Just three months before I wind it down, my 2020 Double Net Value Portfolio took a step back into negative territory, falling 5% since the August update. Through Friday, it is down 1% since inception, but is outperforming the Russell 2000 (down 9%) and Russell Microcap Indexes (down 7.2%). Perhaps more importantly given its value orientation, it is also besting the Russell 2000 Value (-20.1%) and Russell Microcap Value (-18.1%) Indexes. I'd like to see it close the year with positive absolute performance, but the next three months will tell the tale.
Just four of the 13 names are in positive territory, and Lakeland Industries (LAKE) (up 106%) continues to lead the way. However, the protective clothing maker gave back about 12% since the last update, despite reporting better than expected second quarter results last week. Revenue of $35 million beat the consensus by $4.5 million, and earnings per share of $1.16 easily beat the 32-cent consensus.
Future Fuel (FF) (up 9%) gave back 11%, and has seen shares slide from the low $14 range in mid-August to close at $11.37 on Friday on no news, and no spike in volume. FF currently trades at 1.84x net current asset value (NCAV), and ended the latest quarter with $250 million or $5.71 per share in cash and short-term investments and no debt. I'd like to provide a forward price earnings ratio, but the company currently garners no analyst coverage.
Flexsteel (FLXS) (down 4%), made progress in getting back to breakeven, rising 17% since the last update. The company released fourth quarter earnings results on August 24th, and while revenue was down 35% year/year, demand in June and July was "encouraging" according to the company. FLXS, which currently trades at 1.26x NCAV, ended its latest quarter with $48 million, or just over $6 per share in cash and no debt. No forward price earnings ratios here either as FLXS has no analyst coverage.
Now Inc. (DNOW) (down 49%) took over worst performer status from TESSCO Technologies (TESS) (down 45%) after falling 30% since the August update, on no news.
Performance figures for the rest of the portfolio are below:
Amtech Systems Inc. (ASYS) (down 20%)
Universal Corp. (UVV) (down 19%)
Aware Inc. (AWRE) (down 26%)
Hurco (HURC) (down 23%)
Tutor Perini (TPC) (down 8%)
NETGEAR (NTGR) (up 23%)
AXT Inc (AXTI) (up 39%)
Gencor (GENC) (down 4%)
As a reminder, below are the initial selection criteria:
- Companies trade at between one and two times net current asset value (NCAV)
- Minimum market cap of $75 million (down from $150 million last year)
- No development stage pharmaceuticals/biotechs
Looking forward to retiring this iteration, and rolling out the 2021 version of this portfolio sometime in mid-December.
