Winning Value Portfolio Update

 | Jun 02, 2014 | 12:00 PM EDT  | Comments
  • Comment
  • Print Print
  • Print
Stock quotes in this article:

gm

,

f

,

aapl

,

chk

,

pot

Almost half-way into 2014 and the anchor of one security continues to cause the Gad Winning Value Portfolio to trail the S&P 500. Thanks to a record finish by the indices in May, the gap has widened. At the end of May, the Value Portfolio trailed the S&P by nearly 5 percentage points.

Winning Portfolio Table

The continued decline in General Motors (GM) shares led to a further decline in the value of the Class B GM warrants (GM-WTB). The warrants are now down some 30% falling another 6% percentage during the past month as GM continues to deal with the fallout of a collection of vehicle recalls. My patience and confidence has not changed. It's likely that this position will end the year significantly in the red and that may lead to the portfolio underperforming the S&P 500. So be it. While I've created these portfolios to be held annually, in reality I would hold the GM warrants next year because I believe that GM is a very undervalued automaker at this time.

GM currently boasts a market cap of $55 billon, which is less than Ford's (F) market cap of $65 billion, even though it generates more revenue than Ford. To be sure, Ford at the current moment generates more profit per dollar of sales. But three years ago, GM pulled in nearly $10 billion in net income. Over time, as GM continues to benefit from operating inefficiencies, profits should exceed that number.

Apple (AAPL) continued climbing higher, seemingly as Mr. Market took notice of the relative undervaluation in Apple shares relative to other tech giants. Apple's recent $3 billion play for Beats Electronics could help revive the company's iTunes business, a cash cow that has been stagnant for the past couple of years. High quality, stable large-caps, including Chesapeake (CHK) and Potash (POT), continued to illustrate why in today's market, quality is likely going to win over investors.

It will be an interesting finish to the rest of year. Stock indices keep reaching new highs, investors are taking a liking to Treasuries again, and the earnings picture is somewhat hazy. The conservative investing approach is likely to going to be the best policy forward.

Columnist Conversations

3 insiders sold a total of 518,620 Starbucks (SBUX) shares for proceeds of $43.449 MM. 4 insiders dumped 558,1...
Yum Brands saw both insider buying and selling reported last week. One insider bought 10,000 shares for about ...
The bearish star cluster on the Starbucks (SBUX) chart that I highlighted last week preceded price action this...

BEST IDEAS

REAL MONEY'S BEST IDEAS

Columnist Tweets

BROKERAGE PARTNERS

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data provided by Interactive Data. Company fundamental data provided by Morningstar. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by Interactive Data Managed Solutions.


TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

IDC calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.