WTI Falters and Is Dropped From Portfolio A1

After racking up gains of 26.4% in just three weeks in the portfolio, it only took one week for W&T Offshore (WTI) to falter and be dropped from the portfolio. The culprit, as it often is, was earnings. More accurately, it was an analyst downgrade following WTI’s earnings report that helped to push the stock down 8.7% on Friday and trigger a sale. Interestingly, WTI’s stock traded up following Thursday morning’s earnings report and a generally successful conference call with analysts later that morning. It wasn't until Friday that the analyst's comments took their toll.

Friday’s slump in WTI and the rest of the portfolio undid what had been a very successful week to that point, with the result that Portfolio A1 end up losing 0.86% to the benchmark S&P 500 index for the week. Over the 1 year and 2 weeks since Portfolio A1’s inception, the cumulative return stands at 9.9% vs. -8.6% for the SPX.

In addition to WTI, Fresh Del Monte Produce (FDP) also bows out after several lackluster weeks. Replacing these two holdings are returnee StatoilHydro (STO), the state-owned Norwegian oil giant, and a new addition, San Juan, Puerto Rico-based Oriental Financial Group (OFG), a $500 million (market cap) bank whose stock is up almost 150% since August 2007.

There no additional changes to the portfolio this week.

A snapshot of Portfolio A1 is as follows:

Portfolio A1 Increases Lead Over SPX as Markets Drop

After the disastrous mid-August performance, it was heartening to see Portfolio A1 outperform the benchmark S&P 500 index during last week’s market turbulence. While the margin of outperformance was small, this now means that the portfolio is up 9.6% since the February 16, 2007 inception – a period in which the SPX is down 0.1%.

Some of the portfolio’s individual holdings did not fare particularly well during the week, with the result that the stock ranking system has elected to drop DryShips (DRYS) and StatoilHydro (STO). These stocks are being replaced by China Petroleum & Chemical Corp., more commonly known as Sinopec (SNP), as well as Perini (PCR), the large Boston-based construction company. In spite of the very strong year it has had, I am not sure I would be chasing Perini at this point, but, this being a mechanical portfolio, all I can do is raise an eyebrow and be prepared to eat some crow.

There are no other changes to the portfolio this week.

A snapshot of the portfolio is as follows:

Portfolio A1 Stretches Margin Over SPX to 9.6%

Continuing the strong bounce off of the mid-August lows, Portfolio A1 exited the week with fewer scars than that of the benchmark S&P 500 index. Now up 13.3% since the February 16, 2007 inception, the portfolio’s performance compares favorably to a 3.7% gain in the SPX. In spite of the recent performance, as I have discussed previously, I will retire the 100% mechanical Portfolio A1 at the end of the calendar year and replace it with a more complex portfolio that incorporates some discretionary thinking and more active management on my part.

This week one marginal performer, Shanda Interactive (SNDA), the Chinese internet company, is being dropped from the portfolio and will be replaced by StatoilHydro (STO), the state-owned Norwegian oil giant.

There are no other changes to the portfolio this week.

A snapshot of the portfolio is as follows: