Models: USA Stock Only

Transcription

1 : USA Stock Only Macy s goes Overvalued and Kindred Healthcare is taken private by TPG. The USA Stock Only portfolio model has one stock that is overvalued. Macy s [M] has reached over 130.0% Fv, providing a 61.3% return Figure 1: Macy sl [M] stock chart above from ISNPortal. Kindred Healthcare [KND] was acquired by TPG partners at $9/share which is a sizable discount. While this was well below fair value the portfolio still made a 3.4% gain Figure 2; Kindred Healthcare [KND] stock chart from ISN Portal P a g e 1

2 With the two stocks removed from the portfolio the allocation across market capitalization categories is showing an underweight to LargeCap stocks by 14.2% and an overweight to SmallCap stocks of 5.9%. Capitalization # of Stocks % # of Stocks % Diff LargeCap 67 $ 1,999, % % -14.2% MidCap 10 $ 265, % % 3.3% SmallCap 10 $ 241, % % 5.9% CMA # of Stocks Value$ % # of Stocks % Diff Core 17 $ 429, % % -1.3% 52 $ 1,626, % % -3.8% Aspirational 18 $ 451, % % 0.1% The portfolio also now has a slight underweight position in stocks by 3.8%. Sector weights are ideal with all sectors within target ranges. It is almost a shame to disrupt such a nice allocation. However, the market is not overvalued so we want to remain fully invested. Sector # of Stocks % # of Stocks % Diff Consumer Discretionary 17 $ 368, % % 0.4% Consumer Staples 11 $ 190, % % 0.1% Energy 2 $ 152, % % 0.1% Financials 16 $ 400, % % 0.6% Health Care 7 $ 373, % % 0.7% Industrials 10 $ 316, % % 1.8% Information Technology 13 $ 650, % % -0.5% Materials 6 $ 102, % % 1.0% Telecommunication Services 3 $ 27, % % -0.5% Utilities 4 $ 56, % % -0.6% In this case, ideally, we wanted to add to the LargeCap market capitalization area with a stock that exhibits characteristics and possibly in the Information Technology, Telecommunications or Utility sectors. In our first pass of the Buy stock universe we had 7 stocks that met our criteria. We narrow that down to 5 on the second pass and made the final selection by adding a new holding, Applied Materials [AMAT] a LargeCap Information Technology company within the semi-conductor industry. The stock will be a new addition to the portfolio. The company is currently undervalued at 78.7% Fv with mid-level ranked earnings. Dividend yield is good at 1.7% placing it above the middle in ranking. Earnings rankings are middle to slightly above middle and revenue growth ranking is high middle. P a g e 2

3 Went undervalued Considered Buy Figure 3: Applied Materials [AMAT] stock chart from Investment Strategy Network The stock recently became a Buy consideration after spending a brief time undervalued. Rankings on a global comparison are strong with an overall World LCap ranking of 4 and a World-Plus ranking of 3. Table 1: World and Worl-Plus rankings for Applied Materials [AMAT] Expectations are also strong as shown in Figure 4. Figure 4: GC Stock view from Investment Strategy Network for Applied Materials [AMAT] P a g e 3

4 We will be adding 1,100 shares of Applied Materials to the portfolio. This is a combination of the sale of Macy s, the acquisition completion of Kindred Healthcare and dividend income from the previous 6 months. With this addition the asset allocation parameters are as follows. The addition of Applied Materials improved the weighting in the LargeCap segment by 0.6%. The LargeCap segment remains underweight by 13.7% and this will be addressed as dividend income comes into the portfolio or other stocks become overvalued. Capitalization # of Stocks % # of Stocks % Diff LargeCap 68 $ 2,051, % % -13.7% MidCap 10 $ 264, % % 3.1% SmallCap 10 $ 241, % % 5.8% The allocation amongst sectors removed the underweight to Information Technology and all sectors remained within target ranges. Sector # of Stocks % # of Stocks % Diff Consumer Discretionary 17 $ 368, % % 0.2% Consumer Staples 11 $ 190, % % 0.0% Energy 2 $ 151, % % 0.0% Financials 16 $ 401, % % 0.3% Health Care 7 $ 372, % % 0.4% Industrials 10 $ 315, % % 1.6% Information Technology 14 $ 703, % % 0.9% Materials 6 $ 101, % % 0.9% Telecommunication Services 3 $ 27, % % -0.5% Utilities 4 $ 56, % % -0.6% The portfolio now holds the following securities. P a g e 4

5 Ticker Shares Name Pr/Share Value Index Sector Industry %ofport Yield B/H/S CMA AAPL 140 Apple Inc ,825 S&P500 Information Technology Technology Hardware & Equipment 1.00% 1.52 H MARKET ADI 1454 Analog Devices Inc ,187 S&P500 Information Technology Semiconductors and Semiconductor Equipment 5.29% 1.96 H MARKET ADM 259 Archer Daniels Midland 47 12,233 S&P500 Consumer Staples Food Beverage & Tobacco 0.45% 2.84 H MARKET ADS 230 Alliance Data Systems Corp ,675 S&P500 Information Technology Software & Services 2.00% 0.98 H MARKET AFL 412 AFLAC Inc ,914 S&P500 Financials Insurance 0.67% 2.39 H MARKET AGN 347 Allergan plc ,764 S&P500 Health Care Pharmaceuticals & Biotechnology 2.22% 1.67 B MARKET ALL 470 Allstate Corporation 93 43,799 S&P500 Financials Insurance 1.63% 1.97 H CORE AMGN 118 Amgen Inc ,416 S&P500 Health Care Pharmaceuticals & Biotechnology 0.83% 2.78 H MARKET AMP 63 Ameriprise Financial, Inc ,010 S&P500 Financials Diversified Financials 0.33% 2.52 H ASPIRATIONAL AMAT 1100 Applied Materials Inc ,073 S&P500 Information Technology Semiconductors and Semiconductor Equipment 1.90% 1.72 B ASPIRATIONAL ARNC 1673 Arconic Inc ,770 S&P500 Industrials Capital Goods 1.18% 1.26 B ASPIRATIONAL AXP 366 American Express Co ,047 S&P500 Financials Diversified Financials 1.38% 1.38 H MARKET BBT 555 BB&T Corp 51 28,166 S&P500 Financials Banks 1.05% 2.96 H MARKET BCPC 190 Balchem Corporation 99 18,846 S&P600 Materials Materials 0.70% 0.42 H MARKET BHGE 2010 Baker Hughes, a GE Co. Cl A 33 65,325 S&P500 Energy Energy 2.43% 2.22 H MARKET BKE 458 Buckle Inc ,152 S&P600 Consumer Discretionary Retailing 0.41% 4.11 B MARKET BMS 295 Bemis Company Inc ,576 S&P400 Materials Materials 0.47% 2.91 H CORE BMY 618 Bristol-Myers Squibb Co ,534 S&P500 Health Care Pharmaceuticals & Biotechnology 1.28% 2.86 H MARKET BWA 1204 BorgWarner Inc ,614 S&P500 Consumer Discretionary Automobiles & Components 1.99% 1.53 B ASPIRATIONAL CBS 298 CBS Corp. cl B 57 16,947 S&P500 Consumer Discretionary Media 0.63% 1.27 H MARKET CHRW 505 C.H. Robinson Worldwide, Inc ,268 S&P500 Industrials Transportation 1.68% 2.05 H CORE CIEN 600 Ciena Corporation 26 15,450 S&P400 Information Technology Technology Hardware & Equipment 0.57% - H MARKET CLW 377 Clearwater Paper Corp 23 8,728 S&P600 Materials Materials 0.32% - B MARKET CLX 37 Clorox Company 131 4,836 S&P500 Consumer Staples Household & Personal Products 0.18% 2.94 H CORE COTY 4634 Coty, Inc ,691 S&P500 Consumer Staples Household & Personal Products 2.40% 3.58 B CORE CTL 698 CenturyLink, Inc ,136 S&P500 Telecommunication Services Telecommunication Services 0.49% B MARKET CVS 729 CVS Health Corporation 66 48,362 S&P500 Health Care Health Care Equipment & Services 1.80% 3.01 B MARKET DAN 948 Dana Incorporated 21 19,576 S&P400 Consumer Discretionary Automobiles & Components 0.73% 1.94 B ASPIRATIONAL DBD 1410 Diebold Incorporated 12 16,497 S&P600 Information Technology Technology Hardware & Equipment 0.61% - B ASPIRATIONAL DIS 200 Walt Disney Company ,218 S&P500 Consumer Discretionary Media 0.83% 1.51 B MARKET DISCA 293 Discovery, Inc. Series A 27 7,823 S&P500 Consumer Discretionary Media 0.29% - H MARKET EMR 25 Emerson Electric Co. 68 1,697 S&P500 Industrials Capital Goods 0.06% 2.86 H MARKET ETN 25 Eaton Corporation, plc 77 1,922 S&P500 Industrials Capital Goods 0.07% 3.43 H MARKET ETR 76 Entergy Corp 79 6,035 S&P500 Utilities Utilities 0.22% 4.48 H CORE EXC 275 Exelon Corp 42 11,443 S&P500 Utilities Utilities 0.43% 3.32 H CORE EXPE 150 Expedia, Inc ,957 S&P500 Consumer Discretionary Retailing 0.70% 0.95 B MARKET F 1964 Ford Motor Company 10 20,563 S&P500 Consumer Discretionary Automobiles & Components 0.76% 5.73 B MARKET FE 1029 FirstEnergy Corporation 35 35,840 S&P500 Utilities Utilities 1.33% 4.13 H CORE FII 538 Federated Investors Inc ,686 S&P400 Financials Diversified Financials 0.47% 4.58 B MARKET FITB 1277 Fifth Third Bancorp 29 37,276 S&P500 Financials Banks 1.39% 2.47 H ASPIRATIONAL FLO 1645 Flowers Foods Inc 20 33,426 S&P400 Consumer Staples Food Beverage & Tobacco 1.24% 3.54 H CORE FMC 2 FMC Corporation S&P500 Materials Materials 0.01% 0.77 H ASPIRATIONAL FNGN 481 Financial Engines, Inc ,621 S&P600 Financials Diversified Financials 0.80% 0.71 H ASPIRATIONAL FTR 142 Frontier Communications Corp S&P600 Telecommunication Services Telecommunication Services 0.02% - B MARKET GE 892 General Electric Company 13 11,587 S&P500 Industrials Capital Goods 0.43% 3.70 B MARKET GILD 683 Gilead Sciences Inc ,851 S&P500 Health Care Pharmaceuticals & Biotechnology 1.96% 2.95 B MARKET GM 698 General Motors Company 39 27,410 S&P500 Consumer Discretionary Automobiles & Components 1.02% 3.87 H MARKET GPS 418 Gap Inc ,561 S&P500 Consumer Discretionary Retailing 0.47% 3.23 H MARKET HBI 1052 Hanesbrands, Inc ,470 S&P500 Consumer Discretionary Consumer Durables & Apparel 0.87% 2.69 B MARKET HIG 248 Hartford Financial Services 52 13,000 S&P500 Financials Insurance 0.48% 2.29 H MARKET HOG 211 Harley-Davidson, Inc. 41 8,746 S&P500 Consumer Discretionary Automobiles & Components 0.33% 3.57 H MARKET HRB 1035 H&R Block Inc ,451 S&P500 Consumer Discretionary Consumer Services 0.95% 4.07 B MARKET IBM 331 IBM Corp ,227 S&P500 Information Technology Software & Services 1.79% 4.31 H MARKET IR 25 Ingersoll-Rand Plc 90 2,254 S&P500 Industrials Capital Goods 0.08% 2.35 H MARKET ITW 277 Illinois Tool Works Inc ,744 S&P500 Industrials Capital Goods 1.40% 2.29 B MARKET IVZ 297 Invesco Ltd. 26 7,728 S&P500 Financials Diversified Financials 0.29% 4.61 B ASPIRATIONAL JCI 2482 Johnson Controls, Inc ,260 S&P500 Industrials Capital Goods 3.28% 2.92 B MARKET JWN 170 Nordstrom, Inc. 53 9,027 S&P500 Consumer Discretionary Retailing 0.34% 2.79 H MARKET KEY 1704 KeyCorp 21 35,511 S&P500 Financials Banks 1.32% 3.26 H ASPIRATIONAL KO 254 Coca-Cola Company 45 11,417 S&P500 Consumer Staples Food Beverage & Tobacco 0.42% 3.47 H CORE KR 454 Kroger Company 28 12,844 S&P500 Consumer Staples Food & Staples Retailing 0.48% 1.98 H CORE LM 635 Legg Mason Inc ,520 S&P400 Financials Diversified Financials 0.80% 4.01 B ASPIRATIONAL MANH 710 Manhattan Associates, Inc ,649 S&P400 Information Technology Software & Services 1.33% - H ASPIRATIONAL MET 356 MetLife, Inc ,874 S&P500 Financials Insurance 0.59% 3.77 H ASPIRATIONAL MOS 1366 Mosaic Co. (The) 28 38,767 S&P500 Materials Materials 1.44% 0.35 H ASPIRATIONAL MRK 785 Merck & Co. Inc ,212 S&P500 Health Care Pharmaceuticals & Biotechnology 1.83% 3.06 H MARKET OFG 3450 OFG Bancorp 16 56,063 S&P600 Financials Banks 2.08% 1.48 H ASPIRATIONAL PFE 2840 Pfizer Inc ,676 S&P500 Health Care Pharmaceuticals & Biotechnology 3.93% 3.65 H MARKET PG 359 Procter & Gamble Co ,185 S&P500 Consumer Staples Household & Personal Products 1.05% 3.65 H CORE PKE 3508 Park Electrochemical 24 82,438 S&P600 Information Technology Technology Hardware & Equipment 3.06% 1.70 H CORE PPL 110 PPL Corporation 28 3,094 S&P500 Utilities Utilities 0.12% 5.83 B CORE QCOM 1085 Qualcomm Inc ,102 S&P500 Information Technology Semiconductors and Semiconductor Equipment 2.38% 4.20 H MARKET RRC 5386 Range Resources Corp 16 86,553 S&P400 Energy Energy 3.22% 0.50 B MARKET STT 167 State Street Corp 87 14,532 S&P500 Financials Diversified Financials 0.54% 2.16 H ASPIRATIONAL SVU 143 SUPERVALU, Inc. 20 2,867 S&P600 Consumer Staples Food & Staples Retailing 0.11% - B MARKET SYMC 5 Symantec Corporation S&P500 Information Technology Software & Services 0.00% 1.43 H MARKET SYNA 300 Synaptics Incorporated 51 15,228 S&P400 Information Technology Semiconductors and Semiconductor Equipment 0.57% - H ASPIRATIONAL T 436 AT&T Inc ,516 S&P500 Telecommunication Services Telecommunication Services 0.50% 6.45 B CORE TAP 174 Molson Coors Brewing Co ,004 S&P500 Consumer Staples Food Beverage & Tobacco 0.41% 2.59 B CORE TPR 309 Tapestry, Inc ,906 S&P500 Consumer Discretionary Consumer Durables & Apparel 0.55% 2.80 H MARKET TSN 130 Tyson Foods Inc 64 8,263 S&P500 Consumer Staples Food Beverage & Tobacco 0.31% 1.89 B CORE UPS 815 United Parcel Service Inc ,859 S&P500 Industrials Transportation 3.41% 3.23 H MARKET USB 579 U.S. Bancorp 52 30,033 S&P500 Financials Banks 1.12% 2.31 H MARKET UTX 25 United Technologies Corp 129 3,234 S&P500 Industrials Capital Goods 0.12% 2.16 H MARKET VFC 698 V.F. Corporation 92 64,404 S&P500 Consumer Discretionary Consumer Durables & Apparel 2.39% 1.99 H MARKET WSM 196 Williams-Sonoma Inc ,852 S&P400 Consumer Discretionary Retailing 0.44% 2.84 H MARKET WU 986 Western Union 20 19,927 S&P500 Information Technology Software & Services 0.74% 3.76 H MARKET XLK 1812 SPDR Select Technology ,131 Information Technology Software & Services 4.91% 1.40 XLP 7 SPDR Cons Staples Slct Consumer Staples Food & Staples Retailing 0.01% 3.00 ZEUS 1002 Olympic Steel Inc ,886 S&P600 Materials Materials 0.85% 0.35 H ASPIRATIONAL P a g e 5