Readers of my columns have heard me preach the requisites repeatedly for successful long-term investing: Patience is a must, a contrarian point of view when warranted, the value of not over diversifying, and so forth.
This year's Gad Winning Value Portfolio is giving me the opportunity to apply all the lessons I'm so quickly willing to dispense to others.
Our portfolio of 10 securities had a volatile month in May as it declined by more than five percentage points during the month. What happens in a 30-day window is incredibly irrelevant to me as an investor, though.
As of June 2, 2015, the group of 10 was down nearly 9% for the year, compared with a positive 3% for the S&P 500 and Wilshire 5000, respectively:
| 2015 Gad Winning Value Portfolio |
| 2015 YTD Return* |
| Bank of America (BAC) |
| -1.0% |
| Chesapeake Energy (CHK) |
| -29.4% |
| General Motors Class B WTS (GM-WTB) |
| 4.0% |
| POSCO (PKX) |
| -15.2% |
| Whole Foods (WFM) |
| -18.6% |
| Kindred Biosciences (KIN) |
| -12.9% |
| Sizmek (SZMK) |
| 12.2% |
| Cheniere Energy (LNG) |
| 4.5% |
| Travelzoo (TZOO) |
| 1.3% |
| Murphy Oil (MUR) |
| -15.2% |
| Value Portfolio Return |
| -7.0% |
| S&P 500 Return |
| 3.3% |
| Wilshire 5000 |
| 3.4% |
| *as of 6/2/2015 |
Three of our four commodity-related picks -- Chesapeake (CHK), POSCO (PKX), and Murphy Oil (MUR) -- continue to weigh down our performance. Only Cheniere Energy (LNG) is performing well thus far.
Given the near-time outlook for oil prices for the rest of 2015, it's possible that these positions remain significant laggards in 2015. Later this week, the Organization of Petroleum Exporting Countries (OPEC ) is expected to announce that it will keep its oil production level unchanged. I think the idea of $100 oil anytime soon is unrealistic. Names such as Murphy Oil could become intriguing acquisition targets, however, for bigger energy company. If not, the companies in this portfolio will prevail in today's energy market. At the moment, however, Mr. Market is simply sour on the industry.
One comment element in this portfolio is the existence of a catalyst that would bring significant gains to each position. For most of them that are trading below intrinsic, value is the catalyst. Others like Kindred Biosciences (KIN) have several animal drugs in the pipeline that are likely to reach approval milestones over time, which could likely cause the stock to double or triple.
Until then, I will do I say: sit still and be patient.
