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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

Entry Price 4/17/15

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



5.15


GSPC
S&P500
2097.45
2074.28
-23.17
-1.10



LONG PORTFOLIO



-0.78



SHORT PORTFOLIO



5.93

Find Out More About the VE Forecast 16 MNS HERE

 

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Looking for a monthly portfolio of stock picks which are objective and based on cutting-edge academic theory and Wall St.practice? Then subscribe to The ValuEngine View Newsletter.The ValuEngine View Portfolio is based on our highly-refined and tested ValuEngine Portfolio Strategies along with our proprietary quant-based composite scoring system. The ValuEngine View Newsletter is the product of sophisticated stock valuation and forecast models first developed by Yale Professor of Finance Zhiwu Chen.

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

Each month you will receive an electronic copy of our newsletter highlighting 15 potential long positions along with five alternate picks. Our investment strategies focus on dozens of fundamental and technical factors for over 8000 individual stocks, synthesize the data, and then come up with a portfolio. Each newsletter portfolio focuses on maximum potential returns so there are no diversity requirements. Each portfolio pick includes critical ValuEngine valuation and forecast data. These 20 total picks represent the most up-to-date equity assessments of our proprietary models.

Please click HERE to subscribe. You may download a sample copy HERE. After your subscription is approved, you will immediately receive access to download the current issue of newsletter as well as the previous issues, which are all available as PDF files. Each month when the latest issue of the newsletter is released, we will send you an email, informing you to download it from the site. The newsletter is released near the middle of each month.

 

  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

Sector
Change
MTD
YTD
Valuation
Last 12-MReturn
P/E Ratio
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

 

 

 

 

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