What's Doing Best in New Portfolio? Take a Guess

 | Aug 31, 2017 | 12:00 PM EDT
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It's been just three months since I unveiled my Double-Net Dividend portfolio, designed to bring together a group of companies trading cheaply relative to net current assets (between one and two times), while also paying dividends.

While I am never either impressed by short-term gains or overly concerned about short-term losses, this portfolio of under-followed names and what some would consider misfits is holding its own so far. Up 10.3% since its late-May inception, it is doing better than both the Russell 2000 (+1.4%) and Russell Microcap Indices (+2%), the most appropriate benchmarks.

I'd classify this as a value portfolio, and relative to growth, value has been getting trounced this year. Performance is even better vs. the Russell 2000 Value (-0.1%) and Russell Microcap Value Indices (+0.5%).

The leading performer so far, surprisingly, is retailer Guess? (GES) , ahead 60%, which put up better-than-expected second-quarter earnings last week and is up 30% in the past week. Retailers are having a rough go of it these days, especially apparel, so little is expected. GES trounced the consensus, reporting earnings of 19 cents a share vs. the 10-cent estimate. In addition, it beat top-line estimates by about 3% and raised full-year guidance. GES yields 5.6%, and questions about its dividend -- the stock was yielding 9% three months ago -- have been quieted, at least for now. The company ended the quarter with $316.5 million or about $3.80 per share in cash, and $41 million in debt.

West Marine (WMAR) is the next-best performer, up 32.5%, but that's due to the company's decision to be taken private at $12.97 a share. Shareholders are set to vote on the transaction at a Sept. 12 special meeting. I still believe the takeout price is too low, but then again, I always do when names I own are acquired.

Watch-list name Movado (MOV) , up 23%, was also the beneficiary of a second-quarter earnings report earlier this week that was much better than expected, handily beating the 23-cent consensus by 20 cents. Revenue of $128.8 million also exceeded consensus estimates ($119 million) and the stock popped 19% on Tuesday. The company also announced a new $50 million stock repurchase program, although under the previous $50 million program that was set to expire in September Movado bought back just $5.5 million worth of stock. It certainly has the cash to follow through, however, having ended the quarter with $162.4 million or $7 per share in cash. While that's down from $234 million at the end of the last quarter, the company spent $77.5 million in July to acquire JLB Brands, which owns the Olivia Burton brand. MOV currently yields 1.8%.

It's downhill from there with AVX Corp. (AVX) , +7.1%, FreightCar America (RAIL) , +4.9%, CSS Industries (CSS) , +4.4%, Avnet (AVT) , +4%, all still in positive territory and Citi Trends (CTRN) , -4.4%, Shoe Carnival (SCVL) , -13.3%, and Universal Corp. (UVV) , -15%, bringing up the rear.

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