The results are in for my 2020 Triple Net Active vs. Passive Portfolio experiment: Active wins again, but just by a hair.
The original objective was to identify a group of companies trading at a relatively low level of net current asset value (between 2x and 3x NCAV), to see if they could outperform selected benchmarks as a group -- the "Passive Portfolio". The idea was also to see whether a hand-selected subset -- the "Active Portfolio" group -- could outperform the Passive one.
The "Active" Portfolio (up 37.5%) ended up just ahead of the "Passive" Portfolio (up 36.4%). That's hardly a victory, and not nearly as compelling as last year's results. Furthermore, while absolute performance was okay, relative performance was disappointing:
Russell 2000 Index: up 39.6%
Russell 2000 Value Index: up 55.3%
Russell Microcap Index: up 50.0%
Russell Microcap Value Index: up 66.1%
All eight "Active" names were in positive territory, there just were not many big winners this year. The best performer was Haynes International (HAYN) (up 134%), followed by Weyco Group (WEYS) (up 51%), Sanmina (SANM) (up 49%), Daktronics (DAKT) (up 38%), REX American Resources (REX) (up 17%) and Argan (AGX) (up 10%). The final two, Culp (CULP) , and Madison Square Garden Entertainment (MSGE) , just limped their way into positive territory, and were up less than 1%, after both being up solidly earlier in the year.
Of the 27 "Passive" names, all but six were in positive territory. Haynes International, one of the Active names, was the top overall performer, followed by Encore Wire (WIRE) (up 129%), RPC (RES) (up 106%), NACCO Industries (NC) (up 83%), and ScanSource (SCSC) (up 70%) to round out the top five. The worst performers included GSI Technology (GSIT) (down 27%), American Pacific Education (APEI) (down 18%), and Lakeland Industries (LAKE) (down 15%).
Now it's time to get rolling for the 2021 version. On Friday I unveiled the Passive Portfolio, and will reveal the Active names this Wednesday and Friday.