In recent five years, the S&P 500 gained 24.71% in 2009, 11.65% in 2010, 0% in 2011, 12.1% in 2012 and 21.91% until now. The market performance looks good. Could investors make more money by investing in GuruFocus Model Portfolios? It is time to check the performances. The following are the details of the performances of the four value strategies:
Value Strategies (Long):
* All numbers do not include dividends.
In the first seven months of 2013, we can see that among the four model portfolios, the portfolio of Top 25 Undervalued Predictable Companies underperformed the S&P 500 by 4.38%, while the other three model portfolios are about even with the S&P 500.
Both of the portfolios of Buffett-Munger Screener Top 25 and Top 25 Undervalued Predictable Companieswere started in January 2009. In 2009, Top 25 Undervalued Predictable Companies gained 55.72%, double the return of S&P 500. In 2010, both two models outperformed the market by around 9%. In 2011, the market was even, yet the Buffett-Munger Screener top 25 outperformed the market by 6.01%. In 2012 and 2013, Buffett-Munger Screener top 25 was even with the S&P 500, while Top 25 Undervalued Predictable Companies slightly underperformed the market. Since inception, Buffett-Munger portfolio gained 117.48%, while the S&P 500 gained 90.29%, yet it slightly underperformed for the first seven months of 2013. The portfolio of Top 25 Undervalued Predictable Companies has gained 121.03% since January 2009, a little higher than the returns of the Buffett-Munger portfolio in the same period.
The "Buffett-Munger Screener" can be used to find companies with high-quality business at undervalued or fair-valued prices:
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 were about even with the market year-to-date.
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.
From the above analysis, we can see for a single year, the performance of our portfolios may not beat the market, yet in the long run, it is profitable to invest using our model portfolios.
These are the summaries of the four value strategies mentioned above:
1. Buffett-Munger screener: Invests in predictable companies that have low debt, consistent profit margin and are traded at low P/E 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 are traded at historical low P/S ratios.
4. Historical low P/B: Companies that have high predictability rank but are traded at historical low P/B ratios.
GuruFocus premium membership is needed to view the details of the portfolios and screeners. We also publish a monthly Buffett-Munger newsletter which features the picks from the Buffett-Munger Screener. If you are a premium member, you can download this for free. If you are not a Premium Member, we invite you for a 7-day Free Trial.
Value Strategies (Long):
| 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 | 24.71% | 28.65% | 55.72% | ||
| 2010 | 11.65% | 19.54% | 20.17% | 19.05% | 16.39% |
| 2011 | -0% | 6.01% | -3.32% | -2.01% | -1.87% |
| 2012 | 12.1% | 11.01% | 3.95% | 16.34% | 16.45% |
| 2013 | 21.91% | 20.17% | 17.53% | 19.74% | 19.29% |
| Since | Inception | 117.48% | 121.03% | 62.51% | 58.66% |
| Outperforming | S&P 500 | 27.19% | 30.74% | 9.93% | 6.08% |
| Screener | Links | Screener Here | Screener Here | Screener Here | Screener Here |
In the first seven months of 2013, we can see that among the four model portfolios, the portfolio of Top 25 Undervalued Predictable Companies underperformed the S&P 500 by 4.38%, while the other three model portfolios are about even with the S&P 500.
Both of the portfolios of Buffett-Munger Screener Top 25 and Top 25 Undervalued Predictable Companieswere started in January 2009. In 2009, Top 25 Undervalued Predictable Companies gained 55.72%, double the return of S&P 500. In 2010, both two models outperformed the market by around 9%. In 2011, the market was even, yet the Buffett-Munger Screener top 25 outperformed the market by 6.01%. In 2012 and 2013, Buffett-Munger Screener top 25 was even with the S&P 500, while Top 25 Undervalued Predictable Companies slightly underperformed the market. Since inception, Buffett-Munger portfolio gained 117.48%, while the S&P 500 gained 90.29%, yet it slightly underperformed for the first seven months of 2013. The portfolio of Top 25 Undervalued Predictable Companies has gained 121.03% since January 2009, a little higher than the returns of the Buffett-Munger portfolio in the same period.
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. They can maintain or even expand their profit margin while growing their business.
- Companies that incur little debt while growing business.
- Companies that are fair valued or undervalued. We use PEPG as indicator. PEPG is the P/E ratio divided by the average growth rate of EBITDA over the past five years.
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 were about even with the market year-to-date.
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.
From the above analysis, we can see for a single year, the performance of our portfolios may not beat the market, yet in the long run, it is profitable to invest using our model portfolios.
These are the summaries of the four value strategies mentioned above:
1. Buffett-Munger screener: Invests in predictable companies that have low debt, consistent profit margin and are traded at low P/E 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 are traded at historical low P/S ratios.
4. Historical low P/B: Companies that have high predictability rank but are traded at historical low P/B ratios.
GuruFocus premium membership is needed to view the details of the portfolios and screeners. We also publish a monthly Buffett-Munger newsletter which features the picks from the Buffett-Munger Screener. If you are a premium member, you can download this for free. If you are not a Premium Member, we invite you for a 7-day Free Trial.
