My 2022 Tax Loss Selling Recovery Portfolio is getting the job done so far, just under two months since inception. Markets have been volatile so far in 2022, but this portfolio of stocks that had a difficult 2021 is keeping its head above water under difficult conditions and is up 5.7%
By way of reminder, here is 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 up 2.3% versus a 2.3% decline for the S&P 500 and 10.7% drop for the Russell 2000 Index. Two of the four names are in positive territory, with Activision Blizzard (ATVI) (up 35%) having the biggest impact. Two weeks ago, Microsoft (MSFT) announced that it planned to buy Activision for $69 billion, or $95 a share. ATVI, which closed at $79.14 last Friday, is trading about 17% below Microsoft's takeout price, indicating there may be some doubts the deal will get done. Restaurant name Brinker International (EAT) (down 9.7%) has dropped about 15% over the past month due in part to a downgrade from Wedbush from outperform to neutral and because of the overall market decline. EAT now trades at 7x next year's consensus earnings estimates. Diebold Nixdorf (DBD) (up 2%) has had a wild ride recently, breaking into positive territory during the past month. But after hitting the $11 level two weeks ago, the stock has given back 20%. Altice USA (ATUS) (down 17.7%), the second worst performer in the portfolio, is trading at 8x next year's consensus estimate, and there is significant short interest (17.5%).
Tranche 2, released Dec, 8, is up 9% versus a 5.4% decline for the S&P 500 and 10.5% drop for the Russell 2000. Groupon Inc. (GRPN) (up 40%) remains the best performer in the entire portfolio. Shares got another boost last week, rising 20% on Wednesday alone, over excitement about the company's stake in mobile payments company SumUp. Viatris (VTRS) (up 18%) continues to perform well. Earlier in the month, the company raised its quarterly dividend 9% to 12 cents a share, which equates to a 3.3% indicated dividend yield. SelectQuote (SLQT) (down 19%) slipped into negative territory with a very rough January. Early in the month, Evercore ISI downgraded the stock from "outperform" to "in line" and cut the price target from $18 to $11. SLQT trades at 6x next year's consensus estimates. Last but not least, Tupperware Brands (TUP) (down 3.3%) continues to tread water yet trades at less than 5x next year's consensus estimates.
In terms of relative performance, so far so good, but 2022 will be a long and bumpy road.
