Lehman's Uncommon Values Portfolio for 2006

Every year around this time, Lehman Brothers releases its list of 10 Uncommon Values for the next twelve months. The current list is in the table below. According to the company’s website, in the 56 years the company has been compiling the list, “the 10 Uncommon Values Portfolio has significantly outperformed the S&P 500 index.” Unfortunately, the website doesn’t give us any indication of what ‘significant’ means, since there are no actual performance numbers provided.

We do, however, have last year’s portfolio, and the returns show that the 57th year of the Uncommon Values portfolio was probably one of its worst. Overall, the portfolio declined by 4.6% vs. a 2.6% gain for the S&P 500. On an individual basis, the results were even more forgettable, as only one of the ten stocks in the portfolio rose in price.

Turning our attention to this year’s portfolio, we looked to see if there were any stocks from last year’s portfolio that were also included in this year’s. After all, if the stocks were all such great values last year, they should be even better values this year. However, the appearance of Phelps Dodge on the list again this year surprised us given that it was not only the only stock to rise last year, but also because it was up over 65%.