Seven months since inception, my 2021 Double Net Value Portfolio is treading water, up 27.2%. "Normally", that would be a formidable return over that time period, but I am frankly, a bit disappointed. While the portfolio is still outperforming the Russell 2000 Index (up 22.9%), it is trailing the Russell Microcap Index (up 34.8%), as well as the Russell 2000 Value Index (up 34.1%) and Russell Microcap Value Index (up 43%).
Double Net Value is a tracking portfolio I build every year that is comprised of companies that have the following attributes:
- Companies trade at between 1 and 2 times net current asset value (NCAV)
- Minimum market cap $75 million
- No development stage pharmaceuticals/biotechs
Fifteen of the 18 names are in positive territory. Key Tronic (KTCC) (down 15%) is the worst performer. Weighing on the company is a non-compliance notice from NASDAQ for continued listing, given that the company has not filed its past two quarterly reports with the SEC. Gencor (GENC) (down 5%) and VirnetX Holdings (VHC) (down 8%) are the other names that are currently underwater.
The top performer remains footwear name Rocky Brands (RCKY) (up 90%). RCKY breached $65/share in early May after reporting much better than expected first quarter results (earnings per share of $1.19 versus 59 cent consensus), but has since pulled back to about $55. Wine name Crimson Wine Group (CWGL) (up 79%) jumped 33% since the last update, good enough to move it into second place. CWGL has likely benefitted from renewed interest in publicly traded wine names, and now trades at a 3-year high. NOW Inc (DNOW) (up 72%) moved into the third spot, courtesy of better than expected first quarter results (4 cent loss versus 13 cent loss consensus).
If you take a gander at the chart of FutureFuel (FF) (up 2%), it appears to have tanked recently, however, part of that drop is due to the $2.50 special dividend the company paid in May.
Here are the remaining names, and performance to date:
Acacia Research (ACTG) : up 70%
Adams Resources & Energy (AE) : up 4%
Amtech Systems (ASYS) : up 56%
Avnet (AVT) : up 41%
Dril-Quip (DRQ) : up 15%
Tutor Perini (TPC) : up 11%
Aware (AWRE) : up 13%
Lakeland Industries (LAKE) : up 4%
Powell Industries (POWL) : up 26%
Hurco (HURC) : up 6%
Network 1 Technologies (NTIP) : up 17%
Five months to go, but still much to prove. While the absolute returns are fine, this year's crop of double-nets has not proven itself yet the way last year's group did.
