This update will provide the full-year 2013 performance for the Bishop Research and Analytics Model Portfolio. This performance report was compiled using the final share prices of the year on December 31, 2013 and the applicable price that was published in the article at the time that the recommendations were made throughout the year. Once again, let's briefly cover my approach to being a contributor for Seeking Alpha. Specifically, I only write about companies that I would invest in myself - and either I currently am or might be at some point subsequent to publication of my reports on Seeking Alpha. Second, I typically only research and analyze opportunities for long positions in a company. Third, I apply highly selective criteria to my recommendations that utilize a variety of different methodologies to identify undervalued risk opportunities. My contributions to Seeking Alpha are primarily focused on demonstrating the value of my research and analysis for the result of creating a long-term model portfolio that outperforms all of the standard market benchmarks.
The Bishop Research and Analytics Model Portfolio contains all of the published stock recommendations for long positions in all of the companies I have written about for Seeking Alpha since the end of last June. That translates into only six months of returns for FY 2013 that includes seven companies in the model portfolio. Each company added to the Bishop Research and Analytics Model Portfolio is allocated a straight $200,000 worth of shares at the price that was actually published in the article. The only exception to this is Sears Holdings (NASDAQ:SHLD), which is the stock I am the most constructive on over the next two to three years and, therefore, receives double the allocation of the other companies in the Bishop Research and Analytics Model Portfolio.
The Bishop Research and Analytics Model Portfolio is currently weighted with 12.5 percent allocations to the six companies I researched and recommended for Alpha-Rich/Top-Ideas publication throughout FY 2013. As previously mentioned, the Bishop Research and Analytics Model Portfolio allocates a 25 percent weighting - the largest single share allocation - to Sears Holdings due to its high potential rewards in coming years. With the exception of Sears Holdings, a full research report that includes the investment thesis for each company with specific valuation models, relevant risks, and lists of potential catalysts for share appreciation can be accessed with a subscription to Seeking Alpha Pro. By subscribing to the SA Pro database, you will gain access to the web's largest archive of research and analysis on small-cap stocks and receive early access to Top-Ideas articles each trading day 24 hours before the general public. This advantage allows you to take positions in stocks based off of the ability to access new information and compelling stock recommendations before the crowd. Each month there are more than enough profitable opportunities resulting from SA Pro to more than pay for the subscription.
In the chart above, we can see the performance of each stock at December 31, 2013 since the Seeking Alpha publication date of the recommendation during the year. The stock price quoted on the "Article Published Price" was the share price quoted in the article on the day it was published, which was typically the closing price of the trading session prior to the publication date. All prices were cited within each article and verifiable as to the publication dates and dates in which the recommendation article was turned in for review by Seeking Alpha Pro editors. As you can see in the chart above, five of the seven stocks generated double-digit returns from the publication price to the final trading session of 2013. Mason Graphite (OTCQX:MGPHF) led the performance with a 62.4 percent gain and Sears Holdings turned out to be the laggard with only a 4.7 percent gain from the recommendation price. Inter Parfums (NASDAQ:IPAR), Signet Jewelers (NYSE:SIG), Discover Financial Services (NYSE:DFS), and CBOE Holdings (NASDAQ:CBOE) all performed exceptionally well since they were published as a Bishop Research and Analytics recommendation.
In the chart above, we see the performance of the S&P 500 SPDR ETF Trust (NYSEARCA:SPY) from the closing price for the publication date of each recommendation to December 31, 2013. To compare apples to apples, we will use the publication date as the applicable comparison for SPY price performance relative to specific stock recommendations for the Bishop Research and Analytics Model Portfolio. The purpose of this approach is to simulate the outcomes if an investor bought SPY shares as a proxy for the market instead of the Bishop Research and Analytics stock recommendation on that particular date. All SPY "purchase" prices are measured as a gain to the closing price of $184.69 for S&P 500 SPDR ETF Trust shares on December 31, 2013. As you can see in the chart, SPY had its strongest performances since the publication dates for Sears Holdings on June 18 and Inter Parfums on August 15. The S&P 500 SPDR ETF Trust had its weakest performance against Mason Graphite, which was recommended in an article that was published on December 27.
The chart below is the most important statistic for you to know about the Bishop Research and Analytics Model Portfolio performance in 2013. The ultimate consequence is that the Bishop Research and Analytics Model Portfolio outperformed the S&P 500 SPDR ETF Trust by 9.53 percent in 2013, essentially crushing the benchmark for the broader market on an apples to apples basis.
As you can see in the chart above, the Bishop Research and Analytics Model Portfolio returned 17.39 percent from the published recommendation dates to December 31, 2013. As each new company's shares were added to the Bishop Research and Analytics Model Portfolio, a comparable amount of SPY shares were added at the closing price on the publication date. The SPY shares received double the allocation on the June 18 publication date for Bishop Research and Analytics' Sears Holdings recommendation. Interestingly, this was the only instance in which the S&P 500 SPDR ETF Trust outperformed a component of the Bishop Research and Analytics Model Portfolio in 2013. In aggregate, the Bishop Research and Analytics Model Portfolio beat the S&P 500 SPDR ETF Trust by 9.53 percent in 2013.
Let's now zoom in on each component of the Bishop Research and Analytics Model Portfolio and compare its individual performance against the S&P 500 SPDR ETF Trust from the recommendation price on the date of publication.
First, you can see Sears Holdings, which is the one stock in the model portfolio that underperformed the S&P 500 SPDR ETF Trust for the year. Sears Holdings only generated a gain of 4.7 percent compared to the SPY's returns of 11.43 percent, which resulted in 6.73 percent underperformance during that six months time period since the publication of the Sears Holdings' Valuation: Between Berkshire Hathaway And Bankruptcy research report on June 18.
Discover Financial Services
In the chart above, we see the strong performance of Discover Financial Services, which delivered a gain of 12.71 percent from $49.64 a share when I recommended it in an Alpha-Rich article on Seeking Alpha on July 19, 2013. This generated a respectable outperformance of 3.54 percent to beat the S&P 500 SPDR ETF Trust during that same period. It is worth noting that the Bishop Research and Analytics investment thesis calls for Discover Financial Services to experience its greatest gains in 2014 and 2015. For those who are interested in reading the entire research report and specifics about the Bishop Research and Analytics investment thesis for Discover Financial Services, simply register for Seeking Alpha Pro to gain access to this analysis as well as the largest database of research and analysis on small-cap stocks on the web. It is well worth the subscription to have 24/7 access to this valuable information.
In the chart above, we see the phenomenal 23.74 percent gain in Inter Parfums from the price of $28.94 a share published in my Alpha-Rich article for Seeking Alpha on August 15 to its closing price of $35.81 on December 31. By an astounding 12.73 percent, the Bishop Research and Analytics IPAR stock recommendation trounced the 11 percent increase in the SPY for that comparable time period. Importantly, Inter Parfums raised its guidance several times before year end, acquired a major new brand outright with the company's enormous cash position in the Oscar de la Renta brand, and issued a substantial special dividend to shareholders in December. All of these actions were catalysts that were exactly predicted in my report. Additionally, the company also followed my prediction of releasing guidance for 2014 that was far below the analysts' consensus estimates. That means the bad news of the low guidance is already baked into the stock price and Inter Parfums will continue its practice of blowing out analyst estimates by raising guidance a month before earnings before beating that same number a few weeks later on the actual earnings announcement. This company is set for spectacular growth in 2014 with an enormous number of major new brands launching alongside the addition of several legacy licenses being added to the portfolio.
Signet Jewelers Ltd.
In the chart above, we see the stellar 14.69 percent gain in Signet Jewelers Ltd. from $68.62 a share price from my recommendation in my Alpha-Rich article for Seeking Alpha published on September 16 to $78.70 per share on December 31. This is nearly a 75 percent increase over the performance of the SPY during that period, which still turned in a respectable 8.44 percent. In total, Signet Jewelers outperformed the S&P 500 SPDR ETF Trust by an impressive 6.25 percent during the comparable period.
As we see in the chart above, CBOE Holdings gained a solid 10.44 percent from $47.05 a share price when I recommended it in my Alpha-Rich article for Seeking Alpha published on October 14, 2013. While the SPY turned in a decent 8.04 percent gain during the comparable time period, CBOE still outperformed by a modest 2.39 percent by December 31. Like most of the stocks in the Bishop Research and Analytics Model Portfolio, the CBOE research report and investment thesis can be accessed on Seeking Alpha with a subscription to SA Pro.
In the chart above, we see the 5.74 percent gain in Points International from November 18 to December 31. Although this rise seems modest, it still translates into an approximately one percent gain per week since the stock recommendation was published. During that same time period, Points International nearly doubled the return on the S&P 500 SPDR ETF Trust, which only rose 2.94 percent. By way of comparison, PCOM outperformed the SPY by 2.81 percent during those six weeks.
Saving the best of 2013 for last, you can see that the December 27 recommendation of Mason Graphite truly delivered in the closing days of 2013. The report on Mason Graphite and the potential of this phenomenal opportunity to capitalize on its graphite mine project property with the emerging "Wonder Material" of graphene and the growth in lithium-ion battery production offered Seeking Alpha readers an extraordinary opportunity to finish the year. The stock was trading at 50 cents a share when the report was published and closed at 81 cents a share on December 31. This powerful gain of 62.4 percent easily breezed past the miniscule 0.46 percent for the S&P 500 SPDR ETF Trust during the comparable period. This research report and the overall investment thesis is well worth investors' time to read with a subscription to SA Pro as there is substantial upside remaining for this stock in the years ahead.
In conclusion, the chart above shows the value of the Bishop Research and Analytics Model Portfolio with a baseline of $1.6 million original funding balance as each new component constitutes $200,000 worth of shares added to the baseline. As you can see in the chart above, the Bishop Research and Analytics Model Portfolio grew by $278,224.19 during 2013 to $1.878 million. This represents an enviable 17.39 percent gain for the Bishop Research and Analytics Model Portfolio for FY 2013. In apples to apples comparison terms, when compared to the S&P 500 SPDR ETF Trust, the Bishop Research and Analytics Model Portfolio crushed the benchmark index on a relative basis by 9.53 percent during FY 2013.
Thank you for reading. I look forward to brining you more excellent investment opportunities and Top-Ideas in 2014. The book I am writing about Sears Holdings will be coming out soon and I will provide more details in the days and weeks ahead. Let's all have a profitable and productive 2014.
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For details about the upcoming release of the Sears Holdings book, please use the contact form on the Bishop Research & Analytics website to receive updates.
Thanks for reading.
Disclosure: I am long SHLD, MGPHF.
Additional disclosure: Long SHLD shares, bonds, and options positions.