June certainly proved to be a frustrating month.
By any reading, the stock market in June 2013 has been influenced by comments emanating from the Federal Reserve, and by expectations of either a slow down in Chinese economic activity, if not a melt down in their financial system.
While I share these concerns, the fact is that the general market indicators do not indicate a problem. My non-propriety "Indicator" remained, and remains bullish on equities, staying positive in the period.
While experiencing what felt like a bout of "Turmoil" in the period, the mathematical indicators of "Market Turmoil" remained subdued, suggesting that the June commentary about a possible systemic downturn was not warranted.
From my perspective, my April 12 portfolio failed to keep up with SPDR S&P 500 Trust ETF (SPY). Worse, this portfolio was severely whipsawed in the period, so while Ducommun (DCO), Gamestop (GME) and IDT Corp (IDT) which I recommended in my Instablog of April 23, has returned 9%,36% and 45% respectively, the fact is that after precipitous falls in the period, DCO and GME were liquidated prior to their recovery.
Readers may recall that the idea behind these selections was one of returns being generated as a result of special/recovery situations rather than expectations of good business operations. With that in mind, I assumed that very large falls in the share price of DCO and GME reflected the possibility that the special situations had failed to develop. I was wrong, but here we have yet another investing nuance which I had not appreciated then as much as I do now. In terms of strategy, the results proved disappointing with just one clear cut success from 13 selections, and 3 successes if one had the stomach for severe draw downs.
In the current period, my analysis indicates that the Bank, Specialty Chemicals and Publishing sectors are showing interesting characteristics. In the interests of diversification, I have selected the following portfolio comprising the more attractive stocks from these sectors, and some additional stocks which add to a greater level of consistent alpha generation in the period.
STOCK | SECTOR | CAP | ||
AF | Astoria Financial | Banks | 1.15B | |
WBS | Webster Financial | Banks | 2.41B | |
MWW | Monster Worldwide | Business Training | 0.64B | |
AVX | Avx Corp | Electrical Components | 2.18B | |
WMK | Weiss Markets | Food Retailers & Wholesalers | 1.31B | |
SCS | Steelcase | Furnishings | 1.94B | |
NP | Neenah Paper | Paper | .58B | |
FDS | FactSet Research | Publishing | 4.66B | |
GCI | Gannett Co | Publishing | 6.10B | |
WLK | Westlake Chemical | Specialty Chemicals | 6.73B |
For the record, this portfolio is compared to the April 23 recommendations.
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Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.