Value Stock Guide October Portfolio Update

As I am working to finish up the monthly newsletter for my premium subscribers, I thought it is a good idea to talk a little about how the premium portfolio is performing. As a value investor focused on long term results, I prefer to talk about my returns over a year or more. Some highlights follow. These results are as of Oct 31, 2011:

  • 12 month returns: VSG portfolio: 29.89% vs. S&P: 5.92%
  • Since inception (Jul 23, 2009, Annualized): VSG Portfolio: 24.57% vs. S&P: (0.09)%

I initiated several new positions in the month of October, which are holding their own against the overall market. I currently hold 9 different stocks in my portfolio, of which 6 stocks are up solidly while 3 other stocks are either flat or down marginally. My best performing purchase is up 34.4% in one month since I acquired the shares. I subsequently added more shares bringing the average return down in this stock to about 18%. My worst performing stock is down 5.24% since I purchased it about a week ago, but this is one stock that I am not worried about at all for the long term.

In October I also restructured my portfolio and reduced my allocation to one stock that I was significantly overweight in. This freed up cash that will be used for further acquisitions in the coming weeks, as I think this is a great time to be buying stocks (selectively, of course).

Covestor Data Fix

There was a problem with Covestor data in that they were tracking one of my old client account as part of my portfolio. This is not the problem. The problem was that I have not managed this client since Nov 2009, when he moved out of country for work. I worked with Covestor to get this fixed and the performance recalculated. Happy to say that while it did not change my outperformance over S&P over the period that Covestor has been tracking my portfolio, there are significant differences in the performance numbers which you will notice if you have been following my performance over time.

Finding Certainties Amidst Uncertain Times

The risk and volatility are rampant in the stock market today. The market bobs up and down, seemingly without a direction, based on the macro and political currents. In this environment, I am happy to bide my time a bit, keep some cash, and invest only when I find stocks that represent a great value and solid underlying fundamentals. Truth be told, the market is littered with fallen angels, companies that appear to be great values. So a lot of my research today is geared towards finding reasons not to buy a stock despite its seeming value. I have recommended quite a few stocks to be not bought even if they offer a compelling value based on classic value investing measures, due to certain aspects of the company business that I am not comfortable with. Frankly, with so many good value stocks in the market, there is no need to take on more risk than necessary.

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