Bulletproof Investing Performance Update: Week 48

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Includes: ASGN, ATVI, BJRI, BOOT, CHE, CLR, CPRT, CVGW, DPZ, GMED, KLXI, LULU, MLNX, NFLX, PGNX, SGMO, SPY, WWE
by: David Pinsen
Summary

It has been 6 months since I presented 4 hedged portfolios and 10 top names in week 48 of my Marketplace service (April 26th). Here's how everything did.

All 4 hedged portfolios outperformed SPY, 3 out of 4 outperformed their expected returns, and those 3 had returns ranging from 14.99% to 21.9% over 6 months.

The top 10 names (unhedged) outperformed SPY again. So far, their record versus SPY is 38-8-1.

Safety first: NASCAR driver Johanna Long and her helmet (via Autowise)

Bulletproof Investing: Week 48 Performance

Each week since the beginning of June 2017, I have presented at least two hedged portfolios created by Portfolio Armor to my Bulletproof Investing subscribers. This is an "investing with a helmet on" approach, and these portfolios are designed to last six months at most. As with any investment method, the returns with this approach will vary. But in the interests of transparency and accountability, I have promised to publicly share the final performance of everything I present, regardless of how it does.

Here, I update the final performance of the three hedged portfolios and the top 10 names (unhedged) that I presented in the 48th week I offered my service. Let's look at what I presented in week 48 and how it did.

Portfolio 1

This was the $100,000 portfolio presented here initially. The data below was as of April 26th. The primary securities here were BJ's Restaurants (BJRI), Calavo Growers (CVGW), Mellanox (MLNX), and World Wrestling Entertainment (WWE). They were selected because they had the highest potential return estimates, net of hedging costs when hedging against a >15% decline, and they had share prices low enough that you could buy a round lot of one of them for less than $25,000. Boot Barn Holdings (BOOT) was added in a fine-tuning step to absorb leftover cash from rounding down to round lots of the first four names.

The worst-case scenario for this portfolio was a decline of 11.17% (the "Max Drawdown"), and the best-case scenario was a gain of 36.22% (the "Net Potential Return" or aggregate potential return net of hedging cost). The "Expected Return" of 11.62% was a ballpark estimate taking into account that actual returns, historically, have averaged 0.3x Portfolio Armor's potential return estimates.

Portfolio 1 Performance

Here's how the portfolio did, net of hedging and trading costs.

This portfolio was up 21.9%, outperforming its expected return and the return of the SPDR S&P 500 Trust ETF (SPY). So far, we have six-month performance data for 5 portfolios I've presented hedged against >20% declines. Here's how all of them have done.

PORTFOLIOS HEDGED AGAINST > 12.0% DECLINES

Starting Date Expected Return Actual Return SPY Return
January 4, 2018 9.71% 13.59% 0.59%
January 11, 2018 9.00% 0.94% 1.12%
January 25, 2018 9.18% 2.65% 1.10%
February 22, 2018 6.80% 3.13% 6.73%
April 26, 2018 11.62% 21.90% 0.53%
Average 9.26% 8.44% 2.02%

Portfolio 2

This was the $1,000,000 aggressive portfolio presented here initially. This portfolio had BJRI, Continental Resources (CLR), Globus Medical (GMED), Lululemon (LULU), MLNX, Netflix (NFLX), and WWE as primary securities. Progenics Pharmaceuticals (PGNX) was added in the fine-tuning step to absorb cash left over from the process of rounding down to round lots of the primary securities.

The worst-case scenario for this one was a decline of 14.49%, the best-case scenario was a gain of 31.04%, and the ballpark estimate of an expected return was 10.16%.

Portfolio 2 Performance

Here's the performance chart for Portfolio 2:

This one was up 14.99%. So far, we have six-month performance data for 21 portfolios I've presented hedged against >15% declines. Here's how all of them have done.

PORTFOLIOS HEDGED AGAINST > 15.0% DECLINES

Starting Date Expected Return Actual Return SPY Return
April 23, 2017 6.74% 15.41% 10.25%
December 31, 2017 8.90% 13.07% 2.52%
January 29, 2018 8.52% 9.88% -0.30%
February 1, 2018 8.70% 0.87% 0.59%
February 1, 2018 7.30% -5.69% 0.59%
February 22, 2018 7.91% 5.74% 6.73%
March 1, 2018 7.45% 5.80% 9.37%
March 8, 2018 7.47% -1.77% 5.82%
March 8, 2018 7.73% -4.26% 5.82%
March 15, 2018 7.80% 1.73% 6.68%
March 15, 2018 7.21% -4.70% 6.68%
March 22, 2018 7.41% 3.20% 11.74%
March 22, 2018 7.40% 5.89% 11.74%
March 29, 2018 7.57% 4.47% 11.48%
March 29, 2018 8.07% 5.03% 11.48%
March 31, 2018 8.04% 9.06% 11.48%
April 5, 2018 10.57% -1.33% 9.33%
April 5, 2018 10.88% -3.70% 9.33%
April 12, 2018 9.02% 3.66% 4.71%
April 26, 2018 10.16% 14.99% 0.53%
April 26, 2018 9.78% 5.01% 0.53%
Average 8.32% 3.92% 6.53%

Portfolio 3

This was the aggressive portfolio presented here initially. This had most of the same underlying securities as the previous portfolio, but hedged against a >20% declines instead of against >15% declines, and with Activision Blizzard (ATVI) absorbing the leftover cash from the process of rounding down positions to round lots.

The worst-case scenario here was a drawdown of 19.46%, the best case scenario was a gain of 31.17%, the net potential return, and the expected return was 10.32%.

Portfolio 3 Performance

Here's how the aggressive portfolio did:

This portfolio was up 17.44%. So far, we have six-month performance data for 31 portfolios I've presented hedged against >20% declines. Here's how all of them have done.

Portfolios Hedged Against > 20.0% Declines

Starting Date Expected Return Actual Return SPY Return
June 22, 2017 8.43% 20.00% 11.27%
August 31, 2017 8.03% 9.38% 10.87%
October 12, 2017 9.00% 1.81% 5.38%
October 19, 2017 10.07% 13.06% 6.08%
October 26, 2017 8.57% 9.68% 5.13%
November 2, 2017 9.77% 11.11% 3.11%
November 9, 2017 9.59% 4.46% 5.34%
November 16, 2017 8.95% 1.73% 6.22%
November 22, 2017 9.39% 7.25% 5.90%
November 30, 2017 8.55% -4.37% 3.80%
December 8, 2017 8.34% 4.48% 5.73%
December 14, 2017 7.75% 17.49% 5.87%
December 21, 2017 9.33% 12.82% 3.36%
December 28, 2017 9.92% 9.59% 1.99%
January 4, 2018 9.65% 12.96% 0.59%
January 11, 2018 8.93% 8.96% 1.12%
January 18, 2018 9.40% 7.97% 1.55%
January 25, 2018 9.82% 6.21% 1.10%
February 1, 2018 9.00% 0.90% 0.59%
February 8, 2018 7.35% 12.46% 11.75%
February 15, 2018 8.19% -6.17% 4.08%
February 22, 2018 8.54% 6.90% 6.73%
March 1, 2018 7.98% 6.48% 9.37%
March 8, 2018 8.32% -3.2% 5.82%
March 15, 2018 7.9% 2.42% 6.68%
March 22, 2018 7.65% 8.82% 11.24%
March 29, 2018 8.26% 7.72% 11.48%
April 5, 2018 10.59% 0.15% 9.33%
April 12. 2018 9.36% 4.63% 4.71%
April 19, 2018 11.04% 17.36% 3.67%
April 26, 2018 10.32% 17.44% 0.53%
Average 8.98% 7.60% 5.33%

Portfolio 4

This was the top names portfolio originally presented here, along with the list of top names. A couple of securities appearing in this portfolio that didn't appear in the previous ones from this cohort: Domino's Pizza (DPZ), KLX (KLXI), and Sangamo Therapeutics (SGMO).

The worst-case scenario for this one was a drawdown of 8.48%, the best-case scenario was a return of 22.15%, and the expected return was 7.33%.

Portfolio 4 Performance

Here's how it did:

This one was up 5.67%. So far, we have full six-month performance for 51 portfolios I've presented hedged against >9% declines, including this one. Here's how each of them did:

Portfolios Hedged Against > 9.0% Declines

Starting Date Expected Return Actual Return SPY Return
June 8, 2017 6.11% 9.24% 9.99%
June 16, 2017 5.13% 11.56% 10.94%
July 7, 2017 6.29% 8.47% 14.07%
July 13, 2017 6.70% 13.02% 14.85%
July 20, 2017 6.57% 10.36% 14.62%
August 3, 2017 8.46% 16.52% 12.66%
August 3, 2017 8.84% 14.00% 12.66%
August 10, 2017 6.15% 1.99% 8.36%
August 17, 2017 7.06% 9.38% 13.48%
August 17, 2017 8.11% 9.11% 13.48%
August 24, 2017 6.79% 8.88% 13.72%
August 31, 2017 7.43% 4.67% 10.87%
September 7, 2017 6.33% 9.54% 11.61%
September 14, 2017 7.25% 11.28% 11.19%
September 22, 2017 6.41% 10.64% 6.67%
September 28, 2017 6.27% 8.36% 4.73%
October 5, 2017 8.36% 8.73% 5.26%
October 5, 2017 7.33% 4.67% 5.26%
October 12, 2017 6.58% 5.03% 5.38%
October 19, 2017 7.91% 9.66% 6.08%
October 26, 2017 7.63% 9.43% 5.13%
November 2, 2017 6.15% 4.72% 3.11%
November 9, 2017 7.09% -1.49% 5.34%
November 16, 2017 7.13% 3.20% 6.22%
November 22, 2017 6.76% -0.87% 5.90%
November 30, 2017 6.53% -2.01% 3.80%
December 8, 2017 5.10% 4.84% 5.73%
December 14, 2017 6.75% 13.48% 5.87%
December 14, 2017 6.15% 12.48% 5.87%
December 21, 2017 6.70% 0.81% 3.36%
December 28, 2017 7.70% 15.10% 1.99%
December 28, 2017 7.88% 6.22% 1.99%
January 4, 2018 9.30% 15.19% 0.59%
January 4, 2018 8.65% 10.87% 0.59%
January 11, 2018 7.59% -3.05% 1.12%
January 18, 2018 6.81% -0.23% 1.55%
January 25, 2018 8.66% 3.47% 1.10%
February 1, 2018 6.59% 1.69% 0.59%
February 8, 2018 4.74% 8.05% 11.75%
February 15, 2018 6.37% -1.95% 4.08%
February 22, 2018 5.44% 1.72% 6.73%
March 1, 2018 5.05% 4.69% 9.37%
March 8, 2018 6.39% -3.74% 5.82%
March 15, 2018 5.23% 1.33% 6.68%
March 22, 2018 5.98% 4.01% 11.24%
March 29, 2018 5.93% 4.77% 11.48%
April 5, 2018 6.91% 3.41% 9.33%
April 12, 2018 9.09% -2.72% 4.71%
April 12, 2018 8.35% -0.63% 4.71%
April 19, 2018 8.86% 1.04% 3.67%
April 19, 2018 9.66% -4.07% 3.67%
April 26, 2018 7.72% 7.56% 0.53%
April 26, 2018 7.73% 5.67% 0.53%
Average 7% 6% 6.99%

One note about the table above: it includes both $100k portfolios and $1mm portfolios. Starting in May, I started presenting $100k portfolios hedged against >14% declines, so they'll appear in a different table going forward. My guess is that will slightly improve the average performance of the portfolios hedged against >9% declines.

Top Names

These were Portfolio Armor's top 10 names as of April 26th. Names that didn't appear in the portfolios above include: On Assignment (ASGN), Copart (CPRT), and Chemed (CHE).

Top Names Performance

Here's how the top names did:

The top names returned 2.3%, versus 0.53% for SPY. So far, 38 top names cohorts have beaten SPY, 1 has tied SPY, and 8 have underperformed SPY over the next six months. You can see the performance for all of the top names cohorts I've presented so far in the table below (you can find interactive charts for all of these tables under the performance tab on Portfolio Armor).

Starting Date Portfolio Armor 6-Month Performance SPY 6-Month Performance
June 8, 2017 14.49% 9.99%
June 15, 2017 19.85% 10.97%
June 22, 2017 24.46% 11.27%
June 29, 2017 18.24% 11.68%
July 6, 2017 21.03% 14.81%
July 13, 2017 28.25% 14.85%
July 20, 2017 25.04% 14.62%
July 27, 2017 33.52% 17.10%
August 3, 2017 20.72% 12.66%
August 10, 2017 13.05% 8.36%
August 17, 2017 10.71% 13.48%
August 24, 2017 15.23% 13.72%
August 31, 2017 8.42% 10.87%
September 7, 2017 12.75% 11.61%
September 14, 2017 29.19% 11.19%
September 21, 2017 22.56% 9.42%
September 28, 2017 14.30% 4.73%
October 5, 2017 11.53% 5.26%
October 12, 2017 15.46% 5.38%
October 19, 2017 20.73% 6.08%
October 26, 2017 18.10% 5.13%
November 2, 2017 12.64% 3.11%
November 9, 2017 5.41% 5.34%
November 16, 2017 6.11% 6.22%
November 23, 2017 5.18% 6.19%
November 30, 2017 -0.19% 3.80%
December 7, 2017 11.51% 5.99%
December 14, 2017 29.80% 5.87%
December 21, 2017 17.11% 3.36%
December 28, 2017 13.78% 1.99%
January 4, 2018 30.22% 0.59%
January 11, 2018 -2.06% 1.12%
January 18, 2018 7% 1.55%
January 25, 2018 1.73% 1.1%
February 1, 2018 11.02% 0.59%
February 8, 2018 25.21% 11.75%
February 15, 2018 4.31% 4.08%
February 22, 2018 19.48% 6.73%
March 1, 2018 10.64% 9.37%
March 8, 2018 5.82% 5.82%
March 15, 2018 6.99% 6.68%
March 22, 2018 8.64% 11.24%
March 29, 2018 14.68% 11.48%
April 5, 2018 9.76% 9.33%
April 12, 2018 -2.29% 4.71%
April 19, 2018 4.66% 3.67%
April 26, 2018 2.3% 0.53%
Average 13.98% 7.57%

So Portfolio Armor's top ten names averaged 13.98% over the average of these 47 6-month periods, versus SPY's average of 7.57%, an average outperformance of 6.41% over 6 months.

Top Names Time-Stamped

For a few months, in addition to posting those top names in my Seeking Alpha Marketplace service, I also time-stamped them on Twitter. If you click on the tweet shown below and scroll down, it will take you to a thread showing those time-stamped posts as well as charts of their subsequent performance.

Week 48 Assessment

An excellent week. All four hedged portfolios outperformed SPY, three out of four hedged portfolios outperformed their expected returns, and those three posted returns ranging from 14.99% to 21.9%. The top 10 names (unhedged) outperformed SPY for the 38th time out of 47 weeks (we didn't post the top 10 in week 1).

Amazon didn't appear in any of the portfolios because its share price was too high to fit a round lot of it in a $1 million portfolio. I added $2 million portfolios starting in May to capture it and other high share price top names.

We still see the potential variability of hedged portfolio returns from week to week, but the proximity between the average expected returns and average actual returns in the tables above remains encouraging (particularly with the portfolios hedged against >9% declines), because it suggests that with four entries per year (putting half of your money in a hedged portfolio now, half in three months, and repeating the process when those portfolios end), your actual returns will likely come close to your average expected returns.

Disclosure: I/we 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.