It's hard to believe another year is almost behind us; more startling (to me at least), we are 15 years into a new century. As an investor, it's hard to believe we are seven years past the financial crisis of 2008.
With a new year comes the annual unveiling of my Winning Value Portfolio. For those unaware, 10 securities are selected each year. I place no restrictions on stock selection with respect to size, industry or geographic location. The only restriction is that the 10 securities are held for the entire year, unless we uncover corporate malfeasance. Since this project began in 2012, the results have been very satisfactory, except for 2015. The prior three years have all been positive returns and in two of those years, Mr. Market was beaten handily. Final results will be published early next year.
Our first five selections have been finalized. Without further ado:
Making the cut from last year are Cheniere Energy (LNG) and General Motors Class B Warrants (GM-WTB). Despite declining nearly 40% in 2015, Cheniere is set to export its first batch of liquefied natural gas early next year. With natural gas supplies in abundance in the U.S., Cheniere is going to have a cheap abundance of raw product for years to come. With respect to GM, it's simple: Shares are incredibly cheap.
Our next three selections are Towne Bank (TOWN), Alcoa (AA) and Phillips 66 (PSX).
Towne Bank is one of the best banks I've come across in quite some time. Management is superb, the bank's reputation is pristine, and the financial performance confirms that. Towne Bank is growing both organically and by smart acquisitions.
Alcoa is set to split into two businesses next year -- a value add high-performance business and the commodity production business. I think the spinoff is going to unlock tremendous value; Alcoa shares are cheap as it is.
Refiner Phillips 66 is simply a play on the continued growth in refining margins thanks to record low oil prices. If oil prices were to advance, Phillips' diverse business operations should enable the company to generate solid cash flows.
Stay tuned for the next group of five in the coming days.