My Low Enterprise Value screen scored the following names as the highest ranking outputs on 10/08:
- HCI Group Inc ($HCI)- bought 10/18
- Banco Macro SA ($BMA)- bought 10/18
- Barrett Business Services Inc ($BBSI)- watch & new
- FXCM Inc ($FXCM)- bought 6/21
- Taser International ($TASR)- watch & new
- Ehealth Inc ($EHTH)- watch & new
This is another working post, so qualitative assessments for the lists’ new names will follow shortly.
Again, I have to note that this new list has already significantly outperformed SPX to date (alpha of 5.3+).
This morning, I finally opened new positions in HCI and BMA–each of which have been on these outputs since I covered them originally in July. HCI has finally shown the insider participation I had awaited, with insider buying +55% since Q2-end, bringing insider ownership up to 13.5%. While the chart paints a picture of a real momentum stock, the ridiculously cheap fundamentals and insiders’ vouch were the compelling forces behind my purchase:
Of course, BMA is fundamentally cheap too, mostly due to macro concerns around inflation and the Argentinian sovereign government’s battles with legacy defaults (see: Paul Singer/Elliott Management take on Argentina). Although nobody can game the outcome of those circumstances–rather binary events without significant probabilities leaning one way or the other–there’s a significant margin of safety in the name, according to its financials. Further, BMA’s technicals show a daily, long term Cup & Handle filling the gap up to $29 rim resistance with $27 support and strong 2x bull divergence. In the longer, weekly fractal, I find my price target all the way up at $39 (+40%), which is right shoulder resistance for a long term Head & Shoulders (dating back to 2006) with 2x bull divergence:
Here’s the performance to date (intraday) of unrealized positions still open from prior screens; buys executed 4/30, 6/10 & 10/18, as documented:
Here’s a followup on the last Core Value screen 9/20:
Passive +4.75% (alpha= +2.82)
Active +5.14% (alpha= +3.21)
Here’s a followup on the Low Enterprise Value screen run 9/3:
Active & Passive +12.25% (alpha= +5.91)
Combine with yesterday’s buy of the Turkey ETF ($TUR), these purchases bring our portfolio’s allocation just over 70/27/3 (stocks/bonds/cash) vs 60/40 benchmark; beta up to 0.95 vs 0.76 benchmark; sigma at 1.11 vs 0.50.
Obviously, much of the recent buying activity has intentionally continued to increase our international exposure. A quick look at $EFA vs $IWV shows what a good trade that has been over the past quarter-plus, including the stability it provided our portfolio across the weeks of the US’s government shutdown. While the US has outperformed over the past 2 days, international value remains our trade for the forseeable future.