Let’s take a look at two positions added by our Covestor model managers this week. One manager looks beyond creative accounting for his model while the other uses a rotational approach to investing in sectors and market indices.
We’ve talked about Sean Hannon’s Bottom-Up Analysis portfolio before and mentioned its goal to look beyond creative accounting and take advantage of market inefficiencies. This week, Hannon added shares of eBay Inc (NASDAQ:EBAY) to his model. eBay’s increasing net revenues, stockholder equity, earnings per share and net income certainly speak to the power of online selling. In addition, their unique position in the world of online auctions gives them an almost unrivaled presence within the booming sector. Their stock price dropped recently after they adjusted their projected earnings per share down for the year, but their revenues and earnings are showing signs of growth and are beating analyst’s expectations.
Model manager Amin Khakiani manages the Quantitative Hedging model. This model invests in different sectors and market indices. Since many sectors offer cyclical profit cycles, Khakiani’s model uses a rotational approach allowing him to take advantage of these cycles. This week Khakinani added RF Micro Devices Inc (NASDAQ:RFMD) to the portfolio. RFMD designs and manufactures the semiconductor components used in your wireless devices, wireless local area networks (OTCPK:WLAN) and in the defense market. The company has a low price to earnings ratio compared to competitors and increased earnings per share and stockholder equity in 2009. While the electronic technology is considered a cyclical sector, consumer trends in purchasing technology don’t seem very cyclical at all.