Entering text into the input field will update the search result below

High Beta Stocks Still Exist

Jul. 15, 2013 3:40 PM ET
Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

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.

Disclaimer:

The content in this document is provided as general information only and should not be taken as investment advice. The contents in this explanatory paper shall not be construed as a recommendation to buy or sell any security or financial product, or to participate in any particular trading or investment strategy. The ideas expressed on this site are solely the opinions of the author. The author may or may not have a position in any security referenced herein. Any action that you take as a result of information or analysis on this site is ultimately your responsibility.

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.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Recommended For You