Monday, February 4, 2008

PBG Dampens Relief Rally at Portfolio A1

Last week provided a relief rally for most equities, but Portfolio A1 was barely able to eke out a gain, largely due to a poor earnings report from Pepsi Bottling Group (PBG). Tuesday’s report of flat case growth, increasing costs and guidance well below analysts’ expectations led to widespread dumping of the shares. Despite a rally in the markets, the bottler lost 9.1% for the full week.

In spite of PBG’s woes, Portfolio A1 is still up 6.8% for the 50 weeks since inception, as compared to a 4.1% loss in the SPX over the same period.

Not surprisingly, PBG has been dropped from the portfolio, along with LG Philips LCD Co. (LPL), a pick I was scratching my head about two weeks ago.

An interesting new addition to the portfolio is Chattem (CHTT), a consumer products company whose brands include many products advertised on late night TV (Dexatrim, Garlique, Gold Bond, Selsun Blue, pHisoderm, Kaopectate, etc.) The brands may not be sexy, but the stock has been on a tear. Back in 2000 the stock traded as low as 2.37; Friday it closed at 79.73. The other new addition is W&T Offshore (WTI), a Houston-based oil and gas exploration and production company, with geographical focus on the Gulf of Mexico.

There are no other changes to the portfolio this week.

A snapshot of Portfolio A1 is as follows:


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