Buffett-Munger Model Portfolio contains the top 25 stocks on the beginning of the year from the Buffett-Munger Screener. The 14.4% year to date is after a 27% gain in 2009 and 21.1% in 2010. The "Buffett-Munger Screener" can be used to find the stocks that young Warren Buffett and Charlie Munger would invest:
1. Companies that have high Predictability Rank, that is, companies that can consistently grow their revenue and earnings.
2. Companies that have competitive advantages. It can maintain or even expand its profit margin while growing its business
3. Companies that incur little debt while growing business
4. 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.
All of the positions in this portfolio gained. Leading the gain is World Acceptance Corp. (WRLD), which gained 241% since added into the portfolio in 2009.
This is the portfolio details:
This is the complete portfolio of the portfolio:
(Current Value: $175,949. Invested: $100,000 on December 31, 2008)
|Symbol||Company||# of Shares||Bought on||Share Cost||Current Price||Change||Value ($)|
|ADM||ARCHER DANIELS MIDLAND CO||199||01/01/2011||$30.08||37.02||+23.07%||7,367|
|ASNA||Ascena Retail Group Inc.||227||01/01/2011||$26.42||30.82||+16.65%||6,996|
|BCR||C.R. BARD INC.||65||01/01/2011||$91.77||106.75||+16.32%||6,939|
|BDX||BECTON DICKINSON AND CO.||71||01/01/2011||$84.52||85.94||+1.68%||6,102|
|CHD||CHURCH & DWIGHT CO. INC.||71||01/01/2009||$56.12||82.48||+46.97%||5,856|
|CHRW||C.H. Robinson Worldwide Inc.||72||01/01/2009||$55.03||80.15||+45.65%||5,771|
|ESI||ITT EDUCATIONAL SERVICES||94||01/01/2011||$63.69||71.74||+12.64%||6,744|
|FCFS||First Cash Financial Services Inc.||194||01/01/2011||$30.99||38.83||+25.3%||7,533|
|FDS||FactSet Research Systems Inc.||78||01/02/2010||$65.87||109.41||+66.1%||8,534|
|HRL||HORMEL FOODS Corp.||268||01/02/2010||$19.225||29.41||+52.98%||7,882|
|JJSF||J & J Snack Foods Corp.||124||01/01/2011||$48.24||50.49||+4.66%||6,261|
|MCRS||MICROS Systems Inc.||137||01/01/2011||$43.86||51.86||+18.24%||7,105|
|PRSP||Prosperity Bancshares Inc.||153||01/01/2011||$39.28||45.44||+15.68%||6,952|
|PRXL||PAREXEL International Corp.||283||01/01/2011||$21.23||27.02||+27.27%||7,647|
|RY||ROYAL BANK OF CANADA||114||01/01/2011||$52.36||62.96||+20.24%||7,177|
|VAR||VARIAN MEDICAL SYSTEMS INC.||86||01/01/2011||$69.28||70.2||+1.33%||6,037|
|WMT||WALMART STORES INC.||111||01/01/2011||$53.93||54.98||+1.95%||6,103|
|WRLD||World Acceptance Corp.||202||01/01/2009||$19.76||67.49||+241.55%||13,633|
|Total Market Value: $175,949; Cost: $100,000; Change: 75.95%|
We can see the gains are quite even across the board. Since incepted in 2009, the portfolio has gained 76%. In the same period, S&P 500 gained 50%.
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.
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