Rebalance & Review of Defensive High ROIC Portfolio

This week we performed our monthly rebalancing. 

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.

This week we sold Briggs & Stratton Corp (BGG) at $26.98 for $7,139.70, a gain of 9.4%.  We sold Lancaster Colony Corp (LANC) at $43.16 for $7,327.20, a gain of 12.4%.  We sold Stride Rite Corp (SRR) at $13.68 for $7,103.60, a gain of 9.3%.

We bought Reliance Steel & Aluminum Co (RS) at $31.91 for $6,870.65, Masco Corp (MAS) at $26.84 for $6,854.20, and Talbots Inc (TLB) at $21.47 for $6,773.05.

Finally, we reviewed the portfolio for any positions that had fallen below 6% of the entire portfolio.  We discovered that M.D.C. Holdings Inc. had fallen to 5.9% of the portfolio, so we upped our holding in that company by purchasing an additional 20 shares at $40.45.  This rebalanced the portfolio among all 15 stocks on our list. 

The portfolio underperformed both the DJIA and S&P 500 indexes this week, but has slightly outperformed them overall. 

The current value is calculated using prices near close from Thursday.

The snapshot:

Ticker

Total Cost

Current Value

% Gain/Loss

BN $6,450.00 $6,595.40 2.25%
CAE $6,470.20 $6,859.80 6.02%
DHI $6,527.35 $6,681.15 2.36%
FL $6,490.00 $6,485.40 -0.07%
JNY $6,544.00 $6,804.60 3.98%
KBH $6,577.35 $6,262.00 -4.79%
LEN $6,436.95 $6,294.17 -2.22%
MAS $6,854.20 $6,844.20 -0.15%
MDC $7,363.00 $6,876.50 -6.61%
PHM $6,460.00 $6,194.15 -4.12%
RS $6,870.65 $6,860.65 -0.15%
RYL $6,435.60 $6,526.40 1.41%
TLB $6,773.05 $6,763.05 -0.15%
TOL $6,478.80 $6,731.40 3.90%
WEYS $6,543.10 $6,457.50 -1.31%
Cash   $2,721.35  
       
Total $100,000.00 $101,957.72 1.96%

Performance:

 

Last Week

This week

Change

Overall

S&P 1303.82 1294.02 -0.75% 1.75%
Dow 11381.15 11331.44 -0.44% 1.86%
Portfolio 104655.6 101957.7 -2.58% 1.96%

Neither of us holds a position in any of these stocks.  Please review our disclaimer and Our Methods.

Rebalance & Review of Defensive Low PE Portfolio

This week we performed our monthly rebalancing. 

This portfolio is made up of the 15 defensive stocks that are trading at the lowest PE Ratio.  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 will 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 PE Ratio is calculated using an average of the previous 5 years’ earnings per share (EPS).

This week we sold Freddie Mac (FRE) at $63.13 for $6934.30, a gain of 9.4%.  We bought Countrywide Financial Corp (CFC) at $33.68 for $6746.00.

Finally, we reviewed the portfolio for any positions that had fallen below 6% of the total portfolio.  Since there were none this month, we made no further transactions.

This portfolio underperformed the Dow and S&P 500 indexes this week, and has slightly underperformed them overall.

The current value is calculated using prices near close from Thursday.

The snapshot:

Ticker

Total Cost

Current Value

% Gain/Loss

ASH $6,490.00 $6,087.00 -6.21%
BL $6,479.20 $6,480.00 0.01%
CFC $6,746.00 $6,736.00 -0.15%
DHI $6,527.35 $6,681.15 2.36%
FAF $6,420.70 $6,873.10 7.05%
FNF $6,458.10 $6,946.20 7.56%
KBH $6,577.35 $6,262.00 -4.79%
LEN $6,463.95 $6,294.17 -2.63%
MDC $6,544.00 $6,067.50 -7.28%
MTG $6,523.60 $6,940.80 6.40%
PHM $6,508.00 $6,482.25 -0.40%
RYL $6,435.60 $6,526.40 1.41%
SPF $6,522.25 $6,537.90 0.24%
TMA $6,460.10 $6,293.45 -2.58%
TOL $6,478.80 $6,731.40 3.90%
Cash   $2,961.00  
       
Total $100,000.00 $100,900.32 0.90%

Performance:

 

Last Week

This week

Change

Overall

S&P 1303.82 1294.02 -0.75% 1.75%
Dow 11381.15 11331.44 -0.44% 1.86%
Portfolio 103126.2 100900.3 -2.16% 0.90%

Neither of us holds a position in any of these stocks.  Please review our disclaimer and Our Methods.

Rebalance & Review of Defensive Value Portfolio

This week we performed our monthly rebalancing. 

This portfolio is made up of the 15 defensive stocks that are trading at the greatest discount to their intrinsic value.  During the first week of each month we will review the list, and make any trades necessary to get the portfolio to match the list.  Each week we will 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 intrinsic value is calculated by a formula based on Graham’s overall philosophy of calculating value with a margin of safety. 

This week we sold Popular Inc (BPOP) at $19.01 for $6738.55, a gain of 3.6%.  We sold Chubb Corp. (CB) at $49.88 for $6723.80, a gain of 4.7%.  Finally we sold New York Times Co. (NYT) at $22.26 for $6556.70, a gain of 0.3%.

Then we bought Thornburg Mortgage Inc. (TMA) at $23.09 for $6475.20, KB Home (KBH) at $40.40 for $6474.00, and Mercury General Corp (MCY) at $49.49 for $6443.70.

Finally, we reviewed the portfolio to see if any positions had fallen below 6% of the entire portfolio.  Since none had, we made no further transactions.

This portfolio underperformed both the Dow and the S&P 500 indexes this week, and has underperformed them overall.

The current value is calculated using prices near close from Thursday.

The snapshot:

Ticker

Total Cost

Current Value

% Gain/Loss

ASH $6,490.00 $6,087.00 -6.21%
BC $6,427.00 $6,500.25 1.14%
BL $6,479.20 $6,480.00 0.01%
DHI $6,527.35 $6,681.15 2.36%
KBH $6,474.00 $6,464.00 -0.15%
LEN $6,463.95 $6,294.17 -2.63%
LUK $6,505.40 $6,117.05 -5.97%
MCY $6,443.70 $6,433.70 -0.16%
MDC $6,544.00 $6,067.50 -7.28%
MNI $6,422.50 $6,115.50 -4.78%
NFB $6,524.20 $6,471.35 -0.81%
PHM $6,508.00 $6,482.25 -0.40%
RYL $6,435.60 $6,526.40 1.41%
SPF $6,522.25 $6,537.90 0.24%
TMA $6,475.20 $6,465.20 -0.15%
Cash   $3,315.00  
       
Total $100,000.00 $99,038.42 -0.96%

Performance:

 

Last Week

This week

Change

Overall

S&P 1303.82 1294.02 -0.75% 1.75%
Dow 11381.15 11331.44 -0.44% 1.86%
Portfolio 100859.2 99038.42 -1.81% -0.96%

 

Neither of us holds a position in any of these stocks.  Please review our disclaimer and Our Methods.

Review of Defensive High ROIC Portfolio

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.

There were no transactions this week.  Next week we will review the list for any changes and make any necessary transactions.

The portfolio outperformed both the DJIA and S&P 500 indexes this week, and has significantly outperformed them overall. 

The current value is calculated using prices near close from Thursday.

The snapshot:

Ticker Total Cost Current Value % Gain/Loss
BGG $6,529.00 $7,467.70 14.38%
BN $6,450.00 $6,587.00 2.12%
CAE $6,470.20 $6,840.00 5.72%
DHI $6,527.35 $6,898.50 5.69%
FL $6,490.00 $6,507.00 0.26%
JNY $6,544.00 $6,886.00 5.23%
KBH $6,577.35 $6,627.80 0.77%
LANC $6,519.30 $7,503.80 15.10%
LEN $6,436.95 $6,519.75 1.29%
MDC $6,544.00 $6,418.50 -1.92%
PHM $6,460.00 $6,379.05 -1.25%
RYL $6,435.60 $6,827.20 6.08%
SRR $6,499.60 $7,150.00 10.01%
TOL $6,478.80 $6,869.20 6.03%
WEYS $6,543.10 $6,706.35 2.49%
Cash $2,467.75
 
Total $100,000.00 $104,655.60 4.66%

Performance:

Last Week This week Change Overall
S&P 1296.06 1303.82 0.60% 2.52%
Dow 11304.46 11381.15 0.68% 2.31%
Portfolio 102203.4 104655.6 2.40% 4.66%

 

Neither of us holds a position in any of these stocks.  Please review our disclaimer and Our Methods.

Review of Defensive Low PE Portfolio

This portfolio is made up of the 15 defensive stocks that are trading at the lowest PE Ratio.  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 will 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 PE Ratio is calculated using an average of the previous 5 years’ earnings per share (EPS).

There were no transactions this week.  Next week we will review the list for any changes and make any necessary transactions.

This portfolio outperformed the Dow and S&P 500 indexes this week, and has slightly outperformed them overall.

The current value is calculated using prices near close from Thursday.

The snapshot:

Ticker Total Cost Current Value % Gain/Loss
ASH $6,490.00 $6,314.00 -2.71%
BL $6,479.20 $6,469.20 -0.15%
DHI $6,527.35 $6,898.50 5.69%
FAF $6,420.70 $6,896.90 7.42%
FNF $6,458.10 $6,832.30 5.79%
FRE $6,338.30 $6,996.00 10.38%
KBH $6,577.35 $6,627.80 0.77%
LEN $6,463.95 $6,519.75 0.86%
MDC $6,544.00 $6,418.50 -1.92%
MTG $6,523.60 $6,937.20 6.34%
PHM $6,508.00 $6,675.75 2.58%
RYL $6,435.60 $6,817.60 5.94%
SPF $6,522.25 $6,820.05 4.57%
TMA $6,460.10 $6,260.75 -3.09%
TOL $6,478.80 $6,869.20 6.03%
Cash   $2,772.70  
       
Total $100,000.00 $103,126.20 3.13%

Performance:

  Last Week This week Change Overall
S&P 1296.06 1303.82 0.60% 2.52%
Dow 11304.46 11381.15 0.68% 2.31%
Portfolio 101808.5 103126.2 1.29% 3.13%

Neither of us holds a position in any of these stocks.  Please review our disclaimer and Our Methods.

Review of Defensive Value Portfolio

This portfolio is made up of the 15 defensive stocks that are trading at the greatest discount to their intrinsic value.  During the first week of each month we will review the list, and make any trades necessary to get the portfolio to match the list.  Each week we will 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 intrinsic value is calculated by a formula based on Graham’s overall philosophy of calculating value with a margin of safety. 

There were no transactions this week.  Next week we will review the list for any changes and make any necessary transactions.

This portfolio outperformed both the Dow and the S&P 500 indexes this week, but has underperformed them overall.

The current value is calculated using prices near close from Thursday.

The snapshot:

Ticker Total Cost Current Value % Gain/Loss
ASH $6,490.00 $6,314.00 -2.71%
BC $6,427.00 $6,450.75 0.37%
BL $6,479.20 $6,453.00 -0.40%
BPOP $6,506.50 $6,762.75 3.94%
CB $6,419.80 $6,766.20 5.40%
DHI $6,527.35 $6,898.50 5.69%
LEN $6,463.95 $6,525.57 0.95%
LUK $6,505.40 $6,039.50 -7.16%
MDC $6,544.00 $6,418.50 -1.92%
MNI $6,422.50 $6,075.00 -5.41%
NFB $6,524.20 $6,506.92 -0.26%
NYT $6,535.40 $6,643.40 1.65%
PHM $6,508.00 $6,675.75 2.58%
RYL $6,435.60 $6,817.60 5.94%
SPF $6,522.25 $6,822.90 4.61%
Cash   $2,688.85  
       
Total $100,000.00 $100,859.19 0.86%

Performance:

  Last Week This week Change Overall
S&P 1296.06 1303.82 0.60% 2.52%
Dow 11304.46 11381.15 0.68% 2.31%
Portfolio 99626.26 100859.2 1.24% 0.86%

Neither of us holds a position in any of these stocks.  Please review our disclaimer and Our Methods.

Review of Defensive High ROIC Portfolio

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.

There were no dividends this week.

The portfolio underperformed both indexes this week, but has still outperformed them overall. 

The current value is calculated using prices near close from Thursday.

The snapshot:

Ticker Total Cost Current Value % Gain/Loss
BGG $6,529.00 $7,261.00 11.21%
BN $6,450.00 $6,475.00 0.39%
CAE $6,470.20 $6,595.20 1.93%
DHI $6,527.35 $6,741.00 3.27%
FL $6,490.00 $6,353.10 -2.11%
JNY $6,544.00 $6,685.80 2.17%
KBH $6,577.35 $6,386.00 -2.91%
LANC $6,519.30 $7,520.80 15.36%
LEN $6,436.95 $6,525.57 1.38%
MDC $6,544.00 $6,379.50 -2.51%
PHM $6,460.00 $6,305.95 -2.38%
RYL $6,435.60 $6,788.80 5.49%
SRR $6,499.60 $6,791.20 4.49%
TOL $6,478.80 $6,606.60 1.97%
WEYS $6,543.10 $6,320.16 -3.41%
Cash $2,467.75
 
Total $100,000.00 $102,203.43 2.20%

Performance:

Last Week This week Change Overall
S&P 1297.48 1296.06 -0.11% 1.91%
Dow 11334.96 11304.46 -0.27% 1.62%
Portfolio 104089.7 102203.4 -1.81% 2.20%

 

Neither of us holds a position in any of these stocks.  Please review our disclaimer.

Review of Defensive Value Portfolio

This portfolio is made up of the 15 defensive stocks that are trading at the lowest discount to their intrinsic value.  During the first week of each month we will review the list, and make any trades necessary to get the portfolio to match the list.  Each week we will 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 intrinsic value is calculated by a formula based on Graham’s overall philosophy of calculating value with a margin of safety.

There were no transactions this week.

This portfolio underperformed both the Dow and the S&P 500 indexes this week, and has now shown a loss over the 2 week history of the portfolio.

The current value is calculated using prices near close from Thursday.

The snapshot:

Ticker Total Cost Current Value % Gain/Loss
ASH $6,490.00 $6,378.00 -1.73%
BC $6,427.00 $6,390.00 -0.58%
BL $6,479.20 $6,426.00 -0.82%
BPOP $6,506.50 $6,670.45 2.52%
CB $6,419.80 $6,558.30 2.16%
DHI $6,527.35 $6,734.70 3.18%
LEN $6,463.95 $6,521.20 0.89%
LUK $6,505.40 $5,943.15 -8.64%
MDC $6,544.00 $6,376.50 -2.56%
MNI $6,422.50 $6,034.50 -6.04%
NFB $6,524.20 $6,412.06 -1.72%
NYT $6,535.40 $6,563.75 0.43%
PHM $6,508.00 $6,599.25 1.40%
RYL $6,435.60 $6,788.80 5.49%
SPF $6,522.25 $6,540.75 0.28%
Cash $2,688.85
 
Total $100,000.00 $99,626.26 -0.37%

Performance:

Last Week This week Change Overall
S&P 1297.48 1296.06 -0.11% 1.91%
Dow 11334.96 11304.46 -0.27% 1.62%
Portfolio 102025.7 99626.26 -2.35% -0.37%

Neither of us holds a position in any of these stocks.  Please review our disclaimer.

Company of the Week – McClatchy Company (MNI)

The company of the week this week is McClatchy Company (MNI), a newspaper publisher.  The company owns and publishes 32 newspapers in Minnesota, California, the Carolinas, and the Northwest (Alaska and Washington).  As we did last week, we will be looking reviewing the company using Warren Buffett’s approach for the Business & Management Review.  We will also use Benjamin Graham’s overall philosophies to guide our Financial & Value Review.

Business & Management Review

1.  Is the business simple and understandable?

     The newspaper industry is very simple and understandable.  Events happen in the world, whether local, national, or international, and must be reported to individuals.  We all (well, most of us at least) are interested in what happens in our surroundings.  McClatchy Company and other newspapers focus on reporting that news and rely on advertising revenues.

2.  Does the business have a consistent operating history?

     McClatchy Company has been publishing newspapers since 1857.  Over the years the company has acquired numerous newspapers and today is the second largest newspaper company in the United States, in terms of circulation.  The company has never deviated significantly from this operating focus.

3.  Does the business have favorable long-term prospects?

     The newspaper industry is currently in a state of renewal and change.  With the growth of the internet, the need for news delivered daily by paper has diminished.  It may seem that newspaper companies have reached the downslide of the business life-cycle.  However, the management of McClatchy has done an excellent job of transitioning to the internet age, having created Nando.net (now McClatchy Interactive), in 1994.  Over time, this online presence will likely lead to continued prosperity and growth by McClatchy Company.

4.  Is management rational?

     The management of McClatchy is very rational, and open to change – as evidenced by their focus on growing their online presence and acceptance that the future is the internet, and newspapers are the past.

5.  Is management candid with its shareholders?

     McClatchy Company has an extensive investor relations section on their website, which can be found at:  http://www.mcclatchy.com/.

6.  Does management resist the institutional imperative?

     Though most newspaper companies have been following the same approach by moving the bulk of their content online, we believe that this is not evidence that management is following the institutional imperative.  Rather, the management is realistic, willing to change, and realizes that they must adopt very similar approaches as their competitors in order to continue to operate and have favorable long-term prospects.
 

Financial and Value Review

This company appears to be very stable financially.  The company has had a positive net income for over 10 straight years, has paid dividends for over 10 years, and has increased their earnings per share by more than one-third over the last 10 years.  Following Graham’s approach, this stock appears suitable for the defensive intelligent investor.

We believe this company is also significantly undervalued.  The company has a low PE ratio and a low PB ratio.  In addition, the company has a high return on invested capital (calculated by using Buffett’s Owner Earnings and Contributed Capital).  We believe McClatchy Company has potential to reach $62.54 within the next few years.

Neither of us held a position in McClatchy Company at the time of publication.  Also, please read our disclaimer.
 

Please discuss this article in our forums.  Your comments help us mold our future articles.

Review of Defensive High ROIC Portfolio

This portfolio is made up of the 15 defensive stocks that are trading at the highest Return On Investment Capital (ROIC).  Each month we will review the list, and make any trades necessary to get the portfolio to match the list.  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.

There was one dividend issued for this portfolio this week.  On 8/15 Lennar Corp (LEN) issued a $0.16 dividend, and it was reinvested at the day’s closing price.  This week and overall the portfolio has significantly outperformed the Dow and S&P 500 indexes. 

The current value is calculated using prices near close from Thursday.

The snapshot:

Ticker Total Cost Current Value % Gain/Loss
BGG $6,529.00 $7,581.65 16.12%
BN $6,450.00 $6,444.20 -0.09%
CAE $6,470.20 $6,863.40 6.08%
DHI $6,527.35 $6,854.40 5.01%
FL $6,490.00 $6,110.10 -5.85%
JNY $6,544.00 $6,441.60 -1.56%
KBH $6,577.35 $6,818.45 3.67%
LANC $6,519.30 $7,291.30 11.84%
LEN $6,436.95 $6,692.93 3.98%
MDC $6,544.00 $6,720.00 2.69%
PHM $6,460.00 $6,490.85 0.48%
RYL $6,435.60 $6,919.98 7.53%
SRR $6,499.60 $6,968.00 7.21%
TOL $6,478.80 $6,687.20 3.22%
WEYS $6,543.10 $6,737.85 2.98%
Cash $2,467.75
 
Total $100,000.00 $104,089.66 4.09%

Performance:

Last Week This week Change Overall
S&P 1271.81 1297.48 2.02% 2.02%
Dow 11124.37 11334.96 1.89% 1.89%
Portfolio 100458.5 104089.7 3.61% 4.09%

 

Neither of us holds a position in any of these stocks.  Please review our disclaimer.

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