The Great NCAV Experiment Portfolio: Month Two

|
Includes: APWC, GIGM, MSN, SPY, VB
by: Stewart Nielson
Summary

A rough month for both the portfolio and the market.

Relative portfolio outperformance was still achieved.

GIGM was added to the portfolio.

First, many apologies for the late report. I have been fighting some illness this month and had to focus on the basics. However, thankfully now I am recovered and ready to get back on track!

So on to the results...

Overview

How did the second month go? Not as good as month one. For the month, we went down -0.11% on an absolute basis. The only consolation is that on a relative basis, the portfolio still managed to outperform SPY and VB by +1.10% and +1.39%, respectively. Overall from inception (8/10/16) to date the portfolio has returned +3.67%.

Month Two Results

Month Two Results

Our primary victory this month was sadly just not losing as much as our benchmark competitors.

Inception to 10/12/16

Inception to 10/12/16

Overall the portfolio is still strongly outperforming selected benchmarks.

Inception to 10/12/16 Detailed

Inception to 10/12/16 Detailed

All price data is sourced from Google Finance. NCAV values are sourced from Gurufocus.

Emerson Radio (NYSEMKT:MSN) has thus far proved to be by far the top performer. To be frank, I haven't noticed any catalyst that would seem to warrant such outperformance. Investors may be betting on a liquidation.

GigaMedia Limited (NASDAQ:GIGM) was added to the portfolio this month. GIGM is a digital gaming company, incorporated in Singapore. Its share count has been flat for over a year. It has a low burn rate and strong discount to NCAV.

My mention of Asia Pacific Wire & Cable Corp Ltd (NASDAQ:APWC) has caused several readers to write in asking for, or in some cases giving, additional details on the company. One reader rightly pointed out that though much of its NCAV value is in its inventory, that inventory consists of a lot of copper, which should be relatively simple to liquidate. This is important to note and alleviates one of my bigger concerns with the position.

As always, if readers are curious what factors impacted selection, please see this article where I laid out the ground rules for this portfolio.

Confession

I am taking a more statistical approach to this portfolio similar to the methods employed by many of the studies of NCAVs over the years. So if a stock meets the basic ground rules criteria and most of the qualitative criteria, I will likely purchase.

So be warned, I do not do near the level of research that I might do on a more concentrated less statistical portfolio. This may help performance by making it more mechanical, or it may hurt it. Time will tell, but readers should be aware.

Disclosure: I am/we are long MSN,RBCN,RELL,IOT,DSWL,WILC,AEY,APWC,GIGM. 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.

Editor's Note: This article covers one or more microcap stocks. Please be aware of the risks associated with these stocks.