2/10/11-Since the last entry, a Low Price to Earnings pick, HS, purchased on 3/29/10, has been sold today at $32.02 for a net gain, not counting any dividends, of 80.92%. It has been removed from the Low P/E open positions portfolio and its closed position info recorded, based on the 3/29/10 to 2/10/11 per share performance. This asset had not achieved the usual sell criterion of a P/E of 12 or above, but its price performance had been significant, and the P/Bk at time of sale was 1.69. Its current ratio was down to 1.3. The mean advisor recommendation was to sell. However, the main reason for redeeming the shares now rather than waiting to see if I might get another 20% or so price increase was just that I needed the extra funds for other purchases that appear to offer better value at this time.
My current top-five low price to earnings stocks are: CHNG; MSN; SAFM; SIHI; and WRLS.
My favorite among them is Sanderson Farms, Inc. (SAFM) (recent price $41.72). It meets Benjamin Graham's bargain stock safety and value criteria.
Sanderson Farms, Inc. will be added to our nest egg at its market price early tomorrow, Friday, 2/11/11.
2/17/11-Since the last entry, there has been activity in the Earnings Estimates Increase - 5% Plus experimental portfolio. With the portfolio as a whole up over 14% on 2/14/11, two of the original five portfolio assets, IRBT and STEC, were sold, since they no longer met the portfolio buy criteria, and two other assets had been found which apparently did. IRBT had gained 20.61% in the period since its purchase, on 1/20/11, through early 2/14/11. STEC had gained 19.37% between its 1/21/11 buy date and its sale on 2/14/11. The closed positions info of both assets has been added to the portfolio spreadsheet.
They were replaced with VSH and ENTR. These assets were from another investment site's list of equities that supposedly had seen an increase of at least 5% from the prior quarter in their forward looking earnings estimates. Unfortunately, it was later determined that the criteria used for selection of those listed assets were not the same as employed by the American Association of Individual Investors (AAII). Accordingly, after a new list from AAII became available this week, I completed a fresh analysis, generating five new assets that each met all portfolio guidelines. This morning, I began rebalancing the portfolio. First to be sold was ENTR. In the three days since its purchase, ENTR had fallen 6.85% including commissions. ENTR's closed position information has been added to the portfolio spreadsheet.
ENTR was replaced today by MRCY. The remaining current assets of the portfolio, DSW, IRF, VSH, and WLK, will be replaced over the next couple trading days with the balance of the assets presently meeting the portfolio standards: FUL; IIVI; RES; and TER.
As of the close of trading today, the current, partially rebalanced open positions plus all of the closed positions of the portfolio have shown an average combined performance of 8.82%, net of commissions and not counting any dividends. The average hold per asset has been 0.0445 year or 16 days. (The average annualized return is 569.20%, though of course it is much too early for this figure to have statistical significance.)
2/24/11-Since the last entry, there have been no new portfolio sales or stocks ready for sale among assets followed here. So, no redemptions are indicated at this time.
Based on a recent review, my top-five current low price to book value stocks are: CRV; CSKI; LAKE; UUU; and VOXX.
My favorite among them is China Sky One Medical, Inc. (CSKI) (recent price $4.73). It meets Benjamin Graham's bargain stock safety and value criteria.
China Sky One Medical, Inc. will be added to our nest egg at its market price early tomorrow, Friday, 2/25/11. CSKI has been under a bit of a cloud, with notorious short sellers bad mouthing the company's financial reports. I do not know if these allegations are valid, but there are indications that, over and above the alleged difficulties, this company's shares offer good value to an investor at these prices. Please do your own research rather than accepting my conclusion. Suffice to say that, while there is no guarantee of profits from investing in CSKI, a portfolio of such stocks tends to do significantly better than the major market averages.
I am now also more interested in net net current asset stocks, those selling for less than their net current value after subtracting all debt, an original Ben Graham value criterion. Today I purchased shares in one such security, CRC (closed today at $1.86, I believe). Investing in net net asset stocks should also be limited to those with shareholder equity value at least half the total assets value. (And, for safety, I also limit purchasing to stocks with $1 or greater per share price, balance data no more than 6 months old, and lower than average net net asset value stocks' bid-ask spreads.)
These assets can be quite risky, there now being so few of them that we must watch out for ones that are really low in price for good reasons, for instance due to imminent litigation or recent tender offers that will gut the reported levels of reserves, etc. It appears, though, that by doing some investigation one may weed out most of the clearly problematic ones and that those which remain have good investment potential. As recommended on Motley Fool's "Mechanical Investor" discussion group, which has done the heavy lifting for this and many other worthwhile stock strategies, I intend to exercise care in the initial purchases, buy one qualifying asset a month (when and if available) to gradually acquire a portfolio, and sell after each asset is up 50% or more or after a year, whichever first.
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