is. You shouldn’t be surprised. The road to Alpha is paved with companies with superior return forecasts in combination with high quality rankings.

Materially Stronger: Johnson & Johnson (JNJ), McKesson (MCK)

Materially Weaker: Cutera (CUTR), Thoratec (THOR), Nissan Motor (NSANY), Caterpillar (CAT) 1, Astec Industries (ASTE), II-VI (IIVI), Rofin-Sinar (RSTI), Abaxis (ABAX)

1 Would not usually make this list, but dropped from $105 to $95.

Market Barometers

The median Value Line low total return forecast (VLLTR) is now 3.7%, down from 3.9% last week.

Round Table (November 2013)

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Join us Saturday morning (11/23 11 AM ET) for the November 2013 Round Table as we explore, discover and CELEBRATE the performance results of the tracking portfolio.

FREE webcast! Register at: http://www.manifestinvesting.com/events/136-round-table-november-23-2013

The mood is certain to be festive — grateful, even — as we celebrate a legacy of stock selection in/with a COMMUNITY of long-term investors who are no strangers to the land of alpha and positive relative returns. We’re not afraid to keep score and we’re always seeking lessons and best practices to make us all better.

The annualized relative return since inception is now at +3.1% with an overall outperformance accuracy of 57.9%.

Approximately 2% of 20113 funds achieved better performance over the trailing 3-years. [Source: Morningstar]

Ken Kavula, Hugh McManus, Mark Robertson and special guest damsel, Susan Maciolek will share our favorite Thanksgiving stock ideas.

Tune in to see if Hugh McManus can actually find a deep value stock that captures his attention … he’s “passed” a few times lately and believes that bargains are a little more challenging to find than usual even as Black Friday approaches.

Companies Likely To Be Studied/Presented:

  • Apple (AAPL)
  • Cognizant Technology (CTSH)
  • Panera Bread (PNRA)

References:

Round Table Tracking Dashboard

Red October: Forbes Best Small Companies for 2013

This Week at MANIFEST (11/15/2013)

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Movember? Going Grubby?

I’m not sure whether it’s a hunting season thing … or merely an excuse that many men use to take a break from shaving, but Movember is in full swing in many places. Beard Mania was celebrated BIG in Boston during their recent World Series conquest with many of the Red Sox players sporting facial hair that would have made bearded Civil War combatants proud.  The appearance, including some modest twerking with Carrie Underwood, by Duck Dynasty with Willie Robertson and his fam on the Country Music Awards further popularized canning the razor blades and donning the bandana …

But the shaving continues when it comes to the fundamental analysis of our update batch. We continue (with a few notable exceptions cited below) to see that stealthy reduction of long-term forecasts combining with erosion of 2013 and 2014 consensus estimates on both the top and bottom lines.

And to the U.S. veterans who have served, and their incredible contributions to freedom, whether you decide to sport a moustache, beard or both — we say a simple THANK YOU! from the bottom of our hearts. Simply put, YOU ROCK.

Companies of Interest

There’s a smidge more companies on the “Stronger” line this week, but still nothing to write home about. Microsoft (MSFT) finally received a fundamental upgrade and Priceline’s price surge over the last several months (+61.8% over the trailing 12 months) also merited a closer look and a modest boost. But the trimming continues to far outweigh any boosting as the rhinos seem to refuse to Movember with the rest of a stubbly and grubby nation.

Materially Stronger: Microsoft (MSFT) 2, Priceline (PCLN) 3, Zions Bancorp (ZION)

Materially Weaker: Fusion-IO (FIO), Teradata (TDC) 1, Nuance Communications (NUAN), LinkedIn (LNKD)

1 Teradata (TDC) reduced to $65, from $75, on long-term low price forecast. Annualized return drops from 14% to 10.2%.

2 Microsoft (MSFT) raised from $40 to $45 for long-term low price forecast.

3 Priceline (PCLN) raised from $1265 to $1380 for long-term low price forecast.

Market Barometers

The median Value Line low total return forecast (VLLTR) remains unchanged at 3.9% during this week’s update.

This Week at Manifest Investing (11/8/2013)

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A Whole Lotta Genius Going Around …

… and with returns on the average stock up +28.7% over the trailing 12-months, a lot of people are pretty effective investors again. The stocks in this week’s update batch are up +44.7% (!) themselves so it’s been a pretty good year in some corners of energy and entertainment. Schlumberger (SLB) ranks among the worthy study candidates on a fairly short list after some turbo-charged performance. The stocks check in with a nearly overbought (RSI = 68) condition and that momentum can’t last forever. Current price pressure matches the overall average at +21.9% so if there was any “catching up” to be done (for this week’s update batch), it’s probably been done.

Companies of Interest

We’re not kidding about that year-over-year surge in this week’s stocks — and it’s a reminder of WHY WE DO THIS. Take a look at highlighted stocks from a year ago … all of these have delivered a smile or two since then.

I wish I could say that the stealth deterioration of fundamentals has stopped or is slowing — but I can’t.

Because it hasn’t.

We continue to see degradation of 2013 and 2014 forecasts while the rhinos teeter about doing Twitter cart wheels.

Materially Stronger: Air Products (APD), Helix Energy Solutions (HLX)

Materially Weaker: Konami (KNM), ValueClick (VCLK), Gannett (GCI)

Market Barometers

The median Value Line low total return forecast is 3.9%, down from 4.0% last week.

Events & Coming Attractions

For those of you in Chicagoland, Ken Kavula and I will be in town for a full day session on Saturday exploring sources of ideas, disruptive stuff and more:

There’s still room at the inn and we’ll do “standing room” if we have to … for more information:

http://www.manifestinvesting.com/events/134-successful-investing-how-we-do-it-november-9-2013

Best wishes and Better Investing everybody.