Herbalife (HLF) Added to Portfolio A1

One fascinating aspect of a mechanical portfolio is that it will get you long companies that you often not even consider dabbling in. Such is the case right now, as Portfolio A1 has seen fit to drop Invitrogen (IVGN) and replace it with Herbalife (HLF), a company whose core business is in nutritional supplements and weight management products.

A year ago, the portfolio briefly held Herbalife competitor NBTY (NTY), so I should not be surprised to see this segment back in play. Last I heard, over 30% of Americans were classified as obese. An interesting cover story in the most recent Business Week, “Inside Drugmakers’ War on Fat,” chronicles the daunting problems facing companies whose efforts have focuses their efforts on weight loss drugs. The bottom line is that diet programs is a $33 billion dollar business, with no silver bullets in sight. Investment opportunities can follow either the hype cycles or the fundamentals, but there will always be long and short opportunities in this space. Herbalife reported a strong quarter on February 26^th and raised guidance for 2008. Those interested in learning more are encouraged to review their Q4 2007 earnings conference call transcript.

Getting back to the portfolio as a whole, Portfolio A1 lost some ground on the benchmark S&P 500 index last week and now sports a net performance gain of 16.9% over the index, with a 5.8% cumulative gain vs. an 11.1% cumulative loss in the SPX.

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

A snapshot of Portfolio A1 is as follows:

WTI Boosts Portfolio A1

After a challenging start to the new year that resulted in a major reshuffling of the portfolio, it looks as if Portfolio A1 is now back on track with an interesting cross-section of holdings. Part of the credit for the performance turnaround should go to W&T Offshore (WTI), the oil and gas exploration and production company that gained 9.2% in the first week it was in the portfolio. A five stock portfolio is always a crap shoot of sorts, but given the current market environment and opportunities it presents, I am pleased with the current makeup of the portfolio.

After 51 weeks (since the February 16, 2007 inception), Portfolio A1 sports a cumulative performance of +4.8% vs. a -8.5% performance in the benchmark S&P 500 index over the same period.

Gone after just one week in the portfolio is Chattem (CHTT), which is being replaced by Invitrogen (IVGN), a lab testing and diagnostic company that just last week reported solid earnings and resolved some patent disputes. For those looking for more information on IVGN, a good place to start is with the conference call transcript from the February 5, 2008 conference call.

There no additional changes to the portfolio this week.

A snapshot of Portfolio A1 is as follows: