3/1/06-Since the last entry, CERG, a Classic Value (CV) asset, has been held for 12 months, and so will be sold at tomorrow morning's early trading price and its info added to the closed positions record. As of the end of trading today, it is down 0.76% since a 3/1/05 purchase.
My top-ten equities for mention this week are: ASH; CTGI; FORD; IBA; INSP; ITIC; SAFT; SEB; UCI;; and VLGEA.
The focus for the current entry is on a new Classic Value stock, InfoSpace, Inc. (INSP) (recent price $24.41). INSP's trailing P/E is only 5.45. It has a market cap of $756.95 million. InfoSpace, Inc., has no dividend but has a relatively low price to book ratio of 1.12 and a low price to sales ratio for its genre, internet search functions, at 2.20. It has a return on equity of 25.97%, zero debt to equity, and a high current ratio of 7.03. Its shareholder equity to total assets ratio is a high .89. This security meets Benjamin Graham value plus safety criteria, based on low debt and low trailing P/E. INSP will be added to the CV tracking portfolio as of the early trading price in the morning.
3/8/06-Since the last entry, MGA, a Leapin' Lizard (LL) asset, has been held for 12 months, and so will be sold at tomorrow morning's early trading price and its info added to the LL closed positions record. As of the end of trading today, it is up 1.39% since a 3/8/05 purchase.
My top-ten equities for mention this week are: BRY; CLDN; EME; ESCL; FCFS; LDG; ROL; SHLM; VSEC; and ZONS.
The focus for the current entry is on a new Leapin' Lizard pick, EMCOR Group, Inc. (EME) (recent price $42.66). EME's trailing P/E is 22.62. It has a small-cap market capitalization of $1.33 billion. EMCOR Group has no dividend but a quite low price to sales ratio of just 0.28. It's price to book value ratio is 2.12. It has a return on equity of 10.41%, rather low debt to equity (0.003), and a current ratio of 1.33. EME is up more than 74% relative to the S&P 500 Index over the last 12 months, and its per share price has gained 80.19% in the last 52 weeks in its own right. This small-cap has low P/S and D/E plus momentum going for it and, on a risk to return basis, appears in my view to be a good candidate for purchase.
3/22/06-Since the last entry, there have been no portfolio holdings retained for at least a year, so no sales are being made at this time.
My top-ten equities for mention this week are: AWX; BRK/A or BRK/B; DELL; DODGX; EMCI; GOOG; INTC; LMVTX; TYC; and YHOO.
The focus for the current entry is on a new Classic Value (CV) pick, EMC Insurance Group, Inc. (EMCI) (recent price $25.69). EMCI's trailing P/E is 8.13. It has a micro-cap market capitalization of $349.82 million. EMC Insurance Group has an above average 2.40% dividend with a dividend payout ratio of 0.19. EMCI has a low price to sales ratio of 0.77, a relatively low price to book value of 1.34, a return on equity of 17.54%, a debt to equity ratio of 0.21, and a current ratio of 0.47. The asset meets Benjamin Graham value and safety criteria based on a low trailing P/E and low D/E.
3/29/06-We had an oversight in the last entry. Our Classic Value (CV) pick, IPSU, had been held a year but was not then recognized as such. Its performance since the purchase on 3/18/05 has been +134.11% through 1:30 (central time) today. And since its purchase on 3/24/05, our Leapin' Lizard (LL) asset, USG, also now held for at least a year, is up 183.20% through 1:30 (central time) today. Both will be sold effective with the early market price tomorrow morning. The final trade info will be added to the respective portfolios' closed position records.
Incidentally, sufficient results are in that I can answer the question posed several months ago, whether or not to sell assets after they are up 50% or more vs. holding them for a year and a day. It is already clear that holding them for a year and a day is the more profitable approach, and not simply because one thus avoids short-term tax treatment. Counting both open and closed positions, the held-a-year-and-a-day portfolios so far have significantly better gains than the portfolios for which stocks were sold earlier after being merely up at least 50%.
If one wishes to finesse the portfolios for a bit better overall gain, a good way to do it might be to sell taxable account losers (only) just before a year and a day, thus assuring short-term treatment for the losses, which can, I understand, then be subtracted from annual income, up to $3000 a year.
My top-ten equities for mention this week are: BRY; CONN; CVX; EBF; FCFS; FRD; IAL; LECO; PFCO; and SCHW.
The focus for the current entry is on a new Yummy Yielder (YY) pick, Chevron Corp. (CVX) (recent price $57.57). CVX's trailing price to earnings ratio is quite low at 8.80. It has a mega-cap market capitalization of $128.16 billion. Chevron Corp. has a healthy dividend of 3.10%, with a dividend payout ratio of 0.27. The price to sales ratio is just 0.68. Price to book value is 2.02. There is positive free cash flow. Return on equity is 26.13%. Debt to equity is 0.21. The current ratio is 1.37. Based on its low debt to equity and trailing P/E, this asset meets basic Ben Graham value plus safety criteria. In addition, one can receive a nice dividend while waiting for the stock to hopefully realize its price to value potential.
3/30/06-Since yesterday's entry, our Classic Value (CV) pick, CRC, has been held a year, and so it will be sold at the early market price tomorrow, removed from the CV open positions portfolio, and its closed position info recorded at that time. Its performance since a purchase on 3/30/05 has been -2.09%, through 2 PM (central time) today.
Tomorrow evening or by the following day, I'll provide the statistics on our portfolios' performance as of the end of the 2006 first quarter. Currently, they are all looking quite good.
My top-ten equities for mention today are: ABC; ANF; CLDN; ESCL; HOC; KSWS; MAT; MOT; VSEC; and ZEUS.
The focus for the current entry is on a new Leapin' Lizard (LL) pick, Olympic Steel, Inc. (ZEUS) (recent price $30.64). ZEUS's trailing price to earnings ratio is 14.50. It is a nano-cap stock with a market capitalization of $318.59 million. Olympic Steel has a tiny dividend (0.10%). The price to sales ratio is just 0.34. Its price to book value is below average at 1.57. There is positive free cash flow. Return on equity is 11.73%. Debt to equity is 0.00. The current ratio is 2.41. The ratio of shareholder equity to total assets is 0.66. Year-to-date performance is 24.55%. Relative to the S&P 500 Index, the asset price is up 61.22% over the last 12 months. Absolute price movement in that period has been +71.36%. The asset has low price to sales, nano-cap status, momentum, and quite low debt going for it. There is no guarantee of future returns, but on average a portfolio of such securities has been found to perform well over a 12-month holding period. (The reader is advised, however, to do his or her own research before purchasing ZEUS or any other stock.)
3/31/06-2006 First Quarter Summary-As noted previously, we are still following the model tracked portfolios. Indeed, they have been doing well enough that we are now using actual funds to invest in each of the selections. The initial competition between our Leapin' Lizards (LL) and Classic Value (CV) choices began with a pick (BAMM) a year and a half ago, on 10/1/04 (with shares first purchased on 10/4/04). At that time, the portfolios were set up. They have been added to without break since then. Yummy Yielders and Mama's Mix tracking portfolios were then added in 10/05. One change from the onset of the contest and portfolios is that then I used average commissions of $15. However, soon afterward sufficient discount commissions were available to the average stock investor that I dropped that per trade frictional cost to $10.
Closed (where appropriate) and open positions have been included in the following stats and they have been checked carefully and doublechecked. Through the close of trading today, the performance of all our tracked portfolios and of the S&P 500 Index (this last based on a buy-and-hold approach with SPX** since the contest inception) have been as follows:
(The statistics are as of the close of trading 3/31/06. Dividend income has not been included in the portfolios' performance. Commissions, though, have been subtracted from the portfolio asset results, but not from the SPX gains.)
In future, I'll continue providing a performance update at least annually (but not more than once a quarter).
I caution that the total investment duration involved in the above gains has been statistically short. In addition, the last year and a half has probably been an atypical period for investors in various ways. For one thing, there have been no major pullbacks in the stock indexes for roughly three years. Indeed, I believe there has been relatively little volatility up or down among the indexes since early 2003.
It seems likely that the next year and a half to three years, will not be nearly so "tame" for investors. It would probably be foolish not to expect big drops in asset prices before long, perhaps followed by a time of more robust fluctuations in both directions. I do not know how that would affect our results. It might even improve them. I shall of course be delighted if the performance turns out to be, year in and year out, as stellar as shown above. However, more realistically, I shall be pleased if, over the long-term, we simply do better than the major averages yet with lower risk.
And despite what was just written, I do not try to time the market. I believe the CV, LL, and YY strategies will, on average, serve us well both in generally up and generally down markets, if we invest on a fairly regular basis in the very best securities to be found for the respective approaches.
Disclaimer and Disclosure Statement
Neither I nor Investor's Journal will be responsible for losses by anyone who obtained ideas from this site.
This diary is intended for personal interest and general information only. You are advised to do your own research (as well as to consult highly compensated professionals) before spending money on anything.
I know of no reason anyone should take my financial musings seriously. At best I am a dedicated amateur providing a bit of investment-related insight and entertainment, at worst an amusing diversion.
My wife, Fran, and I may at times own shares of some of the assets mentioned here. But neither of us receive any benefit from reference to them, unless you count the mutual misery when we get it wrong, or the opportunity to gloat when we get it right.