It has been a year since we started some of our model portfolios. Each model portfolio consists of the top 25 stocks top ranked with its criteria. How did the model portfolios do? What worked and what didn’t? What are we doing differently this year?
Performance Review
The Most Weighted Portfolio did best in 2006, gained more than 22% without including the dividends. This portfolio consists of the 25 stocks with the highest combined weightings. There is only 1 loser among the 25 stocks, which is Progressive Insurance (PGR). The top performers are Comcast (CMCSK, Financial) and Sears (SHLD). Comcast gained more than 60% in 2006, it is the top 1 holding of Glen Greenberg. It is also owned by 10 other Gurus. Wallace Weitz and Dodge & Cox reduced their holdings in Comcast during the third quarter of 2006. Sears gained more than 40% in 2006. It is the number 1 holding of Eddie Lampert, it is also held by 5 other Gurus. Charles du Vaulx sold out his holdings in Sears.
The Broadest Owned Portfolio did very well, too. It gained 15.8% in price only, outperforming S&P500 by more than 4%. This portfolio consists of stocks that have the highest number of owners among Gurus. The biggest gainer is again Comcast.
The Consensus Picks Portfolio, the Bargain Index Portfolio, and the ValueRank Index all underperformed the S&P 500. It is hard to outperform S&P500, isn’t it?
What We Do Differently for 2007?
First of all, we will not use the portfolios of all the Gurus in our database to make the portfolios. We selected a subgroup of 25 Gurus who have very conservative approach and the lowest turnovers. Their portfolios are used to compose our model portfolios for 2007.
If we review the holdings of the three underperformed portfolios, we found that a lot of the stocks are small caps, which should not be benchmarked to S&P500. In order to make S&P 500 the appropriate benchmark, in this update we selected among the stocks with market caps of at least $4 billion, this is also a requirement to enter the S&P 500 index.
We use the close prices of the stocks on the first trading day of 2007 (Jan. 3) as the prices that the stocks are bought into the model portfolios. The portfolios are from the third quarter holdings of 2006 for these gurus.
Portfolio Updates
The Most Weighted Portfolio has 7 new names. Canadian Natural Resources (CNQ) is owned by Bruce Berkowitz with 17% of weighting. Dell (DELL, Financial) is owned 9 Gurus with 17% of combined weighting. Home Depot is owned by 8 Gurus with a combined weighting of 22%.Microsoft (MSFT), Mohawk Industries Inc. (MHK), Liberty Media Holding Corporation (LINTA), Unitedhealth Group Inc. (UNH) are also the new names in the portfolio of Most Weighted stocks. Overall, the portfolio turnover is 28%.
The Broadest Owned Portfolio has 7 new names, too. Dell and Unitedhealth Group Inc. are again here. IBM (IBM) is owned by 9 Gurus. MMC, MO, TRB, WYE are all owned by 7 Gurus. They are the other new names in this portfolio. The portfolio turnover is also 28%.
The Consensus Portfolio had much bigger shake up. There are only 3 left from the last year’s portfolio. They are Apollo Group Inc. (APOL), 3M Co. (MMM) and Wal-Mart (WMT). Among the stocks that have been added into the portfolio, DELL was bought by 14 Gurus during the last 6 months. Lowe’s (LOW, Financial) was bought by 7 Gurus, including Warren Buffett. Nike, Inc (NKE, Financial) was bought by 6 Gurus including Warren Buffett and Glen Greenberg, the concentrated Guru.
There is only one stock left from the last year for Bargain Portfolios, which is KB Home (KBH). 24 new stocks are the ones that have the biggest decline since the Gurus have bought during the past 6 months. The market cap of all these stocks are higher than $4 billion. Let’s see whether these stocks are bargain ideas from Gurus or they are just mistakes of the Gurus.
The VaueRank portfolio has 18 new positions. We expect this portfolio will be less volatile than before as the stocks have large market caps. Interestingly, Dell is again in this portfolio.
Performance Review
The Most Weighted Portfolio did best in 2006, gained more than 22% without including the dividends. This portfolio consists of the 25 stocks with the highest combined weightings. There is only 1 loser among the 25 stocks, which is Progressive Insurance (PGR). The top performers are Comcast (CMCSK, Financial) and Sears (SHLD). Comcast gained more than 60% in 2006, it is the top 1 holding of Glen Greenberg. It is also owned by 10 other Gurus. Wallace Weitz and Dodge & Cox reduced their holdings in Comcast during the third quarter of 2006. Sears gained more than 40% in 2006. It is the number 1 holding of Eddie Lampert, it is also held by 5 other Gurus. Charles du Vaulx sold out his holdings in Sears.
The Broadest Owned Portfolio did very well, too. It gained 15.8% in price only, outperforming S&P500 by more than 4%. This portfolio consists of stocks that have the highest number of owners among Gurus. The biggest gainer is again Comcast.
The Consensus Picks Portfolio, the Bargain Index Portfolio, and the ValueRank Index all underperformed the S&P 500. It is hard to outperform S&P500, isn’t it?
What We Do Differently for 2007?
First of all, we will not use the portfolios of all the Gurus in our database to make the portfolios. We selected a subgroup of 25 Gurus who have very conservative approach and the lowest turnovers. Their portfolios are used to compose our model portfolios for 2007.
If we review the holdings of the three underperformed portfolios, we found that a lot of the stocks are small caps, which should not be benchmarked to S&P500. In order to make S&P 500 the appropriate benchmark, in this update we selected among the stocks with market caps of at least $4 billion, this is also a requirement to enter the S&P 500 index.
We use the close prices of the stocks on the first trading day of 2007 (Jan. 3) as the prices that the stocks are bought into the model portfolios. The portfolios are from the third quarter holdings of 2006 for these gurus.
Portfolio Updates
The Most Weighted Portfolio has 7 new names. Canadian Natural Resources (CNQ) is owned by Bruce Berkowitz with 17% of weighting. Dell (DELL, Financial) is owned 9 Gurus with 17% of combined weighting. Home Depot is owned by 8 Gurus with a combined weighting of 22%.Microsoft (MSFT), Mohawk Industries Inc. (MHK), Liberty Media Holding Corporation (LINTA), Unitedhealth Group Inc. (UNH) are also the new names in the portfolio of Most Weighted stocks. Overall, the portfolio turnover is 28%.
The Broadest Owned Portfolio has 7 new names, too. Dell and Unitedhealth Group Inc. are again here. IBM (IBM) is owned by 9 Gurus. MMC, MO, TRB, WYE are all owned by 7 Gurus. They are the other new names in this portfolio. The portfolio turnover is also 28%.
The Consensus Portfolio had much bigger shake up. There are only 3 left from the last year’s portfolio. They are Apollo Group Inc. (APOL), 3M Co. (MMM) and Wal-Mart (WMT). Among the stocks that have been added into the portfolio, DELL was bought by 14 Gurus during the last 6 months. Lowe’s (LOW, Financial) was bought by 7 Gurus, including Warren Buffett. Nike, Inc (NKE, Financial) was bought by 6 Gurus including Warren Buffett and Glen Greenberg, the concentrated Guru.
There is only one stock left from the last year for Bargain Portfolios, which is KB Home (KBH). 24 new stocks are the ones that have the biggest decline since the Gurus have bought during the past 6 months. The market cap of all these stocks are higher than $4 billion. Let’s see whether these stocks are bargain ideas from Gurus or they are just mistakes of the Gurus.
The VaueRank portfolio has 18 new positions. We expect this portfolio will be less volatile than before as the stocks have large market caps. Interestingly, Dell is again in this portfolio.
