Tiny Titan Stocks

by: Scott's Investments

AAII (American Association of Individual Investors) released their January 31st screen results this week. One of their more popular--and profitable--screens is the 'O'Shaughnessy Tiny Titans'. Since 1998 the screen has produced cumulative results of over 2000%. However, since 2007 the screen has struggled significantly along with the overall market.

The screen looks for companies with a market cap between $25 million and $250 million, a price to sales of less than 1, excludes over the counter stocks, and finally, ranks the top 25 based on the greatest relative strength over the past 52 weeks. This creates a list of highly volatile and risky stocks. However, there may be some names of interest worthy of further research. In addition, one potential strategy would be to pair the portfolio with a hedge by simultaneously shorting the Russell 2000 via RWM with a portion of your portfolio. Or, an investor could only participate in the strategy when an index such as the Russell 2000 was above a long term moving average. My suggestion for using a moving average system was inspried in part by Mebane Faber's The Ivy Portfolio: How to Invest Like the Top Endowments and Avoid Bear Markets and also by Tom Lydon, author of The ETF Trend Following Playbook: Profiting from Trends in Bull or Bear Markets with Exchange Traded Funds.

I ran the AAII Tiny Titans screen using stockscreen123 and came up with the following 25 names. If there is interest among readers, it could be a portfolio I track for free on my blog along with several others already available for free. I also looked at the 3 and 5 year performance when the portfolio was rebalanced every 4 weeks. The past 3 years the screen returns were approximately -33% excluding slippage and commissions. The past 5 years the cumulative return was approximately 33%. Thus, this screen struggled mightily in negative markets.

Below is the current list ranked on their 52 week return as of 2/18/10. The list will differ from the AAII list because that list was updated 1/31/10. Personally, this is not a screen I would blindly invest in without further investigation of each name and also without using stop losses and a hedge. If an investor wanted to run this screen for free he or she could do so using any number of free stock screens such as the one available at Finviz.

Ticker Name Last Free Trend Analysis MktCap
VVTV ValueVision Media, Inc. 3.93 Here 127.08
ROIAK Radio One, Inc. 3.3 Here 180.6
LEE Lee Enterprises, Incorporated 3.8 Here 170.51
ATSG Air Transport Services Group 2.42 Here 153.57
OTC:LNET LodgeNet Interactive Corp. 5.99 Here 135
NAVI NaviSite, Inc. 2.89 Here 107.81
CMRG Casual Male Retail Group, Inc 3.17 Here 149.51
LBY Libbey Inc. 10.32 Here 156.41
MGPI MGP Ingredients, Inc. 7.6 Here 126.73
BIOF BioFuel Energy Corp. 2.8 Here 95.29
SPCHA Sport Chalet, Inc. 2.02 Here 28.53
SALM Salem Communications Corp 4.92 Here 116.48
IHR Interstate Hotels & Resorts, 2.25 Here 72.35
PXLW Pixelworks, Inc. 3.4 Here 45.56
BONT The Bon-Ton Stores, Inc. 8.44 Here 156.63
CVGI Commercial Vehicle Group, Inc 4.99 Here 113.51
BELM Bell Microproducts Inc. 4.57 Here 145.76
KV.A K-V Pharmaceutical Company 3.08 Here 153.84
IEC IEC Electronics Corp. 6.13 Here 54.8
OTCPK:TXIC Tongxin International Ltd 8.15 Here 100.32
SBSA Spanish Broadcasting System I 0.74 Here 48.06
KTCC Key Tronic Corporation 5.62 Here 56.71
NXST Nexstar Broadcasting Group, I 4.39 Here 124.81
WILC G. Willi-Food International L 6.96 Here 71.46
ARTX Arotech Corporation 1.89 Here 27.2

Disclosure: No position in the stocks mentioned

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