February 24, 2015

VALUATION WATCH: Overvalued stocks now make up 59.05% of our stocks assigned a valuation and 20.77% of those equities are calculated to be overvalued by 20% or more.  Eleven sectors are calculated to be overvalued--with six at or near double digits.

--Great Job!

VE Forecast Market Neutral Newsletter Posts Double-Digit Gain for Second Month Running

Our portfolio posted another excellent gain this month. Our 50/50 allocation's pick up of 10.15% beat the benchmark MLSAX's* gain of 1.09% by 906 bps. The modified stop-lossed strategy with a suggested 60-40 allocation gained even more with a pick up of 12.74%. The trailing 12 month percentage return is 3.62% for the newsletter and 11.07% for the MLSAX Long-Short Fund. Since inception, our portfolio has returned 105.43% vs the MLSAX return of 123.8%.

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Longs were once again stunning this month with thirteen winners for the second month in a row. Nine of our stocks were well above or near double-digit returns. Valentine's Day was good to us as 1800Flowers.com returned a whopping 39% and led our long side. Our shorts featured seven winners with Leapfrog's gain of 34% helping to preserve our portfolio's big pick up overall.

We have had a switch to an overvalued condition this month thanks to the market's latest rally. 60.15% of the stocks we can assign a valuation are calculated to be overvalued-- with 20.93% of them calculated to be overvalued by 20% or more. We remain bullish on US equities and find that the better job market—Wal-Mart just announced a minimum pay rate of $10/hour in response to employee action and wage pressures—is further evidence (finally) of a full-force US recovery. Unrest elsewhere has led to a stronger dollar and the new found US dominance in certain forms of energy is a great help as well.

Here are the primary long and short-side selections and their performance for the month.

Find Out More About the VE Forecast 16 MNS HERE

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The ValuEngine View Newsletter is the product of a sophisticated stock valuation model that was first developed by ValuEngine's academic research team. It utilizes a three factor approach: fundamental variables such as a company's trailing 12-month Earnings-Per-Share (EPS), the analyst consensus estimate of the company's future 12-month EPS, and the 30-year Treasury yield are all used to create a more accurate reflection of a company's fair value. A total of eleven additional firm specific variables are also used. In addition, the portoflio uses top picks from our Forecast Model. In essence, the portfolio is constructed with the best picks from our main propiretary models

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