As promised, and after some diligent thought, here's the Gad Winning Value Portfolio for 2014. I decided two years ago I would create a portfolio of 10 stocks, all equally weighted, to comprise a portfolio that would be held for the entire year. No new positions would be added and no selling would occur unless there was fraud or other malfeasance.
The idea behind such a portfolio is that many investors trade in and out of stocks far too much. For example, in the 2013 portfolio (so far up over 50% year-to-date against 28% for the S&P 500), one of the holdings Motorcar Parts of America (MPAA) was down nearly 20% in the first four months of the year. Thanks to a corporate restructuring, shares are now up 168% this year. Many investors who bailed out after a couple of months of underperformance left the party way too early.
This will be the third edition of the Winning Value Portfolio. The Class of 2012 returned 16.4% vs. nearly 12% for the S&P, thanks to names like Bank of America (BAC) and Goldman Sachs (GS). The Class of 2013, as of 11/30/2013, was up 49.2% versus about 25% for the S&P and Wilshire 5000, respectively. The outperformance was due to names like MPAA in addition to others like Tecumseh (TECUA), Wendy's (WEN), and as well as BAC and GS. The outperformance was also due to a very strong market tailwind. In the future, the markets may not be this optimistic.
The Class of 2014 has some old friends, but plenty of new names as well. The portfolio constituents are, in no particular order:
2014 Gad Winning Value Portfolio
1. Bank of America (BAC)
2. Deere (DE)
3. Gentex (GNTX)
4. Potash (POT)
5. Chesapeake Energy (CHK)
6. General Motors Class B Warrants (GM.WTB)
7. Lawson Products (LAWS)
8. Apple (AAPL)
9. Wendy's (WEN)
10. Horsehead Holdings (ZINC)
In the coming weeks, I will dig deeper into this list and discuss why I've chosen this group. Some names are back: BAC is back again for a third straight year while GNTX, POT, and WEN were part the 2013 Class. General Motors is also back, but I opted to go with the Class B warrants instead of the common for the upcoming year.
Enjoy looking through the list during the holidays. Looking forward to another solid year from RealMoney!