Sunday, April 29, 2007

Strong Earnings at RKT Lift Portfolio A1

Strong earnings at Rock-Tenn Co. (RKT) helped propel the company to a 14% gain on Thursday, before a CSFB downgrade trimmed the stock price 4% on Friday. RKT’s weekly gain of 8.6% now makes it the top performer in the portfolio (up 24% in a little less than two months) and has helped to increase Portfolio A1’s advantage over the benchmark S&P 500 index to 6.8%.

It is worth noting that while four of the five holdings continue to sport double digit gains since being added to the portfolio, WCG’s lackluster week dropped it in to the red. Some analysts have expressed concern about WCG’s medical loss ratio; continued insider selling probably has done little to reassure investors.

There are no changes to the portfolio for the coming week.

A snapshot of the portfolio is as follows:


dk said...

I've enjoyed learning about and following the 1-2-3 system through your portfolio. It looks like a very cool approach.

What condiitons trigger a Sell on this system? For example, WCG looked a good rebalance candidate on Friday, and I was surprised that Portfolio didn't take the initiative.

Good wine pick - FYI -- regardless of the VWSI reading - lol.

Hope you're well.

Bill Luby said...

I'm glad you liked the wine pick. That particular one should be able to fool a lot of people who taste it blind and wish to guess the price...

Regarding the selling triggers, this particular portfolio has only two sell triggers. The first one is a simple rule to sell if any holding falls 20% from it's high. The second one is more difficult to explain, but essentially it sells a holding when its ranking/rating drops below a certain threshold. In terms of the specific elements that go into the ranking, the best I can do is to point you to the details of an earlier public version of an ancestral ranking system from which mine was derived. That system is known as Balanced4. In terms of an overview of Portfolio A1's ranking system, it includes a lot of fundamental ratios, some EPS analysis, TA/momentum indicators, valuation metrics, and insider activity data.

It might take a little time and effort to kick the tires of, but I think this is the kind of site that you might enjoy, dk.

Bill Luby said...

To clarify, that 20% drop is 20% from the highest price after the stock was added to the portfolio.

This rule serves a dual purpose as a very loose initial stop loss and a more effective trailing stop -- though in most cases I would hope the rank/rating drop would kick in before the 20% rule would have to be applied.

dk said...

Thanks for the response, Bill. I've been window-shopping the 123 site and it looks great. Oh, if I had more time...

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