• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Bruce Kamich
    • Doug Kass
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • Trifecta Stocks
  1. Home
  2. / Investing

How My Outperforming Value Portfolio Is Bucking the Trend

Despite the disparity this year between growth and value, my 2017 Double Net Value Portfolio is not struggling.
By JONATHAN HELLER
Sep 11, 2017 | 10:00 AM EDT
Stocks quotes in this article: ESIO, AXTI, CROX, CLAR, WMAR, KLIC, RAIL, AVX, HURC, TESO, GEOS, AVT, FIT, AE, UVV, MOV, GENC, CSS, BHE

With nearly three quarters of 2017 already in the rearview mirror, at least one thing is clear: It's been a fairly rough year for smaller value stocks. Both the Russell 2000 Value and Russell Microcap Value indices (-2% and -0.9%) remain in negative territory while their growth cousins (Russell 2000 Growth and Russell Microcap Growth) are having decent years, up 10.6% and 8.4%, respectively.

Given this disparity between growth and value, it stands to reason that my 2017 Double Net Value Portfolio, launched at the tail end of 2016, would also be struggling, but oddly enough, that's not the case.

In fact, since inception, the portfolio is up 7.4%, better than both the Russell 2000 and Russell Microcap indices (+3.7% and +2.2%, respectively), although not as good as those indices' respective growth components. I still consider these results to be short term, however, and while pleased, will continue to track into the future.

By way of reminder, below are the criteria for inclusion in the portfolio:

  • Trades at between 1 and 2 times net current asset value (current assets less total liabilities)
  • Minimum market cap $150 million
  • No development stage pharmaceuticals/biotechs

As is typical in portfolio performance dynamics, there are a handful of companies that are doing much of the work, and are responsible for the overall gain. Electro Scientific Industries (ESIO) (+99%) seems to have turned the corner, putting up solid positive earnings surprises the past couple of quarters, as the shares have nearly doubled year to date.

AXT Inc. (AXTI) has soared 59%. Former cult stock Crocs (CROX) has been a surprising winner, up 37%, and also positively surprised on the earnings front. The growth crowd gave up on this faddish name years ago; it traded as high as $75 in 2007, and may be making somewhat of a comeback. Currently trading at 2.35x net current asset value, the company ended last quarter with $157 million, or $2.15 per share in cash, and no debt.

Clarus Corp. (CLAR) (formerly Black Diamond) is up 42%, while West Marine (WMAR) has increased 23% courtesy of the fact that it's being taken private, the latest in a long line of double-nets to be taken out. Double-nets remain a potentially prime hunting ground for acquirers.

Rounding out the winners are Kulicke & Soffa (KLIC) (+15.9%), FreightCar America (RAIL) +14%, AVX Corp. (AVX) (+8.5%) and Hurco Companies (HURC) (+6.3%).

Tesco Corp. (TESO) is the worst performer (-47.3%), followed by Geospace Technologies (GEOS) (-28.5%), Avnet (AVT) (-23.2%) and Fitbit (FIT) (-15%). I have high hopes for FIT, not as high as the growth crowd once did, but believe it is undervalued at these levels. The company does have much to prove, however, in order to entice other investors back into the fold.

Rounding out the portfolio:

  • Adams Resources (AE) (-13%)
  • Universal Corp. (UVV) (-11.1%)
  • Movado (MOV) (-5.7%)
  • Gencor Industries (GENC) (-2.8%)
  • CSS Industries (CSS) (+.7%)
  • Benchmark Electronic (BHE) (+3.4%)

One thing to keep in mind about this portfolio: it is static. Once names exceed 2x net current asset value, they are not removed.

That being said, I shudder to think what the 2018 version of this portfolio will look like, given the increasing population of retailers.

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

At the time of publication Heller was long FIT, KLIC, WMAR and RAIL.

TAGS: Investing | U.S. Equity | How-to | Stocks

More from Investing

The 10 Personality Traits of Successful Traders and Investors

James "Rev Shark" DePorre
Jun 25, 2022 10:00 AM EDT

Superior market players share these characteristics in their emotional makeup.

Does the Big Bounce Mean More to Come? Let's See What Drove the Move

James "Rev Shark" DePorre
Jun 24, 2022 4:42 PM EDT

Much of the rally can be attributed to structural reasons, not fundamentals, technicals, or even macro ones.

MongoDB Is Poised for a Rally

Bruce Kamich
Jun 24, 2022 2:15 PM EDT

Here's our initial upside price target for MDB which provides a general purpose database platform.

See That Down the Road? It's the Big 'Green' Bubble, Ready to Pop

Jim Collins
Jun 24, 2022 1:30 PM EDT

Environmental, social, and corporate governance has created a monster and gullible investors should hit the brakes on their EVs and run from the Washington technocrats while they have the chance.

Treat Becton, Dickinson and Company With Care

Bruce Kamich
Jun 24, 2022 1:25 PM EDT

BDX gets an upgrade, but are the charts healthy enough to recommend?

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 08:55 AM EDT JAMES "REV SHARK" DEPORRE

    This Weekend on Real Money

    The 10 personality traits of successful traders an...
  • 12:08 PM EDT STEPHEN GUILFOYLE

    Stocks Under $10

    As a Portfolio Name Agrees to a Merger, Here's Our...
  • 10:44 AM EDT PAUL PRICE

    My Very Best Pick for the Next 12 Months

    American Woodmark . It rarely gets better than th...
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2022 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

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

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.

FactSet 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.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login