In this article we review the Bargain Basement Portfolio, which was created on March 27, 2009, and rebalance it to the target allocations. You can view a more detailed description of the portfolio in the Introduction to the Bargain Basement Portfolio. Here’s a review of the rules of the portfolio:
- Using the Value Line Bargain Basement Screen, select companies that are priced at 75% or lower of Price-to-”Net” Working Capital and have achieved a positive EPS for at least 5 straight years.
- Buy shares when the price is 75% or lower, and hold until the price is 150% or higher of “Net” Working Capital.
- Maximum number of companies invested at a given time is 5 (target allocation of 20% of portfolio). If there are more than 5 suitable companies, any purchases will be made in the company with the lowest Price-to-”Net” Working Capital ratio.
- Any funds not invested in suitable companies will be invested in the iShares Barclays 10-20 yr Treasury ETF, ticker symbol TLH.
- Any dividends received are placed in cash to be reinvested during rebalancing.
- Portfolio is rebalanced to target allocations every 3 months.
Since the last update on the portfolio, and prior to the rebalance, there were no transactions; however, when the time came to rebalance (end of the 2nd quarter), the positions had the following allocations:
- Movado Group, Inc (MOV) – 18.59% of the total portfolio
- Sketchers, USA (SKX) – 20.43%
- PC Connection (PCCC) – 19.03%
- iShares 10-20 yr Treasury ETF (TLH) – 41.6%
- Cash – 0.36%
The target allocation is 20% for each equity and the remaining funds in the iShares ETF. As a result, the following transactions were made, bringing the allocations in line with the target.
- Sell 25 shares of TLH, proceeds of $2,724.50
- Buy 189 shares of MOV, cost of $1,871.10
- Buy 243 shares of PCCC, cost of $1,287.90
In addition, between the rebalancing of the portfolio and today, the following transactions were made:
- Dividend of $0.303 per share of TLH received in the amount of $145.44
During the second quarter of 2009 (the period is considered from 3/27/2009 to 7/3/2009), the following performance was observed:
|3/27/09 Value||7/3/09 Value||Gain/Loss|
|Bargain Basement Portfolio||$100,000.00||132,306.79||32.31%|
|Dow Jones Industrial Average||7,776.18||8,280.74||6.49%|
|S&P 500 Index||815.94||896.42||9.86%|
You can view the current portfolio at the Google Spreadsheet I have set up to track the performance. The spreadsheet provides an overview of the portfolio’s current value, weekly historical value, and a history of the transactions. As of today, the portfolio is currently up over 48% since inception.