The stock market finished the first quarter up steadily. The S&P500 was up by about 5.4%. It is time to check the performances of GuruFocus Model Portfolios.
These are the details of the performances of the four value strategies:
Value Strategies (Long):
All numbers do not include dividends.
We can see that among the four model portfolios, the portfolio of Buffett-Munger Screener outperformed the S&P500 by 4.2% in the first quarter. All other three model portfolios underperformed the S&P500 slightly.
The "Buffett-Munger Screener" can be used to find companies with high-quality business at undervalued or fair-valued prices:
From the back testing study from 1998-2008 we have found strong correlations between the Predictability of Businesses and the long-term return of stocks. The group of undervalued highly predictable companies performed the best. This group had an annualized gain of 20%, while the market just averaged 2.7% a year.
For details, go to: What Worked In The Market From 1998-2008? Part II. Under-Valued Predictable Companies And Buffett-Munger Screener.
Both of the portfolios of Buffett-Munger Screener Top 25 and Top 25 Undervalued Predictable Companieswere started in January 2009. Since inception, Buffett-Munger portfolio gained more than 68%, while the S&P500 gained 46.8%. Although it slightly underperformed for the first quarter of this year, the portfolio of Top 25 Undervalued Predictable Companies did even better since 2009. The portfolio gained 96.97% since Jan. 2009, more than doubling the returns of the S&P500 in the same period.
This is the 12-month performance chart of the portfolio of Buffett-Munger Screener:
Both Buffett-Munger Screener and Top 25 Undervalued Predictable Companies select stocks from the companies that have the highest predictability rank. Top 25 Undervalued Predictable Companies Portfolio selects the stocks that are undervalued from DCF calculations. For the current list of undervalued predictable companies, go to the screener.
The other two model portfolios are for predictable companies that are traded at historical low P/S and historical low P/B ratios, respectively. Both of these two portfolios outperformed the market average in 2010, but both lag slightly so far in the year.
Please read Stocks Traded at Historical Low Price/Book Ratios: RGLD, AZN, ABT, JNJ, WMT for some of the stocks in the list. Go to historical low P/B ratios for the complete list.
All the portfolios are rebalanced once a year; therefore, no portfolio changes will be made at this time.
These are the summary of the four value strategies mentioned above:
1. Buffett-Munger screener: Invests in predictable companies that have low debt, consistent profit margin, and traded at low PE to growth ratios.
2. Undervalued Predictable Companies: Invests in predictable companies that are undervalued based on DCF model.
3. Historical low P/S: Companies that have high predictability rank, but traded at historical low P/S ratios.
4. Historical low P/B: Companies that have high predictability rank, but traded at historical low P/B ratios.
GuruFocus premium membership is needed to access the details of the portfolios and screeners. If you are not a Premium Member, we invite you for a 7-day Free Trial.
These are the details of the performances of the four value strategies:
Value Strategies (Long):
All numbers do not include dividends.
| Year | S&P 500 | Buffett-Munger Screener top 25 | Top 25 Undervalued Predictable Companies | Top 25 Historical Low P/S Ratio Companies | Top 25 Historical Low P/B Ratio Companies |
| 2009 | 23.5% | 27% | 54% | ||
| 2010 | 12.8% | 21.1% | 21.5% | 19% | 16.4% |
| 2011 | 5.4% | 9.6% | 5.3% | 4.3% | 4.9% |
| Screener Links | Screener Here | Screener Here | Screener Here | Screener Here | |
We can see that among the four model portfolios, the portfolio of Buffett-Munger Screener outperformed the S&P500 by 4.2% in the first quarter. All other three model portfolios underperformed the S&P500 slightly.
The "Buffett-Munger Screener" can be used to find companies with high-quality business at undervalued or fair-valued prices:
- Companies that have high Predictability Rank, that is, companies that can consistently grow their revenue and earnings.
- Companies that have competitive advantages. It can maintain or even expand its profit margin while growing its business
- Companies that incur little debt while growing business
- Companies that are fair valued or under-valued. We use PEPG as indicator. PEPG is the P/E ratio divided by the average growth rate of EBITDA over the past 5 years.
From the back testing study from 1998-2008 we have found strong correlations between the Predictability of Businesses and the long-term return of stocks. The group of undervalued highly predictable companies performed the best. This group had an annualized gain of 20%, while the market just averaged 2.7% a year.
For details, go to: What Worked In The Market From 1998-2008? Part II. Under-Valued Predictable Companies And Buffett-Munger Screener.
Both of the portfolios of Buffett-Munger Screener Top 25 and Top 25 Undervalued Predictable Companieswere started in January 2009. Since inception, Buffett-Munger portfolio gained more than 68%, while the S&P500 gained 46.8%. Although it slightly underperformed for the first quarter of this year, the portfolio of Top 25 Undervalued Predictable Companies did even better since 2009. The portfolio gained 96.97% since Jan. 2009, more than doubling the returns of the S&P500 in the same period.
This is the 12-month performance chart of the portfolio of Buffett-Munger Screener:
Both Buffett-Munger Screener and Top 25 Undervalued Predictable Companies select stocks from the companies that have the highest predictability rank. Top 25 Undervalued Predictable Companies Portfolio selects the stocks that are undervalued from DCF calculations. For the current list of undervalued predictable companies, go to the screener.
The other two model portfolios are for predictable companies that are traded at historical low P/S and historical low P/B ratios, respectively. Both of these two portfolios outperformed the market average in 2010, but both lag slightly so far in the year.
Please read Stocks Traded at Historical Low Price/Book Ratios: RGLD, AZN, ABT, JNJ, WMT for some of the stocks in the list. Go to historical low P/B ratios for the complete list.
All the portfolios are rebalanced once a year; therefore, no portfolio changes will be made at this time.
These are the summary of the four value strategies mentioned above:
1. Buffett-Munger screener: Invests in predictable companies that have low debt, consistent profit margin, and traded at low PE to growth ratios.
2. Undervalued Predictable Companies: Invests in predictable companies that are undervalued based on DCF model.
3. Historical low P/S: Companies that have high predictability rank, but traded at historical low P/S ratios.
4. Historical low P/B: Companies that have high predictability rank, but traded at historical low P/B ratios.
GuruFocus premium membership is needed to access the details of the portfolios and screeners. If you are not a Premium Member, we invite you for a 7-day Free Trial.
