Stock Portfolio Updates: Volatility Trims Positions
By: Christopher Mistal
March 22, 2018
Over the last five weeks, S&P 500 was up 0.5% and Russell 2000 was higher by 3.8% as of yesterday’s close. The Almanac Investor Stock Portfolio’s blend of cash and long positions climbed 0.8% over the same time period excluding dividends and any trading costs. Our Mid-Cap portfolio was the best performer and responsible for the majority of the overall increase. Small-Caps also contributed a 0.8% gain while Large-Caps declined 0.8%.
Volatility’s return to the market has had a negative impact on the portfolio. Five positions have been stopped out. Lantheus Holdings (LNTH) was stopped out on February 27 and closed out of the Small-Cap portfolio on February 28. Both days were challenging for the market and tepid guidance released after the close on the 26th was apparently all that was needed to trigger a 23% one-day decline.
In the Mid-Cap portfolio, home builders KB Homes (KBH) and Meritage Homes (MTH) were also stopped out at the end of February. Sluggish housing data in December and January combined with increasing mortgage rates are two concerns that knocked housing stocks down.
Arista Networks (ANET) and Owens Corning (OC) also stopped out. ANET closed below its stop loss on February 16 after dropping over $60 per share from its previous close. Earnings were released on February 15. ANET has since bounced back suggesting the initial reaction to its fourth quarter earnings was not the correct one. OC appears to be caught in the malaise that has stricken home builders and other major industrial companies.
On a positive note, Global Brass and Copper Holdings (BRSS) and Southern Cooper Copper (SCCO) have rebounded nicely over the past month. SCCO was up 9.4% at yesterday’s close while BRSS was up 14.4%. Additionally, Orbotech (ORBK) is being bought by KLA-Tencor (KLAC) in a deal that values ORBK shares at approximately $69.02. The deal was just announced and will need regulatory approval.
With the “Best Six Months” end on the horizon, all positions in the Stock Portfolio are on hold. Please see following table for current advice, buy limits and stop losses.
[Almanac Investor Stock Portfolio – March 21, 2018 Closes]
Disclosure Note: At press time, officers of the Hirsch Organization, or accounts they control held positions in, ANET, BUSE, FAF, G, HII, LII, MHO, OC, ORBK and SNX. They did not hold any positions in the other stocks mentioned in this Alert, but may buy or sell at any time.