What a difference a month or so has made for my 2018 Tax-Loss Selling Recovery Portfolio, which was up more than 7% since the last update courtesy of a September uptick in value. Since inception, this tracking portfolio of names that suffered in 2018 is up about 17%.
Tranche 1, released last Dec. 10, is up about 16.7% versus 12.4 % for the S&P 500 and 8.1% for the Russell 2000. Winnebago Industries Inc. (WGO) (up 71%) retained its position as the best overall performer. While relatively unchanged since the August update, it did have a rough run for a bit, falling to about $30 in early September before rallying back to the $39 range. Kraft Heinz (KHC) (down 40%) continues to suck wind as the worst overall performer and could be a repeat performer for the 2019 Tax-Loss Selling Recovery Portfolio, which I plan on releasing in early December. United Natural Foods Inc. (UNFI) (down 12%), had a huge gain, rising 56% since the last update and 63% since the beginning of the month, courtesy of the rally in distressed value names. Despite the run, UNFI still trades for about 7.5x next year's consensus estimates. General Mills Inc. (GIS) (up 47%) continues to quietly put up a nice return.
Tranche 2, released last Dec. 12, is up 4.3% on average, much worse than the S&P 500 (up 12.3%) and Russell 2000 (up 10.6%). There's not a lot to report here; Bed Bath & Beyond Inc. (BBBY) (down 13%) was up about 11% since the last update. Kronos Worldwide Inc. (KR) (up 16%) did participate in the recent value rally, rising 18% since the beginning of September, but it had fallen 17% in the three weeks following the August update.
Tranche 3, released last Dec. 14 is up an average of 29.4%, better than the S&P 500 (up 11.8%) and Russell 2000 (up 9.7%). Methode Electronics Inc. (MEI) (up 52%) had a great month, up 24% since the last update, courtesy of better-than-expected first-quarter earnings announced in late August, followed by the value rally. MEI trades at about 9.5x next year's consensus estimates. Boise Cascade (BCC) (up 32%) also had a nice run, up 13.5% since the last update, bolstered by a solid second-quarter earnings release. While Skechers U.S.A. Inc. (SKX) (up 50%) ended the period flat, it experienced quite a ride since the last update, falling below $30 in late August and then rising 20%. PetMed Express Inc. (PETS) (down 16%) also had a nice month, rising 11%.
By way of reminder, qualifying companies had to meet the following criteria:
- Down at least 30% year to date,
- Forward price-to-earnings (P/E) ratios below 15 in the next two fiscal years
- Minimum market cap $100 million
The resulting list was then whittled down from 200 to 12 and released in three tranches of four names each in mid-December.
