This portfolio is made up of the 15 defensive stocks that are trading at the highest Return On Investment Capital (ROIC). The first week of each month we will review the list, and make any trades necessary to get the portfolio to match the list. Every week we examine the portfolio's performance against the S&P 500 and Dow Jones Industrial Average, and reinvest any dividends. The list of defensive stocks is made by following modernized Benjamin Graham strategies, and ROIC is calculated with a formula based on Warren Buffett's definition of Owner Earnings and Contributed Capital.
We have decided to provide our list of Defensive High ROIC companies on a weekly basis. The portfolio will continue to be rebalanced once a month, but the list itself will be provided every week.
Here is this week's list of Defensive High ROIC companies:
| PIXR | PIXAR |
| RCII | RENT-A-CENTER, INC. |
| DEBS | DEB SHOPS, INC |
| DLX | DELUXE CORPORATION |
| HRB | H&R BLOCK INC |
| PCU | SOUTHERN COPPER CORP |
| NUE | NUCOR CORPORATION |
| RYL | RYLAND GROUP, INC |
| KCP | COLE (KENNETH) PRODUCTS |
| MDC | M.D.C. HOLDINGS INC |
| LIFE | LIFELINE SYSTEMS INC. |
| LEN | LENNAR CORP |
| OSG | OVERSEAS SHIPHOLDING |
| EXPO | EXPONENT, INC |
| LIZ | LIZ CLAIBORNE, INC |
There were a number of transactions this week because we updated our formulas.
The portfolio has outperformed both the DJIA and S&P 500 indexes during this period, and has very significantly outperformed them overall.
The current value is calculated using prices near close from Thursday.
The snapshot:
| Ticker | Total Cost | Current Value | % Gain/Loss |
| DEBS | $8,040.00 | $8,031.00 | -0.11% |
| DLX | $7,948.80 | $7,939.20 | -0.12% |
| EXPO | $8,030.10 | $8,021.40 | -0.11% |
| HRB | $8,027.40 | $8,017.20 | -0.13% |
| KCP | $7,995.90 | $7,986.00 | -0.12% |
| LEN | $6,510.59 | $7,691.81 | 18.14% |
| LIFE | $7,887.00 | $7,877.10 | -0.13% |
| LIZ | $7,601.90 | $8,424.60 | 10.82% |
| MDC | $7,406.29 | $9,616.06 | 29.84% |
| NUE | $7,884.00 | $7,874.55 | -0.12% |
| OSG | $8,039.25 | $8,029.80 | -0.12% |
| PCU | $8,101.80 | $8,092.00 | -0.12% |
| PIXR | $8,132.40 | $8,122.80 | -0.12% |
| RCII | $8,063.00 | $8,052.00 | -0.14% |
| RYL | $6,454.10 | $8,687.28 | 34.60% |
| Cash | $50.92 | ||
| Realized | $16,177.10 | ||
| Total | $100,000.00 | $122,513.72 | 22.51% |
Performance:
| Last Week | This week | Change | Overall | |
| S&P | 1389.08 | 1425.49 | 2.62% | 12.08% |
| Dow | 12163.66 | 12416.76 | 2.08% | 11.62% |
| Portfolio | 117071.05 | 122513.72 | 4.65% | 22.51% |
Neither of us holds a position in any of these stocks. Please review our disclaimer and Our Methods.
Ben & Jon,
I think this is as good as any to comment on your methods (as stated on http://www.moderngraham.com/methods.htm).
You state "We have developed a complex computer model to estimate the intrinsic value of a company. This model takes a number of factors into account including: PE ratio, Price to book ratio, Price to free cash flow ratio, price to sales ratio, and discounted cash flows."
Would it be at all possible for you to share how exactly your "complex computer model" works? I consider myself an amateur investor, and I would value the chance to know the inner workings of your valuation model. Lots of people can estimate the intrinsic value of a company, but I am interested in exactly HOW they came to the conclusion they did.
Any and all feedback is much appreciated!
# Posted by: Jason at December 15, 2006 11:32 PM