Since the last update on my "2018 Double Net Value Portfolio" six weeks ago, the markets have gone a bit wacky as daily volatility has intensified, and investors have experienced a veritable roller coaster of ups and downs. The Double Net Value Portfolio has actually rallied a bit during that time (+4%).
However, it's essentially flat since its December inception, which means that it's underperforming the Russell 2000 Index (+1%) and Russell Microcap Index (+2.4%) since I launched the portfolio.
While performance since inception is not pleasing, I am impressed with how well the portfolio has held up the past six weeks amid all of the market volatility. When I set up deep value tracking portfolios, I am equally, if not more interested to see how they perform in volatile market environments, or when markets are headed lower as I am when they are rising.
By way of a reminder, here are the criteria for inclusion in the portfolio:
- Companies trade at between one and two times net current asset value (NCAV);
- Minimum market cap $150 million;
- No development-stage pharmaceuticals/biotechs.
Less than half of the portfolio -- just nine names -- are in positive territory since inception. That's an improvement over my last update, when just six names were positive, but still not where I'd like things to be.
Performance is still being driven by Fossil Group (FOSL) , which is up 92%. The stock did pull back a bit after hitting $18 intraday on Feb. 14, falling below $12 last month, but has again been on the upswing back to the $15 level. After crushing fourth-quarter earnings, we'll see if the company can keep the momentum when it reports first quarter results on May 9. Consensus estimates are calling for a loss of 82 cents per share.
Hibbett Sports (HIBB) (+27%) remains the only other notable positive performer. Shares eclipsed the $28 level last week, putting it very close to a 52-week high, before giving back 5.5% on Friday. Still, the stock has had quite a run, and the next progress report will be on May 21, when the company is scheduled to report first-quarter results.
The other names in positive territory are Hurco (HURC) (+10%), Digi Intl (DIGI) (+8%), Avnet (AVT) (+5%), Northwest Pipe (NWPX) (+3%), Actua (ACTA) (+3%), Benchmark Electronics (BHE) (+2%), and Big 5 Sporting Goods (BGFV) (+2%), which has made a nice recovery (+17%) since early March.
The biggest losers so far include CSS Industries (CSS) (-38%), Gulf Island Fabrication (GIFI) (-36%), EMCOR (EMKR) (-23%). FreightCar America (RAIL) (-21%), which has been a big disappointment, continues to drip with liquidity given the company's $10.63 per share in net and short-term investments, while the stock trades in the $13.50 range.
Rounding out performance: