May 20, 2015
ATTENTION
Advanced Investors and Finance Professionals:
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VALUATION WARNING: Overvalued stocks now make up 66.22% of our stocks assigned a valuation and 28.5% of those equities are calculated to be overvalued by 20% or more. ALL sectors are calculated to be overvalued--with eight at or near double digits.
--Return to Glory
VE Forecast Market Neutral Newsletter Posts Strong Pick Up Due to Short Positions
It's back to our winning ways for the ValuEngine Forecast 16 Market Neutral Strategy Newsletter in April/May with some real nice performance from our short side. Our gain of 5.15 % versus the benchmark MLSAX's* gain of 0.39% was a significant beat. The modified stop-lossed strategy with a suggested 60-40 allocation trailed the standard market neutral allocation with a gain of 3.92%. The trailing 12 month percentage return is 17.75% for the newsletter and 8.52% for the MLSAX Long-Short Fund—and 12.87% for the SP500. Since inception, our portfolio has returned 124.24% vs the MLSAX return of 31.97%.*
*NOTE: We have begun to use the MLSAX Long-Short Fund as a benchmark. This compares the performance of our strategy to other similar strategies. We also include the S&P500 numbers.
It was a bit of a paradox this month as our longs were lackluster—with a hit rate just over 50%-- despite the overall market putting in some new highs. Bright spots for longs were Western Union, Starz Liberty, and TeeKay Tankers. Thankfully, our shorts picked up the slack—and then some. A hit rate of 88% with big pick ups from Peabody Energy, Caesar's, Eneroc, and YRC Worldwide powered up our overall gains. Only Ignite ruined the short party, with losses in excess of 20%.
Valuations have edged up a bit. As of today, 66.22% of the stocks we can assign a valuation are calculated to be overvalued-- with 28.57% of them calculated to be overvalued by 20% or more. That means we currently have a VALUATION WARNING.
Find Out More About the VE Forecast 16 MNS Newsletter HERE
Please click HERE to subscribe. You may download a sample copy HERE.
With the latest market leg up and the new highs, we have seen a spike in our valuation figures yet again. While
we remain convinced that US equities remain the "only game in town" as long as the Fed policy of zero to-low interest rates remains in place and the rest of the world struggles to deal with a variety of crises, a relatively strong dollar, relatively low energy prices (although not as low as expected just a few months ago), etc.
However, we have been on quite a run since the devilish interday S&P 500 low of 666 back in March, 2009. Where, oh where is the "BUY GOLD! BUY GUNS! BUY SEEDS!" crowd today? We have witnessed a truly historic rally under the Obama Administration--despite all the gnashing of teeth about destroying the economy, creeping socialism, etc. We finally see signs of hope across the labor market, with some increases in wages, better hiring, etc. The recovery there is much needed, and represents the last piece of the puzzle to end the greatest economic crisis since the Great Depression.
However, all good things must come to an end. But for that to occur, money must rotate somewhere. And we simply have not found that place--yet. But keep in mind that in the past, these sorts of valuation levels have been correlated with market declines. This is a time for investors to make sure they are prepared for a move to the downside by taking some profits or hedging against a sell off. Of course, this may be a blip and we may not see a decline. We operated under a valuation warning for much of 2013 and 2014 during this unprecedented rally.
Here are the primary long and short-side selections and their performance for the month.
Position |
Ticker |
Company Name |
|
Exit Price |
Change |
%Change |
Sector |
Long 1 |
SPR |
SPIRIT AEROSYS |
52.67 |
53.96 |
1.29 |
2.45 |
AEROSPACE |
Long 1 |
AXL |
AMER AXLE & MFG |
24.78 |
25.09 |
0.31 |
1.25 |
AUTO TIRES TRUCKS |
Long 1 |
X |
UTD STATES STL |
26.10 |
24.31 |
-1.79 |
-6.84 |
BASIC MATERIALS |
Long 1 |
WU |
WESTERN UNION |
20.74 |
22.42 |
1.68 |
8.10 |
BUSINESS SERVICES |
Long 1 |
TSEM |
TOWER SEMICOND |
17.79 |
15.62 |
-2.17 |
-12.20 |
COMPUTERS TECHNOLOGY |
Long 1 |
BZH |
BEAZER HOMES |
18.65 |
18.66 |
0.01 |
0.05 |
CONSTRUCTION |
Long 1 |
STRZA |
STARZ-LIB CAP-A |
37.55 |
40.32 |
2.77 |
7.38 |
CONSUMER DISCRETIONARY |
Long 1 |
GCI |
GANNETT INC |
35.95 |
36.03 |
0.08 |
0.22 |
CONSUMER STAPLES |
Long 1 |
CIM |
CHIMERA INVEST |
15.82 |
14.45 |
-1.37 |
-8.66 |
FINANCE |
Long 1 |
ACCO |
ACCO BRANDS CP |
8.45 |
7.94 |
-0.51 |
-6.04 |
INDUSTRIAL PRODUCTS |
Long 1 |
GILD |
GILEAD SCIENCES |
103.34 |
110.56 |
7.22 |
6.99 |
MEDICAL |
Long 1 |
GFF |
GRIFFON CORP |
17.34 |
16.39 |
-0.95 |
-5.48 |
MULTI-SECTOR CONGLOM |
Long 1 |
PZE |
PETROBRAS EGY |
7.51 |
7.27 |
-0.24 |
-3.20 |
OILS ENERGY |
Long 1 |
TA |
TRAVELCENTERS |
17.18 |
16.00 |
-1.18 |
-6.87 |
RETAIL WHOLESALE |
Long 1 |
TNK |
TEEKAY TANKERS |
6.09 |
6.68 |
0.59 |
9.69 |
TRANSPORTATION |
Long 1 |
TEO |
TELECOM ARGENTI |
20.87 |
21.02 |
0.15 |
0.71 |
UTILITIES |
Short 1 |
AVAV |
AEROVIRONMENT |
26.26 |
26.38 |
-0.12 |
-0.46 |
AEROSPACE |
Short 1 |
NAV |
NAVISTAR INTL |
29.37 |
28.42 |
0.95 |
3.23 |
AUTO TIRES TRUCKS |
Short 1 |
CDE |
COEUR MINING |
5.69 |
5.34 |
0.35 |
6.15 |
BASIC MATERIALS |
Short 1 |
ENOC |
ENERNOC INC |
11.30 |
9.57 |
1.73 |
15.31 |
BUSINESS SERVICES |
Short 1 |
FUEL |
ROCKET FUEL INC |
8.99 |
8.24 |
0.75 |
8.34 |
COMPUTERS TECHNOLOGY |
Short 1 |
RYN |
RAYONIER INC |
26.36 |
25.75 |
0.61 |
2.31 |
CONSTRUCTION |
Short 1 |
CZR |
CAESARS ENTERTN |
12.21 |
9.97 |
2.24 |
18.35 |
CONSUMER DISCRETIONARY |
Short 1 |
RDEN |
ELIZABETH ARDEN |
15.38 |
14.82 |
0.56 |
3.64 |
CONSUMER STAPLES |
Short 1 |
GNW |
GENWORTH FINL |
7.99 |
7.90 |
0.09 |
1.13 |
FINANCE |
Short 1 |
ASCMA |
ASCENT CAP GRP |
40.21 |
39.97 |
0.24 |
0.60 |
INDUSTRIAL PRODUCTS |
Short 1 |
AKBA |
AKEBIA THERAP |
8.67 |
8.23 |
0.44 |
5.07 |
MEDICAL |
Short 1 |
RAVN |
RAVEN INDS INC |
20.97 |
20.32 |
0.65 |
3.10 |
MULTI-SECTOR CONGLOM |
Short 1 |
BTU |
PEABODY ENERGY |
5.29 |
3.76 |
1.53 |
28.87 |
OILS ENERGY |
Short 1 |
IRG |
IGNITE RESTRNT |
3.85 |
4.67 |
-0.82 |
-21.30 |
RETAIL WHOLESALE |
Short 1 |
YRCW |
YRC WORLDWD INC |
16.51 |
14.32 |
2.19 |
13.26 |
TRANSPORTATION |
Short 1 |
S |
SPRINT CORP |
5.10 |
4.73 |
0.37 |
7.25 |
UTILITIES |
|
|
PORTFOLIO TOTAL |
|
|
|
|
|
|
GSPC |
S&P500 |
2097.45 |
2074.28 |
-23.17 |
-1.10 |
|
|
|
LONG PORTFOLIO |
|
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SHORT PORTFOLIO |
|
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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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VE View vs. S&P 500 Index Past Five Years |
|
VE View |
S&P 500 |
Ann Return |
18.01% |
12.43% |
Ann Volatility |
21.51% |
11.60% |
Sharpe Ratio |
0.84 |
1.07 |
Sortino Ratio |
1.39 |
1.34 |
Max Drawdown |
-34.94% |
-11.14% |
The ValuEngine View Newsletter is derived from the ValuEngine Aggressive and Diversified Growth BenchmarkPortfolio Strategies. These strategies are the product of ValuEngine's academic research team and combine cutting-edge financial analysis and portfolio construction techniques with real-world Wall St. know how.
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The ValuEngine View Newsletter portfolio has 15 primary stock picks and five alternates and is re-balanced once each month. The ValuEngine View Newsletter is published near the middle of each calendar month. An equal amount of capital is allocated to each stock. The monthly returns are calculated from the closing prices on date of publication. The performance calculation does not include any transaction costs.
ValuEngine Market Overview
Summary of VE Stock Universe |
Stocks Undervalued |
33.78% |
Stocks Overvalued |
66.22% |
Stocks Undervalued by 20% |
11.48% |
Stocks Overvalued by 20% |
28.57% |
ValuEngine Sector Overview
|
|
|
|
|
|
|
|
0.97% |
1.35% |
6.65% |
22.64% overvalued |
-1.54% |
20.98 |
|
0.13% |
1.83% |
11.91% |
21.25% overvalued |
14.00% |
31.39 |
|
0.23% |
2.42% |
6.51% |
16.07% overvalued |
9.28% |
31.10 |
|
0.94% |
1.89% |
5.08% |
15.31% overvalued |
4.48% |
25.21 |
|
1.26% |
1.87% |
2.55% |
11.65% overvalued |
8.70% |
26.79 |
|
0.63% |
2.26% |
8.04% |
11.57% overvalued |
2.01% |
27.90 |
|
1.21% |
1.95% |
8.04% |
11.10% overvalued |
9.43% |
26.42 |
|
1.15% |
1.71% |
5.38% |
10.14% overvalued |
4.59% |
23.01 |
|
-0.81% |
-4.10% |
2.77% |
8.25% overvalued |
-31.35% |
25.45 |
|
0.73% |
0.93% |
4.43% |
7.66% overvalued |
4.70% |
17.85 |
|
-0.00% |
0.67% |
3.55% |
6.89% overvalued |
0.38% |
21.53 |
|
0.11% |
1.49% |
6.51% |
6.13% overvalued |
-1.43% |
16.62 |
|
0.93% |
1.59% |
3.64% |
4.88% overvalued |
-4.76% |
20.15 |
|
0.26% |
0.99% |
3.41% |
4.48% overvalued |
5.21% |
19.84 |
|
2.57% |
2.54% |
3.73% |
3.05% overvalued |
3.68% |
25.20 |
|
1.76% |
0.78% |
3.60% |
1.45% overvalued |
-13.36% |
24.80 |
ValuEngine.com Products and Services
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