Today's weekly review will be somewhat abbreviated, as I will post a more thorough review of the month on Tuesday evening or Wednesday morning. The last couple of days almost got us out of the slight YTD performance hole, but the early part of the week was quite rough. Thankfully, May ends. It certainly was not what I envisioned. Here is how we stand as of this evening:
In Top 20, we gave up some more ground this week, with our return falling a bit more than the market. One of the more disappointing performances came from our small Healthcare company. We had trimmed this three months ago (and watched it run up a bit further), but it is lower now. I anticipate adding to it in the near future and am also contemplating a new name. Encouragingly, we had several stocks, especially some of our smaller companies, perform very well. In fact, two of the retailers who went down after they reported have reattained their pre-report levels. On the other hand, one of my favorite holdings (a Tech holding) had a slight miss and was hammered. We had trimmed this one earlier in the year too - I would like to add to this as well. While Top 20 is giving me some challenges right now, I would like to take just a moment to point out that it enjoyed its 3-year anniversary this week. Since the launch in May, 2008, the S&P 500 total return has been 3.5%, while Top 20 has almost doubled. We have had our challenges along the way, but we have always bounced back and then some. While I am frustrated to be essentially in line with the market now after almost 5 months, I am not ready to throw in the towel on the goal of beating the S&P 500 this year by 12-20%.
CG/B has performed much better this month than Top 20. This week, it declined about 0.3%, while the stock/bond index actually climbed about .2% (bonds were very strong). We are still sporting a lead (1.4%), but this is behind the pace I had hoped to see at this point. The model is about not only beating the market, but also preserving capital. Given the very slight decline this month, I am satisfied on that front.
Sector Selector actually gained some ground relative to the market, though it was quite minor. The model declined ever-so-slightly. This first month has been quite challenging, and I will detail what worked and what didn't in my month-end review next week. For now, we are about 0.4% below the market since the launch, but I remain very optimistic about the positioning.
Market Outlook
I had called the 1320 area as likely support, so I was glad to see it hold near there (1312 low and 1317 closing low) and work its way higher. We aren't out of the woods yet on this vicious rotation, but the action the last few days tells me it is quite possibly over. I still believe that this was just profit-taking and not the beginning of a new trend.
Articles
- Joplin Tornado Blows Away This Dividend - Seeking Alpha
- 5 Big Dividends on Small Companies with Large Insider Ownership - Seeking Alpha
- 7 Dirt-Cheap Small-Caps that are Growing - Seeking Alpha
- 14 Energy Buys to Consider- TradeKing (note that paragraphs 2 and 3 should be removed)
It's a long weekend. I would love to say that I am taking a little break from all of this, but I will be at it full-speed tomorrow working on some repositioning in Top 20. Hopefully, I will get a bike ride in too. Have a safe and relaxing long weekend!
Alan Brochstein, CFA
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