It's Only a Month, but This Deep-Value Portfolio Is Performing Quite Nicely

The aggregate return of the 2021 Double Net Value Portfolio one month since inception is outpacing a handful of Russell indices.

One month since inception, my 2021 Double Net Value Portfolio is doing its job, so far anyway. Up 9.3% since inception, it is performing slightly better than the both the Russell 2000 (up 8.9%) and Russell Microcap (up 9.1%) indices. But more importantly, given its value orientation, it is also eclipsing the Russell 2000 Value Index (up 7.5%) and Russell Microcap Value Index (up 7.3%). It's early for sure, and a lot can happen over the course of a year, but so far, so good.

Double Net Value is a tracking portfolio I build every year that is comprised of companies that have the following attributes:

• Trade at between 1 and 2 times net current asset value (NCAV)
• Minimum market cap $75 million
• No development-stage pharmaceuticals/biotechs

This year's group of 18 names, up from 13 last year, included six repeat offenders from last year's portfolio, which was up 24.9% and outperformed the Russell 2000 (up 16.2%), Russell Microcap (up 9.8%), Russell 2000 Value (up 3.1%) and Russell Microcap Value (up 6.4%).

So far, all but five names are in positive territory; ironically the top performer so far is Lakeland Industries (LAKE) (up 40%), a repeat offender that was last year's second-best performer. The protective clothing name has surged since releasing third-quarter earnings that were much better than expected ($1.14 a share vs. a 53-cent consensus) on Dec. 10. Lakeland currently trades at 2.51x NCAV.

Construction name Tutor Perini (TPC) (up 30%), also a repeat offender from last year's portfolio, and oil and gas equipment name Now Inc. (DNOW) (up 29%), round out the top three performers.

Adams Resources & Energy (AE) (down 16%), Hurco Cos. (HURC) (down 11%), and Gencor Industries (GENC) (down 5%) are the worst performers, but so far there are no huge losers dragging on returns. That likely will change at some point. The key to this shotgun approach to a deep-value investing concept is that the winners more than offset the losers.

Here are the remaining names and their performance to date:

Avnet Inc. (AVT) : up 20%

Dril-Quip (DRQ) : up 2%

FutureFuel Corp. (FF) : up 13%

VirnetX Holding (VHC) : down 3%

Powell Industries (POWL) : up 11%

Rocky Brands (RCKY) : up 6%

Acacia Research (ACTG) : up 12%

Crimson Wine Group (CWGL) : up 1%

Amtech Systems (ASYS) : up 6%

Key Tronic Corp. (KTCC) : down 4%

Network-1 Technologies (NTIP) : up 15%

Aware Inc. (AWRE) : up 11%

At the time of publication, Heller was long CWGL.