Time for the Next Portfolio Reshaping
I will admit, I don’t feel much like doing my portfolio reshaping now, even though it is a part of my management discipline, because the portfolio has been kicked around. Not much worse than the rest of the market, though, and there are some stocks that look interesting that could be worth considerably more three years out. As you look through my tickers list for candidates for addition, you’ll see a few commonalities:
- Energy (still)
- Industrials (still)
- Retail (now, that’s new)
- Insurers (many still cheap, particularly some stronger operators, also title names)
- Technology (different for me)
- A few odd real estate names (not likely, but there are some places where values are protected)
So, the process begins. Within a few days, I’ll run my industry model, and do a few screens off of it, adding a few more tickers. Beyond that, I invite you to send me ideas as well. Last time, ideas suggested by readers made up two of the four new names that I bought. So, send them in, and thanks as always for reading me.
The replacement candidate tickers: AA ABK ACIW AEO AES AIG AIT ALL APA APL ARM ARO ARW ASGN ATU ATW AVCA AVZA AZ BAC BCS BER BGP BKE BKS BRO BRY CACC CAE CAKE CALL CAMD CBL CCRT CHS CNQ CNX COF COST CQP CRI CRK CRZO CSCO CSG CSGS CSL CTLM DDS DFG DITC DLB DNR DRI DTLK DVN EAT EEP EFII EMC ENWV ESST ESV EXAR EXTR FLEX FNF FNM FRE FSII GCA GLW GPC GS GSIT GSK GW HAS HCC HCSG HD HIG HILL HMC HOC HOG HOLX HPQ IDTC INAP INFN INSP INT INTC IRE ISSI JCG JCP JEC JRT JWN KEM KFT KSS LINE LM LOOK LRW LUV LYG MAN MAS MDC MHK MHP MHS MMC MNST MTSC MTW MU MUR MVC MW MWA NOV NSH NSR OII OMX ORI OXY PCZ PDC PDE PDII PDS PHLY PNCL PNRA POL PROS PTEN PVSW RAMR RAVN RGA RIG RNIN RNWK SCMR SGP SIMG SKS SKSWS SKX SLXP SNY SPN SSTI SSW STC STI SU SWK T TECH TECUA TEX TGI TLGD TMTA TM TNB TOT TRID TRLG TSO TWB UFS UNP URBN USG VFC VMC VNR VPHM WAG WCG WDC WHQ WLL WSM WSTL WU WWW XL XTEX XTO
PS — Though I don’t feel like doing it, I didn’t feel like doing it in the Fall of 2002 either,and some of my best picks came then. So, discipline before feelings.
January 12th, 200810:12 am at
David,
I agree, frustrating times for Value Investors (especially small caps), but there are a lot of good companies with a lot of value in your list. The key here is to focus on the process and the results will come. I look at this time period as an opportunity to upgrade my portfolio into better companies at cheaper prices.
One you may want to look given your propensity for insurance is Standard Life in the UK. They are back below their IPO price, business is growing and the Pound is down.
January 12th, 200812:52 pm at
David,
One thing that strikes me is the number of the potential tickers in your list; it seems much, much larger than previous rebalancings. It’s anecdotal, and everything depends on how earnings how up in a recession, but a lot of stuff is cheap, and getting cheaper.
Secondly, you don’t list Valero (VLO) on your list this time, but it has been coming down along with the other refiners. It’s scheduled to report Q4 on Jan.31, and the numbers probably won’t be very good. In the past, buying VLO in January has often been a good trade, as the gasoline market strengthens into Spring. I don’t own it yet, and am also considering TSO, which is on your list.
Have a great weekend,
Steve
January 12th, 20081:09 pm at
Of the securities you mentioned above I have recently added to my GW and FNF positions. Both are at extremely low valuations. I do not expect an immediate turnaround, but both have strong management teams for the long term.
I also have a 1/2 sized position in GS that I am not currently looking to add to (unless it got back to the $150-160 range). This is a best in breed company which I originally started buying at the end of the summer. This was one of those stocks I always kicked myself over and over again for not buying. I finally had the opportunity amidst the credit woes to buy at what I determined to be a reasonable valuation.
Additionally, I started a position in VFC around $64 two weeks ago. I added a little this week to bring it to a 1/2 sized position. I was looking at JCP also, but went with VFC for retail exposure. The reason was that JCP is still spending to open stores. I feel we are already “over stored” in the retail space. Further, VFC’s dividend had gotten to a very attractive level. In the short term, I made the right choice as VFC was up 11.85% this week while JCP was up 1.1% after accounting for a $0.20 dividend on the 01/08/08 ex-date. Of course, I intend all of these positions as long term holdings.
January 13th, 20086:35 am at
Have you backtested whether a purely mechanical screening + ranking algorithm would have outperformed you discretionary choices over time? … similar vein, tracked the performance of the tickers that “almost” made it to your portfolio? Just curious, it’s always a good thing to think about for traders (like yourself) who are heavily rules-based, but still apply significant amounts of discretion.
January 17th, 20089:23 pm at
Bump! For comment #4 re: backtesting.