The Acquirer's Portfolio: The Key To Success

by: Ryan Boselo

Updating the AMLC portfolio for 2019.

Outlining how retail investors can maximize after-tax gains using the Acquirer's Multiple.

Reiterating confidence in beating the S&P 500 and (VIVAX) by a low single-digit percentage in 2019.

Adding your two cents may cost you a lot over the long term."

- Joel Greenblatt, 2012

Achieving consistent outperformance in the stock market is no easy feat, especially for retail investors. Furthermore, investing in a period where limitless information can be had and distributed at a moment’s notice is cause for concern among the less informed – retail investors who don’t have access to Bloomberg, industry analysts, and expensive money managers. Luckily for us, there is a strategy that has consistently outperformed, is easy to use, and is readily available.

The Acquirer’s Multiple is a quantitative approach to value investing that filters public markets for companies that exhibit a large margin of safety.

In essence:

The Acquirer’s Multiple® is the value metric financial acquirers use to find takeover targets."


This is the fourth installment in a series of articles on Seeking Alpha in which I have analyzed the implementation and performance of a portfolio using Tobias Carlyle’s Acquirers Multiple Large Capitalization (OTCPK:AMLC) investing strategy. The original portfolio was constructed on November 6, 2017 and was accompanied by an article explaining my approach, expectations, and reasoning behind tracking this strategy. If you would like to read my very brief description of the underlying securities purchased or how the portfolio performed over the past year you can do so by following the links below.

The Acquirer’s Portfolio – A Year in Review

The Acquirer’s Portfolio – Large Cap Q2 Update

After achieving the primary goal of single-digit outperformance of both the chosen benchmark (VIVAX) and the S&P 500 (SPY) by 4.24% and 3.64%, over the past 12 months, it is now time to rebalance the portfolio.


The rebalancing was executed from November 5th to November 7th following Tobias’ simple method for investing systematically (Carlisle, 133):

  1. Research: Ignore any stocks you do not want to own for any reason. Hold at least twenty stocks for diversification.
  2. Buy: It’s best to buy all your stocks at once. But it’s fine to scale in—make regular portfolio purchases over twelve months. One way to do it is to buy two or three stocks each month.
  3. Sell: For taxable accounts, hold winners for one year plus one day. Then sell. That maximizes after-tax returns. If a stock is up and still in the screener after one year and one day, hold until it leaves the screener. If a stock is down and, in the screener, hold. If a stock is down and leaves the screener, sell. You should check your stocks at least quarterly to see if you need to buy or sell.

The AMLC portfolio had an exactly 50/50 split in terms of holdings either gaining or losing value. For the holdings that have lost value over the past 12 months, 7 have been sold and 3 are still held in the portfolio. Table 1 shows the breakdown of the portfolio losers:

For the seven portfolio losers that have been sold, $-3,926.36 is attributable to short-term capital gains. In summation with the dividends accrued over the prior 12 months ($2,310.27), total short-term capital gains equal $-1616.09.

For the taxable investor, this loss can be deducted from ordinary income for the current year (Graham, Buffett & Zweig, p. 562). If in the future any capital losses were to exceed $3,000.00 they may be applied in later tax years to offset future capital gains. Table 2 shows the breakdown of portfolio gainers and resulting capital gains:

As of November 6, 2018, nine of the portfolio gainers are now out of the screener. The long-term capital gains associated with these nine holdings equals $15,441.89, with the unrealized mount from Ternium (TX) being $528.04. For the taxable investor, these long-term capital gains should be taxed at the favorable taxable gains rate. (Assuming the highest tax bracket and a favorable tax rate of 20%, roughly $3,100 would be due).

Total fees paid towards the selling of the 18 holdings was $37.96 and is equal to the number of shares traded multiplied by one cent. This total will likely vary depending on the institution you do business with.

Portfolio Allocation

After following the “simple method for investing systematically” and deciding to invest all proceeds of the reallocation at the same time, the new allocation for the 2019 portfolio was constructed. Table 3 shows the 2019 AMLC portfolio:

The total dollar value allocated to the new equities in the 2019 AMLC portfolio was $93,735.52. This equals the cash received from dividends ($2,310.27) and the sale of the equities ($91,463.21) minus trading costs ($-37.96) but does not include any taxes that may need to be paid. Since this is an equal-weighted portfolio, $5,858.47 was distributed across the top 16 names in the Acquirer’s Multiple large-cap screener on November 7, 2018. Sixteen because four equities remain in the screener; Lear Corporation (LEA), Fiat Chrysler Automobiles (FCAU), Tech Resources (TECK), and Ternium S.A. (TX). These four equities did not receive any additional investment and will be sold when they leave the screener.

I have decided to include the Acquirer’s Multiple numbers in the excel data to better gauge and compare how the individual equities perform in relation to their AM number, their peers, and the portfolio from year to year. I believe this will provide a lot of insight into which investments really deserve portfolio weighting over time and may lead to a more concentrated investment approach, however, Tobias insists upon 20 equities being the minimum amount and after all - the last thing I want to do is add my two cents!

The 2019 AMLC portfolio is heavily weighted towards 3 industries: Metals & Mining; Oil, Gas & Consumable Fuels; and Automobiles. All three of these industries are very cyclical and have been seriously impacted by politics over the past 2 years. I doubt this will change in the years to come but it may lead to an increase in M&A activity and industry consolidation which would be a net positive for the portfolio.

Portfolio Objectives

To reiterate what I stated on November 6, 2017: The objective of this portfolio is to outperform the Vanguard Value Index Fund ( VIVAX) by a low single digit percentage. My investment time frame is long-term oriented, and I am used to taking on substantial risk in my investments (I am no longer invested in only one equity). Based on the prior 12 months and the simple approach to reallocation this strategy provides I strongly believe that all retail investors can beat the market.


By following a simple method of rebalancing coupled with the tried a true principles outlined in the Acquirer’s Multiple investing strategies, a retail investor can outperform the market over the long-term. Over the past year I have attempted to show how a retail investor can achieve his or her goals and implement this strategy in practice. I believe it has gone well and I am excited to continue to track this strategy and share the results with you over the next year.




Carlisle, Tobias. The Acquirer's Multiple: How the Billionaire Contrarians of Deep Value Beat the Market (p. 133). Ballymore Publishing.

Graham, B., Buffett, W., & Zweig, J. (2005). The intelligent investor (4th ed., Appendix p. 562). New York: HarperBusiness.

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.