It has been a couple months since the last update on my 2022 Tax Loss Selling Recovery Portfolio, and while the markets have firmed up a bit this portfolio of 2021 losers has lost some ground. There's still a long way to go, though.
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 2.3% versus flat for the S&P 500 and a 4.8% decline for the Russell 2000 Index. Two of the four names are in positive territory, with Activision Blizzard (ATVI) (up 38%) the top overall performer. Restaurant operator Brinker International (EAT) (up 5%) has picked up the pace over the past two months to get back into positive territory. EAT currently trades at about 8x next year's consensus earnings estimates. Diebold Nixdorf (DBD) (down 33%) has been sliding since mid-February after releasing fourth-quarter results that were much worse than expected (earnings of 6 cents a share versus a 57-cent consensus). That is three consecutive earnings misses for the maker of ATMs and other banking equipment. Altice USA Inc. (ATUS) (down 26%) also suffered from a post-earnings swoon. It now trades at 8x next year's consensus estimates, while short interest, at just over 27%, has been growing since the last update.
Tranche 2, released last Dec. 8, is down 13.5% versus a 3% decline for the S&P 500 and a 4.7% decline for the Russell 2000. Groupon (GRPN) (down 1%), which had been the best overall performer, has slipped as excitement over the value of the company's stake in SumUp waned. In addition, Groupon's fourth-quarter results were below consensus; earnings per share of 18 cents missed by 3 cents, while revenue of $223 million was off by $1.6 million. Viatris Inc. (VTRS) (down 13%) flipped into negative territory in late February after an earnings miss and several analyst downgrades. Viatris now trades at 3x next year's consensus estimates. SelectQuote Inc. (SLQT) (down 69%) is the biggest disappointment and is still reeling from its second-quarter earnings miss in early February. SelectQuote is not expected to be profitable until fiscal 2024. Tupperware Brands (TUP) (up 28%) is now the second-best performer despite fourth-quarter earnings that were worse than expected. However, Tupperware shares were boosted by the company's accelerated stock buyback program, announced in late February.
While the road has gotten bumpy, that is par for the course with this portfolio.