Watch Lists Off to Good Start
Yes, we know it has only been two days since the Watch Lists were priced, but they were a nice two days. In fact, despite our complaints that some stocks were going up dramatically between the time we announced the watch list and the time we priced it, several names had nice earnings reports Wednesday night and got an immediate boost to their at-the-close official pricing.
The small cap watch list was up 1.31%, significantly better than the 0.50% and 0.58% posted by the Russell 2000 and S&P small cap indices over the two day period. The performance was driven by particularly strong results from Silgan (SLGN - Annual Report), Landstar (LSTR - Annual Report), Rent-a-Center (RCII) and NVR (NVR - Annual report). The worst performers were Vaalco Energy (EGY) and Apria Healthcare (AHG).
The mid-cap watch list turned in 1.58%, compared with just 0.46% for the S&P mid-cap. Due to significant overlap, the same names accounted for the gain. However, Vaalco is not in the mid-cap watch list so the second-worst performance came from Equifax (EFX).
The 0.49% return for the large cap watch list was also sufficient to beat the S&P 500’s 0.28%. Positive stocks were fairly evenly dispersed, but the performance was held back by poor returns from Freeport McMoRan (FCX - Annual Report), TJ Maxx (TJX) and Ricoh (RICOY.OB).
We’ll also continue to track the original all-cap watch list against the S&P 500 and our own portfolio. Embarrassingly, the only negative performance this week was our own portfolio.
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You’re equal-weighting? Ah.
I put a cap-weighted version of your large-cap list into Yahoo Finance as a portfolio against a short sale of the S&P index. Currently your long-short large-cap hedge fund is up perhaps 0.035% over the week (I used 26. Jan. as a start date, so you added MMM as a big loser), which would annualize to a little under 2%. Even with MMM that’s not bad, depending on how closely you correlate to the index, though one week is hardly something off which to extrapolate.
Actually the weightings are merely nearly equal weight. Most are 3% but there are a couple of 4’s and a 2. The weightings are listed on the original post image.
I’m flattered that you have taken the time to benchmark me. You’ll have to update me from time to time on the alternate strategy’s performance. If it does better than mine I may have to start a hedge fund!
As to the Jan. 31 initial date, it seems like on balance it probably worked in my favor. A couple of stocks ran up ahead of the date and a couple declined. But it just seemed fairest to pick a date in the future and live with the consequences.