It has been a difficult year so far for my 2022 Tax Loss Selling Recovery Portfolio. As the markets have headed south, this tracking portfolio of 2021 losers has had an even rougher time. This annual experiment has worked well in past years, but 2022 has been a different animal so far.
By way of reminder, here are the criteria for inclusion:
--Down at least 20% year to date
--Forward price-to-earnings (P/E) ratios below 15 in the next two fiscal years
--Minimum market cap of $100 million
Tranche 1, released last Dec. 6, is down 30% while the S&P 500 is down 15.8%, and the Russell 2000 Index is off 20.6% during that same period. Just one name is in positive territory -- Activision Blizzard ATVI (up 32%). ATVI is defying markets due to the proposed acquisition by Microsoft (MSFT) for $95 a share. If that deal goes through, ATVI will get a nice boost as it currently trades at $77. Restaurant name Brinker International (EAT) (down 40%) is trading near a two-year low due to recession fears. EAT currently trades at about 6x next year's consensus earnings estimates. Diebold Nixdorf (DBD) (down 75%), the worst overall performer, put up first-quarter results that were much worse than expected; that makes four consecutive earnings misses for DBD. Altice USA (ATUS) (down 44%) now trades at 6x 2023 consensus earnings estimates.
Tranche 2, released last Dec. 8, is down 41.4% versus a 18.5% decline for the S&P 500 and 20.5% drop for the Russell 2000 over the same period. Groupon (GRPN) (down 31%) was recently added to the Russell Microcap Index. GRPN currently has a 39% short interest ratio, which could be interesting to watch. Viatris (VTRS) (down 10%) once again has flipped into negative territory and trades at just 3x next year's consensus estimates. SelectQuote (SLQT) (down 69%) has been all but dead money since its early February second-quarter earnings miss. Third-quarter results were better than expected, as SelectQuote lost four cents a share versus the 24-cent loss consensus while revenue of $275 million was $16 million ahead of consensus. However, those results have not moved the needle much. Meanwhile, Tupperware Brands (TUP) (down 57%) has endured an epic collapse. On May 3, Tupperware shares closed at $17.91; the following day, the company reported a huge earnings miss (12 cents a share versus a 52-cent consensus estimate) and its shares fell 33%. The slide has continued, and TUP closed at $6.62 Tuesday. Where the stock goes from here should be interesting; there was considerable insider buying earlier this month.