I had time to read over a couple of 10-K and 10-Q reports this weekend. I spent most of the time looking at companies on the magic formula website and re-evaluate a current position as I continue to re-balance my portfolio towards a more concentrated contrarian/magic formula portfolio. The rebalancing has led to a great deal of selling of positions which has led to a portfolio turnover of 100%. Yikes!
I am not worried about the turnover being so high as I feel I have planted the seeds for the future. Most stocks in my portfolio appear on the magic formula website for companies with a minimum market cap of 50, 250, 500, 1000, 2000 million returning the top 25 results. I usually stick to the top 25 as it assures me that I am chosing from the top ranked stocks according to the margic formula. To help clarify whats going on I have broken down the portfolio, the new page on the blog will bring more transparency in the future.
Stocks Mentioned Before On Blog That Are Still In Portfolio
US Bank <—— Will sell once opportunities arise
Burlington Northern-Santa Fe <—— Will sell once opportunities arise
United Rentals <—— Will sell once opportunities arise
Proctor and Gamble <—— Will sell once opportunities arise
New Additions
Herman-Miller (MLHR)- The maker of office furniture (known for their Aeron chair) showed up on my screen today. I’m impressed with their ability to continue results despite a weak U.S marker. Their management has given analysts nothing to chew on in the guidance front and I like it. I get the feeling that management is telling analysts “Do your homework”. Anyway, the company is doing a great job of getting their products in front of customers and selling on quality, quick delivery, etc. A pretty straight forward plan for success.
American Eagle Outfitters (AEO)- The stock of this popular teen retailer tanked after its chief marketing officer resigned bringing the stock to some historic low levels. Be careful though, company has auction rate securities (ARS) on hand which it might have to write down or take a write off. When and if it does, stock may go down providing an opporturnity. I established a small position on that basis.
Perini Corp. (PCR)- Slowdown? What slowdown? You wouldn’t know there was a slowdown by reading their reports. The company has a 7 billion+ backlog and is planning to expand into Dubai and other foreign countries.
Barrett Business Services (BBSI)- My favorite among the staffing companies (there are many on the magic formula list). Obviously, its been beaten down as less people are hired during recessions. Also, temporary workers are usually the first to get the boot in bad times as companies downsize to keep expenses down as revenue decline or stay flat. One has to love a CEO who tells Wall St “If you guys want to sell [the company] down to five times earnings, maybe I will just buy the whole [expletive] thing.” The company has $5 in cash.
Boeing (BA)- Read Boeing Flying Under The Radar.
Buy Oders Placed-
Illinois Tools Works (ITW)
Sell Orders Placed -
Manitowoc (MTW)- Agree, company did “Diwersify”
Obviously, I do not plan to buy and sell this often (not my style). I have not done any valuation on any of the above companies and do not plan too. With school and work, I am using a low p/e approach based on David Dreman’s book and using the magic formula as a screen. The new performance page will show more transparency as to what I am doing (if anything).
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