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Scott Martindale

 
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  • August Consolidation Offers Opportunity To Buy Best Stocks From Top Sectors [View article]
    Rob, my weekly article appears on several sites, including Sabrient blog, Seeking Alpha, Investing.com, and others, and it goes out as an email newsletter to subscribers who have signed up for it, so I don't regularly monitor comments on all sites. Best bet for getting a timely response from us is to submit questions through our web site. Keep in mind, the purpose of my weekly article is not to provide a report card on Sabrient's various portfolios, but to offer up trading ideas to the general investing public, and that means describing what's working rather than what's not working.

    But to be absolutely clear, we do not own a crystal ball and occasionally some of our stock selections do not perform well, as you pointed out (like TX and MRVL). And some perform great for us for a long while, but then later have a hiccup that changes everything (like OCN).

    We certainly appreciate that you are pulling for us. Our core approach employs a GARP (growth at a reasonable price) quantitative model to generate a short list of stocks from the broader universe, followed by a qualitative fundamental review process, and finalized with a qualitative forensic accounting (earnings quality and insider behavior) review by our subsidiary Gradient to throw out the higher-risk names that might not be evident in the quant data. The model employs no momentum factors or timing triggers. Our annual Baker's Dozen (top picks list) has finished well ahead of the overall market each year over the past five years since we launched it in Jan 2009. It tripled the SP500 return in 2012 and doubled it in 2013, and the first series of our Forward Looking Value (launched in June 2013) also doubled the SPY over the ensuing 12 months. Moreover, of the 44 total positions between those two portfolios last year, only 3 were negative after 12 months. As I write this on Wed Aug 13, our 2014 Baker's Dozen is up +9.9% while the SPY is up +7.7% over the same 7-month timeframe (Jan 13 launch), so it's doing okay.

    The Weak Treasury portfolios employ a different selection approach that is focused on outperformance during rising interest rates and steepening yield curve (for those who seek to position themselves for such a climate taking hold as the Fed tapers their market manipulation), but in fact the climate has been the exact opposite, as the 10-year Treasury continues to strengthen (interest rates falling) and inflation remains low. If you are a regular reader of my weekly article, you know that I have been in the camp that has expected long-term rates to remain low as global forces push capital into the relative safety of U.S. Treasuries, despite Fed tapering. These Weak Treasury portfolios are heavily invested in Financial (about twice the exposure of the broader market), followed by Tech and Industrial. Although Tech has done well in the prevailing market, Financial and Industrial have not kept up, which is somewhat unusual historically during bullish market conditions. Thus the underperformance.

    However, our core GARP approach employed in our other portfolios has worked quite well for us and is what we consider to be a sustainable all-weather approach for the future. Of course, no alpha strategy outperforms its benchmark all the time in all market conditions, so some investors might prefer either a trend-following approach or simple passive investment in a broad market index.
    Aug 13 05:12 PM | Likes Like |Link to Comment
  • Bold Bulls Dare Meek Bears To Take Another Crack [View article]
    Thanks for your comment. Regarding BIDU, it scores a mid-range 51 (out of 100) in our GARP rank and a 4 (out of 5) in our Earnings Quality Rank. Also, a low Value score of 2 (out of 100), but high Growth and Momentum scores of 99 and 80, respectively. So, it displays strong growth prospects, good earnings quality, and obvious momentum, but that momentum has led to perhaps an overly high valuation. As you suggest, technical consolidation, and preferably a little pullback to test support, would make a better entry point from my standpoint.
    Jul 30 01:29 PM | Likes Like |Link to Comment
  • Sector Rankings Take A Bearish Turn As The Flight To Safety Solidifies [View article]
    Thanks for your continued support. The SectorCast model includes no technical indicators, but the sentiment indicators can be valuable for making short-term adjustments even though the longer-term outlook has been consistently bullish.

    Do you windsurf The Gorge?
    Apr 7 02:30 PM | Likes Like |Link to Comment
  • SectorCast Rankings Take A Neutral Slant As Market Hits New Highs [View article]
    As it says in the disclosure at the top, I have no positions in any stocks mentioned.
    Mar 13 09:39 AM | Likes Like |Link to Comment
  • SectorCast Rankings Take A Neutral Slant As Market Hits New Highs [View article]
    Strictly from the standpoint of Sabrient's unbiased rules-based quant models, QCOR carries a 79 Value score, a perfect 100 Growth score, and a 94 Momentum score, and it carries a Strong Buy rating from our ratings algorithm. Moreover, it resides in the highest (best, or lowest risk) quintile of our Earnings Quality Rank, and it ranks #17 out of over 2700 eligible stocks in the GARP model that serves as the foundation of our high-performing annual "Baker's Dozen" portfolio (which has a +100% total return over the past two years), boasting a strong composite score of 87.5 (out of 100). Also, from a technical perspective, the stock has pulled back to the uptrend line where it seems to be finding buyable support.
    Mar 12 01:33 AM | Likes Like |Link to Comment
  • Stocks Continue Their Rebound As Uncertainties Subside [View article]
    The Sabrient Ratings Algorithm (SRA) has been around since 2003. The Earnings Quality Rank (EQR) has only been in production since January 2013, so it is not included in SRA. We intend to launch a project later this year to incorporate EQR into SRA.

    However, note that EQR is already a factor in the Outlook Rank, which is the key score in our SectorCast model.
    Feb 19 10:00 AM | 1 Like Like |Link to Comment
  • Flight To Safety May Serve As Prelude To Flight To Quality Stocks [View article]
    I actually wrote and submitted this article on Sunday. SA didn't get it published until Tuesday, unfortunately. You can find more timely postings on the Sabrient blog.
    Feb 6 09:40 AM | Likes Like |Link to Comment
  • Will Investors Embrace Weakness As An Entry Point? [View article]
    I have been writing these articles every week for several years, so I would encourage you to look back through my articles to see the various sector scores on various dates. You will see that at times, top-bottom spreads in Bull and/or Bear scores were much wider, sometimes ranging from 70's to 30's.The tighter scores we have been seeing are reflective of high equity correlations. Thanks for reading!
    Feb 1 12:06 PM | Likes Like |Link to Comment
  • Fed Drops The Green Flag And Bulls Are Off To The Races [View article]
    Thanks for your interest in the Baker's Dozen. You probably noticed the big 3% jump today (Thursday) in the portfolio, led by 15% gain in IACI, despite the market being flat to down.

    In prior years, the portfolio has stayed somewhat under the radar, with a relatively small contingent of subscribers, although each year the strong performance has attracted more and more attention, of course. Keep in mind that in order to be included in the unit investment trust (UIT) that tracks the portfolio, each stock must display a history of sufficient daily trading volume such that impacts like this are minimized. The UIT has a 30-day sales period, so funds are invested over time rather than all at once.

    You won't find micro caps in the portfolio. The smallest firm in the current portfolio upon launch on Jan 11 was EPL at about $900M mkt cap, and you can see in the historical chart that there were no notable price spikes in EPL around launch. All the other stocks were considered mid or large caps. More importantly, we aim for a minimum daily dollar volume (P*Vol) of at least $5M/day.
    Dec 19 01:29 PM | Likes Like |Link to Comment
  • Tech Stays Strong As Markets Present A Welcome Entry Point [View article]
    Follow up note: I wrote this article on Wed night when SNPS was down afterhours, but it recovered quickly on Thu despite troubling earnings quality trends. However, another recent Gradient Analytics report last month addressed earnings quality issues at ULTA, which is down big time (about 20% today) after disappointing last night.
    Dec 6 09:55 AM | Likes Like |Link to Comment
  • A Company That Has Been Lining The Pockets Of Its Shareholders For Years [View article]
    Thanks for sharing, Bill. I wanted to point out that Sabrient Systems' fundamentals-based quant models also have long favored OCN. We publish an annual "Baker's Dozen" portfolio of top stocks for the year, and OCN has been in the 13-stock portfolio both this year and last year. Last's year's portfolio was up +43% overall, with OCN contributing +135%, and this year's is up +31% so far since Jan 11 launch (with all 13 stocks solidly positive), with OCN contributing +52%.
    Sep 19 05:13 PM | Likes Like |Link to Comment
  • Transports Try To Prod Bulls Ever Forward [View article]
    I employ the US sector iShares rather than Sector SPDRS primarily for two reasons. First, iShares divides the equity universe into 10 sectors rather than 9, with Technology and Telecom separated, which I prefer. And second, the number and diversity of constitutents in each ETF is greater, which gives me more choices when drilling down to the top- or bottom-ranked stocks within each. Sector SPDRs are subsets of the S&P 500 large cap index, while sector iShares track the various Dow Jones US industry indexes, which include companies with lower capitalizations.
    Mar 29 11:04 AM | Likes Like |Link to Comment
  • Transports Try To Prod Bulls Ever Forward [View article]
    AAPL looks like a good bet within Sabrient's various quant models. It carries an Outlook score of 94, Value 96, Growth 92, and Earnings Quality 82. Only its Momentum score is low at 36 (no surprise).

    FFIV also looks good with an Outlook score of 70, Value 70, Growth 93, Momentum 12, and Earnings Quality 96.

    On the other hand, NEM carries much lower scores, including an Outlook score of 56, Value 73, Growth 25, Momentum 9, and Earnings Quality 17. Not quite as good.
    Mar 28 05:19 PM | Likes Like |Link to Comment
  • Bulls Seek New Blood To Boost Conviction [View article]
    JJC is an exchange-traded note (ETN) tied to copper futures contracts, and as such it is not included in Sabrient's SectorCast rankings, which creates bottom-up aggregate profiles of ETFs based on the underlying equity scores. What I can say is that from a chart perspective, JJC has fallen hard this month and today it is threatening to close below its 200-day simple moving average. On the other hand, its oscillators have become oversold and price should be getting ready to at least stabilize and perhaps bounce back. Whether it's only a dead cat bounce remains to be seen. From a fundamental perspective, the iShares Basic Materials ETF (IYM), which includes copper miners, continues to rank low in the Sabrient rankings, primarily driven by modest low-term growth projections and net downgrades from the Wall Street analyst community.
    Feb 21 12:22 PM | 1 Like Like |Link to Comment
  • Healthcare And Utilities Are The Current Safe Havens [View article]
    Thanks, La Marque, for the kind words. I invite you to sign up for email delivery of my weekly article through the Sabrient.com web site ... and tell your friends!
    Dec 2 01:25 PM | Likes Like |Link to Comment
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