In less than two months I'll be winding down my 2020 Double Net Value Portfolio and rolling out the new version. This deep-value tracking portfolio, which I've featured in Real Money for several years, took a turn for the better since the September update, rising about 10% and getting back into positive territory since inception (up 8.6%). It continues to outperform the Russell 2000 (up 0.2%) and Russell Microcap (up 1.2%) indices as well as the more appropriate Russell 2000 Value (down 12.4%) and Russell Microcap Value (down 10.4%) indices.
However, just six of the 13 portfolio names are in positive territory. Lakeland Industries (LAKE) (up 131%) continues to be the top performer, a beneficiary of pandemic spending on protective clothing. After hitting hit the $26 range in July Lakeland slipped to about $18 in September, though it has fought its way back to close at $24.54 on Friday.
AXT Inc. (AXTI) jumped into the second spot (up 64%) despite pulling back 15% since hitting a 52-week high on Oct. 14. B. Riley, one of the few firms that covers AXT, downgraded AXTI from "Buy" to "Neutral" on Oct. 6.
NetGear (NTGR) (up 39%) has been hitting its stride, achieving a 52-week high on Oct. 21, following a third-quarter earnings report that was much better than expected. Revenue of $378 million was ahead of the consensus by $65 million, while earnings per share of $1.13 easily beat the 86-cent estimate. Cash grew from $253 million at the end of the second quarter to $300 million, or just over $10 per share.
Flexsteel Industries (FLXS) (up 29%), also made a positive contribution, rising 33% since mid-September and also hitting a 52-week high on Oct. 9 before pulling back a couple points. There has been no news here, but the company is expected to report first-quarter results here on Monday.
Tutor Perini (TPC) (up 3%), which has had a wild ride over the past year, has inched its way into positive territory after rising 11% since mid-September.
Some things have not changed; Now Inc. (DNOW) (down 55%) and Tessco Technologies (TESS) (down 47%) remain the worst performers and biggest drags on performance.
Performance figures for the rest of the portfolio are below:
Amtech Systems Inc. (ASYS) (down 12%)
Universal Corp. (UVV) (down 20%)
Aware Inc. (AWRE) (down 24%)
Hurco Cos. (HURC) (down 18%)
Gencor Industres (GENC) (down 1%)
FutureFuel (FF) (up 18%)
At this writing, I am on the cusp of rolling out the new version of this deep value portfolio in six wee. There are 29 names that would qualify, well ahead of last year's 13. The more, the merrier!
As a reminder, below are the initial selection criteria:
- Companies that 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
