New Actions Required
- Long model: ANET reached our model portfolio price target, and the position will be assumed closed and replaced with cash Monday.
Sell Side Upgrades and Downgrades Today
- Long model: None.
Also of Note
- Long model: ALSN was reiterated a Sell with a low-on-the-Street $26 price target by a sell side firm citing its survey of electric trucks, which do not seem to need sophisticated gearboxes.
- Short sale model: AGIO presented updated data from a Phase 1 study of single agent ivosidenib in patients with IDH1m positive solid tumors, including glioma.
For the month to date the Core Long Model portfolio is up +0.78% on a simple cumulative return basis (sum of daily returns). This compares to the S&P 500 up +0.15%, the S&P 1500 Composite up +0.14%, and the Russell 2000 down -0.65%. The Core Long/Short Model is up +1.93%.
Stock Selections Are Presaging Sell Side Analyst Actions
- MTD 9 stocks in the long model have received 27 positive price target revisions, and 5 stocks have received 7 ratings upgrades from sell side firms, led by Facebook, Inc. (FB).
- MTD 5 stocks in the short sale model have received 17 negative price target revisions, and 4 stocks have received 7 ratings downgrades, led by Under Armour, Inc. (UAA).
Stock Selection Criteria
Our criteria for selecting stocks in these model portfolio strategies, which heavily weight proxies for cash flow growth and ROIC, include the following:
- Relative Value
- Operating Momentum
- Consensus Estimate Revision Momentum
- Fundamental Quality
We rebalance our model portfolios every month and have been tracking long-only and long/short theoretical daily returns since March 31, 2009 (up +474.4% and 378.5% through October 31, 2017, respectively).
These models also tend to generate some solid ideas for 12-month holding periods (up an average +25.60% versus an average of +15.87% for the S&P 500 Index since December 31, 2015).
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Additional disclosure: As a simple quantitative model based on fundamental rankings, the portfolio models do not take into account rumors or pending M&A transactions. Theoretical return data reflect simple cumulative returns (not compound returns) and do not assume the impact of costs such as execution fees, margin fees, slippage, the availability of stocks for short selling, or any other kind of cost. There are limitations inherent in our theoretical model results, particularly with the fact that such results do not represent actual trading and they may not reflect the impact material economic and market factors might have had on our decision making if we were actually managing client money. We do our best to provide accurate information in this report, but do not guarantee its accuracy.