MANIFEST 40 (3/31/2016)

Your Most Widely-Followed Stocks: An Update

Our MANIFEST 40 is a celebration of collective excellence in stock selection, strategy and disciplined patience.

The 40 stocks are something of a barometer because we know that these community favorites are not simply followed … most of them are also widely owned, with considerable diligence and vigilance.

MANIFEST 40 (March 2016). Performance Results. These are the most widely followed stocks by Manifest Investing subscribers. Current leader Apple (AAPL) was added on 9/24/2009 and steadily climbed the ranks while generating a relative return of +20.3% (annualized) since then. Figures in parentheses are the ranking back in December 2015.

The rate of return is 9.0% since inception (9/30/2005). Bottom line? On an annualized basis, your community favorites have beaten the Wilshire 5000 by +3.6 percentage points — a relative, or excess, return that probably portends outsized success with our actual portfolios.

Quality (90) is solid and the overall return forecast (8.9%) is positioned to outperform the Wilshire 5000. At an average sales growth forecast of 6.8%, we’d to see some faster-growing companies adopted by our community.

Capturing Attention: Chargers

Gilead Sciences (GILD) moved from #25 to #22 as most of the list remained rather steady. Visa (V) is a new addition at #40. The results of $100 positions investing in any of the Top 40 companies can be viewed at any time via the public dashboard on the home page.

“We have always believed that the collective decisions made by our community of long-term investors are worth huddling over … a place where ideas are born.”

The Stocks We Follow (MANIFEST 40)

Perspectives

MANIFEST 40 Update

Our MANIFEST 40 is a celebration of collective excellence in stock selection, strategy and disciplined patience. We continuously monitor the 40 most-widely followed stocks by our community of subscribers at Manifest Investing.

“We have always believed that the collective decisions made by our community of like-minded, long-term investors are worth huddling over … a place where ideas are born.”

This managed “tracking portfolio” of your collective favorites has outperformed the Wilshire 5000 by +3.3%. The absolute rate of return for the trailing 9.5 years is 9.6%.

Capturing Attention: Chargers

QUALCOMM (QCOM) continues to ascend, moving from #12 to #11. CVS Health (CVS) has been bolstered of late and moves from #38 to #37.

The results of $100 positions investing in any of the Top 40 companies can be viewed at any time at: http://www.manifestinvesting.com/dashboards/public/manifest-40

Newcomer

T. Rowe Price (TROW) is a newcomer to the MANIFEST 40. The company was featured in Solomon Select in the July 2014 issue and has been discussed during a number of Round Tables and during other events. The asset manager is highly regarded in this long-term investing community and has been a favorite for decades.

Strongest Performers

The three top performers in the MANIFEST 40 since inception, based on annualized relative rate of return, are Cognizant Technology (+30.7%!), Apple (27.5%), PRA Group (20.2%).

The charter members of the MANIFEST 40: Microsoft (3), Stryker (4), AFLAC (5), Johnson & Johnson (6), General Electric (7), Cisco Systems (10), Walgreen (12), FactSet Research (13), Oracle Corp (17), PepsiCo (18), Teva Pharmaceutical (20), Intel Corp (22), Medtronic (23), Danaher (27) and Wal-Mart (33).

We’ll continue to pay the most attention to these community favorites. Keep up the good hunting!

More Fun With The MANIFEST 40

Here’s the listing (ranked from Most Widely Held, Descending) with a display of Opinions on Parade courtesy of Manifest Investing (consensus-based), Value Line, Morningstar, Standard & Poor’s, Analyst Consensus Estimates and Goldman Sachs.

Mi 40 opinions 20150410

Value Line Low Total Return Screen (4/12/2013)

Photo Credit: bayat via Compfight cc

Companies of Interest

This week’s short list is the type of list we start to see near market tops. Several of the companies fail to reach the top quality quintile (Quality Ranking > 80) and we included AFLAC (AFL) although it’s on the edge.

We’ll be spending more time this month with Teva Pharma (TEVA) and the generic pharma industry to examine the bigger picture and longer term expectations. It will be part of the agenda for the Round Table on April 30.

We’ll also take a look at Robert Half (RHI) as a study candidate — but from the perspective of “traps” as community favorite RHI ends up in the “Look Out Below” roster this week along with Mylan Labs (MYL) and Novo Nordisk (NVO).

Materially Stronger: Biogen Idec (BIIB), Bristol-Myers Squibb (BMY), Kelly Services (KELYA), Albany Molecular (AMRI), BRE Properties (BRE), Public Storage (PSA), Investors Banc (ISBC)

Materially Weaker: Alcoa (AA), Anglogold Ashanti (AU), People’s United Financial (PBCT)

Market Barometers

The median Value Line low total return forecast is 6.7%, compared to 6.7% last week.

Three Stooge Group in the Windy City

Photo Credit: twm1340 via Compfight cc

It’s that time of year. It’s in the air. You might even say it’s in the wind.

Whether we wrap the theme around March Madness or simply the advent of educational event season, we spent the weekend in Chicago at an investing conference developed and delivered by a coalition of local investment education volunteers. The Chicagoland Investment Conference was well done and kudos to the team. Ken Kavula and I are honored to be invited and included in the festivities.

Howard “Bunny” Mack. Photo Credit: Deb Severson

Speaking of madness, I’m not sure we can take the master of ceremonies (Howard Mack, President – Chicagoland Chapter) all too seriously when he’s trotting around wearing Trix rabbit ears (General Mills presented at the event) while channeling Playboy bunnies and referring to the closing Stock Talk panel participants as “Three Stooges” but he did. Seriously, the crowd seemed to enjoy the banter and discussions as Ken Kavula, Mark Robertson and Doug Gerlach shared some thoughts and stock study ideas to take home.

Ken Kavula reminded the audience of successful selections made at one of the inaugural Stock Talk panels at the Chicago National Convention for NAIC held in Schaumburg a few years ago. See BINC Stock Talk 2008

Most of all, this Stock Talk panel reminds and underscores why-we-gather and emphasizes the power of what-we-do gathered in community, sharing and exploring investment ideas.

Doug Gerlach, Ken Kavula and Mark Robertson. Photo Credit: Deb Severson

Ken’s suggestions for the audience included Mesa Labs (MLAB), NIC (EGOV) and  Aerovironment (AVAV). EGOV innovatively pursues IT projects for predominantly state (and local) government agencies — seeking to optimize and improve things like making it easier to drive away with a new driver’s license.

Doug’s study roll call included Echo Global Logistics (ECHO), Yandex (YNDX) and SodaStream (SODA) — and yes, he tied sulzer bottles into the Stooge theme. His final selection was Mistras Group (MG), a worthy engineering & construction company to study.

Any study of ECHO might also include: CH Robinson (CHRW) and Expeditor’s (EXPD).

Mark’s selections included Qualcomm (QCOM) courtesy of Houston’s Anne Manning and the Mid-Michigan Round Table (our monthly stock discovery webcast), AFLAC (AFL) and the hospitalization of the duck … and a nudge to study Cognizant Technology (CTSH) and to explore the other candidates in our Ivory Soap Stock Screen.

At the end of the day, Howard removed the rabbit ears (probably went home and tried to see if they improved his TV reception) and can rest assured that he, Dean Hartley and their Chicago team favorably affected the investing future of at least one person several times over.

Challenge Club (February 2013)

Challenge Club – February 2013

It’s more than a mantra. When things get a little tough, battle-tested investors go shopping.

And they go shopping with a specific shopping list in hand — a quest to identify leadership companies selling at attractive prices.

The Challenge Club has more than a little cash on hand (10.9% of total assets) so we need some candidates.

Bring out your best.

Current dashboard: http://www.manifestinvesting.com/dashboards/public/challenge-club

Register to attend Saturday morning’s meeting/webcast at:

http://www.manifestinvesting.com/events/113-challenge-club-february-23-2013

AFLAC (AFL)

“I would like to see AFLAC under your scope.” — Jack Ellison

Thanks, Jack. For those who don’t know Mr. Ellison — he’s one of the leaders of the award-winning GaAs investment club near Sacramento, California. Gallium Arsenide (GaAs) is a compound of the elements gallium and arsenic and the chemical is used in the production of semiconductor devices. The connection to and inspiration from Silicon Valley is pretty clear.

The GaAs investment club was the leading group in the Value Line/NAIC club portfolio contest back in 2001 and was honored at the 50th anniversary national convention in Detroit.

AFLAC Duck: Uhhhh … he said arsenic. I really wish he’d not do that.

MI: No worries. Besides, we thought the only thing you ever said is “AFLAC!”

AFLAC Duck: That’s my stage persona.

MI: We hope the healing process is going well and sorry to hear of your set back.

AFLAC Duck: Thanks. I needed some rest. Since I stopped that whole migration thing … it’s way, way over-rated, by the way … I’ve gotten a little pudgy. A little time here with the workout equipment in Physical Therapy is probably just what the doctor ordered. Hollywood can wait.

MI: You’re not concerned that a gecko or some furry critter will steal your spot?

AFLAC Duck: Always a concern. Who are we kidding? Wally Pipp thought it’d be OK to take a day off. If you see any critters around the offices in Columbus that remind you of Gehrig, let me know.

MI: Consider it done. And now for a closer look at a community favorite and paragon of stability over the decades. But at the same time, we could make a case for a couple of really big speed bumps over the last few years — and some turbulent challenges that we’d consider more temporary than terminal.

AFLAC Duck: Terminal is not such a good word either around here.

MI: Sorry. Get well soon.

Aflac, Inc. provides supplemental life and health insurance services. The company is a general business holding company and acts as a management company, overseeing the operations of its subsidiaries by providing management services and making capital available. Its principal business is supplemental health and life insurance, which is marketed and administered through its subsidiary, American Family Life Assurance of Columbus, which operates in the United States and as a branch in Japan. The company operates business through two segments Aflac Japan and Aflac U.S. The Aflac Japan segment provides child endowment and ways products and operates as a branch of Aflac and principal contributor to consolidated earnings of Aflac. The Aflac U.S. segment sells voluntary supplemental insurance products including, loss-of-income products and products designed to protect individuals from depletion of assets. AFLAC was founded by John Amos, Paul Amos and William Amos on November 17, 1955 and is headquartered in Columbus, GA. [Wall Street Journal]

Business Model Analysis

The top-line for financial sector companies like AFLAC is book value (BV). The bottom line is EPS, as always — and the relationship (difference) between the top-line and bottom-line for financial sector companies is return-on-equity (ROE) and we pay close attention to the profitability trend on display for ROE.

Projected Average P/E

The forecast for a future P/E ratio for AFLAC is little different from the rest of the banking and/or insurance industry. Will ROE return to historical levels or “labor” in the New Normal? As an investor in financial sector enterprises, this is a key assumption or judgment.

In the case of AFLAC, we’d probably argue for stabilization and statistically a median of 10x (plus or minus 2x) seems to be reasonable.

Equity Analysis Guide

Using the 11% book value growth rate, a ROE forecast of 13% and a projected average P/E of 10x — the projected annual return is 11.6%.

This compares to a Value Line low total return forecast of 11.5%.

With the median return (all stocks) at 7.1%, the 11.6% return forecast is fairly compelling — particularly when considering the 99th percentile quality ranking for AFLAC (AFL).

Challenge Club (January 2013 Meeting)

January Meeting Highlights

The 2012 Annual Report was presented. Relative return for 2012 was +1.4%.

Unit value at the time of the meeting is $24.21 — 6.9% since inception vs. 3.3% for Wilshire 5000.

Blog link (for sharing): https://expectingalpha.com/2013/01/17/challenge-club-january-2013/

Motions, Decisions

1. A motion to buy 100 shares of Green Mountain Coffee (GMCR) failed to pass.

2. The motion to accumulate 100 additional shares of AFLAC (AFL) passed (82%).

3. The motion to accumulate 125 shares of FactSet Research (FDS) passed (94%).

4. A motion to accumulate 100 shares of Coach (COH) failed to pass. (~50%)

The dashboard at meeting end (but before January contributions):

Challenge dash 20130118