All of the GuruFocus undervalued model portfolios have beaten the market by wide margins for the past two years. To further clarify and validate the performance of our Undervalued Predictable Portfolios, we follow up the previous one with this article.
The GuruFocus model portfolio of undervalued predictable companies, shown below, consists of the top 25 stocks that had the highest predictability rank, yet were the most undervalued as of Jan. 1st, 2010. We calculated the daily balance of the portfolio throughout the year, updating and reporting the data on the chart below. The portfolio is due to be rebalanced on Jan. 1, 2011, as we only rebalance once a year.
Excluding Laundry’s Restaurants, which was bought out, all of the companies currently in the model portfolio are the same ones that we had on Jan 1st, 2010. Laundry’s Restaurants was added in the portfolio at $11.60, the company’s closing price on Dec. 31, 2009. It was bought out in May 2010 at $24, a gain of 107%. After the buyout, the cash was not reinvested.
As of December 22nd, 2010, the model portfolio gained about 20.4% since rebalance on Jan. 1st, 2010. Comparably, the S&P500 was up approximately 12.9% during the same period. The model portfolio gained 56.7% in 2009, while the S&P500 gained 20.4%. The two years’ cumulative performance of the model portfolio was 88.61%, while the S&P500 gained 39.37%. All statistics do not include dividends. The chart below outlines the performance of the model portfolio compared to the S&P500:
This is the complete portfolio of the portfolio:
(Current Value: $188,614. Invested: $100,000 on December 31, 2008 Last Rebalance: January 1, 2010)
|Symbol||Company||# of Shares||Bought on||Share Cost||Current Price||Change||Value ($)|
|ANF||Abercrombie & Fitch Co.||173||01/01/2009||$23.07||56.97||+146.94%||9,856|
|BDX||Becton Dickinson and Company||79||01/02/2010||$78.86||84.38||+7%||6,666|
|BRO||Brown & Brown Inc.||349||01/02/2010||$17.97||24.2||+34.67%||8,446|
|CSC||Computer Sciences Corp.||114||01/01/2009||$35.14||48.87||+39.07%||5,571|
|DST||DST Systems Inc.||144||01/02/2010||$43.55||45.19||+3.77%||6,507|
|FCNCA||First Citizens BancShares Inc.||38||01/02/2010||$164.01||198.06||+20.76%||7,526|
|GD||General Dynamics Corp.||92||01/02/2010||$68.17||70.53||+3.46%||6,489|
|HD||The Home Depot Inc.||216||01/02/2010||$28.93||35.18||+21.6%||7,599|
|JKHY||Jack Henry & Associates Inc.||271||01/02/2010||$23.14||29.49||+27.44%||7,992|
|JOSB||Jos. A. Bank Clothiers Inc.||222||01/02/2010||$28.1267||41.19||+46.44%||9,144|
|LBAI||Lakeland Bancorp Inc.||355||01/01/2009||$11.26||11.47||+1.87%||4,072|
|LNY||Landry's Restaurants Inc.||345||01/01/2009||$11.6||Buyout in May||+107%||0|
|NBR||Nabors Industries Ltd.||286||01/02/2010||$21.89||22.35||+2.1%||6,392|
|PPD||PrePaid Legal Services Inc.||152||01/02/2010||$41.08||63.46||+54.48%||9,646|
|RGA||REINSURANCE GROUP OF AMERICA, INC.||131||01/02/2010||$47.65||54.7||+14.8%||7,166|
|TRK||Speedway Motorsports Inc.||248||01/01/2009||$16.11||16.48||+2.3%||4,087|
|TSCO||Tractor Supply Company||236||01/02/2010||$26.485||48.19||+81.95%||11,373|
|TTC||The Toro Company||150||01/02/2010||$41.81||63.2||+51.16%||9,480|
|UNH||UnitedHealth Group Inc.||205||01/02/2010||$30.48||35.84||+17.59%||7,347|
|WMT||WalMart Stores Inc.||117||01/02/2010||$53.45||53.31||-0.26%||6,237|
|WRLD||World Acceptance Corp.||202||01/01/2009||$19.76||53.13||+168.88%||10,732|
|XOM||Exxon Mobil Corp.||95.823||01/02/2010||$46.53||72.8||+56.46%||6,976|
|Total Market Value: $188,614; Cost: $100,000; Change: 88.61%|
As one can see from the table above, with the exclusion of WalMart Stores Inc (NYSE:WMT), all of the companies performed positively during the year. WalMart lost only 0.26% in price year to date. If dividends were calculated, WalMart would still be positive. Among the other companies, three more than doubled, while four were up between 50% and 100%. 28% of all the companies in the model portfolio returned more than 50%.
We don’t claim that the portfolio will outperform the market every year; obviously there are chances that it will underperform the S&P500 in the future. However, as value investors, we strongly believe that a group of high quality companies selling far below their intrinsic values will outperform the market average most of the time. This is the principle for our value strategies and model portfolios. This is also the principle that GuruFocus is built on.
The model portfolio will be rebalanced on New Year’s Day of 2011. You can see the current list of undervalued predictable companies in its screener.
Here we take the chance to say Merry Christmas and Happy New Year to you. Thank you for your continuous support to GuruFocus. We wish you great success in value investing. If you are not a premium member, we still invite you for a 7-day Free Trial of our Premium Membership. Time is running up for the year. Start the new year with the strategies that work.