Musing ... About the Model Portfolio
I guess today is supposed to be a holiday, so let’s not do any heavy lifting. Let’s take a day and think about the top 20 portfolio.
The average price/book is about 1.4x, the median more like 1.2x, that is exactly where I like it. The yield is 2.0%, which is fine. Four big yielders (4%+), Northwest Natural, Nutrien, Helmerich & Payne, and Kinder Morgan. The yield is ok.
The average, and median, market cap is about $5 billion, maybe that could be a little lower.
The sector weights are pretty close to the market, except I have no technology, and only one non-traditional financial. Having two utilities, and one gold stock are my bigger over-weights compared to a small/medium cap index.
One foreign stock, Smith & Nephew is headquartered in London
Let’s look at some non-valuation measures, market cap, Wall Street buys and sells, Seeking Alpha’s momentum rating, and next reporting date:
Corteva - $37b - 15 buys, 7 sells - C - 7/31
Nutrien - $25b - 17 buys, 9 sells - D+ - 8/7
Kinder Morgan - $44b - 7 buy, 14 sells - B - 7/17
Tyson - $20b - 4 buys, 8 sells, B - 8/5
Revvity - $13b - 11 buys, 7 sells - B - 8/1
Smith & Nephew - $12b - 3 buys, 1 sell - B - 8/1
Royal Gold - $9b - 6 buys, 7 sells - B - 8/1
Middleby - $7b - 6 buys, 3 sells - D - 8/2
Chart - $6b - 15 buys, 6 sells - C - 8/2
Red Rock - $6b - 10 buys, 4 sells - B - 7/30
Brunswick - $5b - 11 buys, 9 sells - D - 7/25
First Cash - $5b - 3 buys, 2 sells - D - 7/25
Helmerich & Payne - $4b - 6 buys, 14 sells - D - 7/25
Neogen - $3b - 1 buy, 1 sell - C+ - 7/24
TreeHouse - $2b - 2 buys, 8 sells - C- - 8/6
Cable One - $2b - 2 buys, 4 sells - D- - 8/2
Northwest Natural - $1.3b - 2 buys, 5 sells - D - 8/2
Jack in the Box - $1.0b - 8 buys, 14 sells - D- - 8/7
Titan - $.7b - no coverage - F - 7/31
Unifi - $.3b - no coverage - C - 8/2
I guess in a perfect world I would not own the four $20+ billion market cap stocks, but I really like the individual stories. Maybe I should have only small caps, but with the market at a high, I do not mind a few bigger caps,
I worry that my momentum is too low (only 5 rated B, and 15 C or worse) going into tax loss selling season. This is the life of value stock manager. Buy low. sell high is the idea, but tactically that is dangerous. Really 9/30 would a better starting point for the portfolio.
Six stocks have roughly average Wall Street recommendations, and 14 stocks have below average recommendations, or limited, coverage. That is about what I prefer. Not every stock has to hated by Wall Street, I can live with 75% disgust.
Maybe I should wait for more obvious recession signs for Brunswick, First Cash, and Jack in the Box, but you cannot eliminate economic sensitivity altogether.
All 20 companies will report between 7/17 and 8/7.