Hi everyone, I found ๐ณ๐ฐ๐๐ข ๐ข๐ง๐ญ๐๐ซ๐๐ฌ๐ฌ๐๐ง๐ญ๐ ๐๐ง๐ญ๐๐ซ๐ง๐๐ก๐ฆ๐๐ง rebalancing again this month - I'm happy to share my findings with you here:
The average return per year - for the ๐๐๐ฅ๐ฎ๐ & ๐๐จ๐ฆ๐๐ง๐ญ๐ฎ๐ฆ ๐ฐ๐๐ฅ๐ญ๐ฐ๐๐ข๐ญ portfolio - recovered somewhat in August 2022, rising to +17.1% (from +13.8%). This is encouraging, but in a year like this, this number can change dramatically on an almost daily basis - depending on recession fears, war, and even geopolitical factors such as the conflict between China and Taiwan. Since the start on February 11, 2020, the return is now +50% again.
A ๐๐๐ญ๐๐ข๐ฅ๐ฅ๐ข๐๐ซ๐ญ๐ & รผ๐๐๐ซ๐ฌ๐ข๐๐ก๐ญ๐ฅ๐ข๐๐ก๐ ๐๐๐๐๐ฅ๐ฅ๐ of the entire portfolio is available here:
I'd love to put it all in here, but displaying it is a bit tricky. I have nevertheless packed as much as possible for you in here.
But now back to the ๐๐ค๐ญ๐ฎ๐๐ฅ๐ฅ๐๐ง ๐๐ข๐ญ๐ฎ๐๐ญ๐ข๐จ๐ง:
It turns out that my confidence seemed justified in the last rebalancing in July. The portfolio seems well positioned for the current economic climate with a high allocation to the commodity sector. This is despite the fact that many issues remain such as inflation concerns, war, and supply chain difficulties.
The rebalancing in August also showed that one has to look closely: Companies that no longer meet the quality criteria must be rigorously weeded out rather than held on to. Because nowhere is it written that you have to make up a loss with the same share. In practice, I notice that both laymen and professionals find it difficult to part with losers in the portfolio. Instead, they often sell winners too early instead of keeping them. Both are detrimental to returns.
As an asset manager, I try to take these ๐๐ฆ๐จ๐ญ๐ข๐จ๐ง๐๐ฅ๐ ๐๐จ๐ฆ๐ฉ๐จ๐ง๐๐ง๐ญ๐ out of investment decisions. When investing, it is important to be very ๐ฌ๐ญ๐ซ๐ฎ๐ค๐ญ๐ฎ๐ซ๐ข๐๐ซ๐ญ ๐ฏ๐จ๐ซ๐ณ๐ฎ๐ ๐๐ก๐๐ง. This is exactly how I approach the value and momentum strategy: ๐๐ฎ๐๐ฅ๐ข๐ญ๐๐ญ๐ข๐ฏ ๐ก๐จ๐๐ก๐ฐ๐๐ซ๐ญ๐ข๐ ๐ companies with ๐ รผ๐ง๐ฌ๐ญ๐ข๐ ๐๐๐ฐ๐๐ซ๐ญ๐๐ญ๐๐ง shares and a ๐ก๐จ๐ก๐๐ง ๐๐จ๐ฆ๐๐ง๐ญ๐ฎ๐ฆ are bought. Those shares that no longer meet these criteria are sold.
๐๐๐ฎ in the portfolio are no less than two U.S. companies from the commodities sector: on the one hand, this is ๐๐๐ ๐๐ง๐๐ซ๐ ๐ฒ, which, in addition to processing petroleum, is also active in the production of nitrogen fertilizer and was founded back in 1906. The second company is ๐๐๐ ๐๐ง๐๐ซ๐ ๐ฒ, which specializes in the processing and supply of petroleum products in the United States, Canada, and Mexico.
Both companies are characterized by having a high Piotroski F-Score. That is, they are ๐ฌ๐๐ก๐ซ ๐ซ๐๐ง๐ญ๐๐๐๐ฅ, have a ๐ ๐๐ซ๐ข๐ง๐ ๐ ๐๐๐ซ๐ฌ๐๐ก๐ฎ๐ฅ๐๐ฎ๐ง๐ , and are ๐๐๐๐ข๐ณ๐ข๐๐ง๐ญ ๐ข๐ฆ ๐๐๐ซ๐ง๐ ๐๐ฌ๐๐กรค๐๐ญ. In addition, they have a very ๐ก๐จ๐ก๐๐ฌ Adjusted Slope ๐๐จ๐ฆ๐๐ง๐ญ๐ฎ๐ฆ - meaning the stock price has risen sharply and they are still cheaply valued. Such a combination is not easy to find. Certainly, the high raw material prices help here and it will be seen in the coming year whether this remains so. Unfortunately, it does not currently look like the world situation will change overnight.
I am happy to present the core business of the two newcomers in the portfolio here:
๐๐๐ ๐๐ง๐๐ซ๐ ๐ฒ:
CVR Energy was founded in 1906 and is headquartered in Sugar Land, Texas.
The company operates in the United States of America and specializes in petroleum refining and nitrogen fertilizer manufacturing.
In the Petroleum segment, CVR Energy refines and markets gasoline, diesel fuel, and other refined products. The company owns and operates crude oil refineries in southeast Kansas and Wynnewood, Oklahoma. It primarily serves retailers, railroads, agricultural cooperatives and other refiners/marketers.
The Nitrogen Fertilizer segment owns and operates a nitrogen fertilizer plant in North America. The company sells products primarily to agricultural and industrial customers.
๐๐๐ ๐๐ง๐๐ซ๐ ๐ฒ:
PBF Energy is based in Parsippany, New Jersey and was founded in 2008.
The company is divided into two segments: Refining and Logistics. Through its petroleum processing operations, PBF produces gasoline, low-sulfur diesel, fuel oil, lubricants, asphalt, and other petroleum products, for example. As of December 31, 2021, the company owned six oil refineries and related assets.
The company sells its products primarily in the United States, but also in Canada and Mexico. In addition, its logistics operations provide rail, truck, and marine transportation, as well as pipeline transportation and storage.
๐๐ง๐ฅ๐๐ ๐๐ฌ๐ญ๐ซ๐๐ญ๐๐ ๐ข๐:
It has been shown in numerous studies and also in practice that the ๐๐จ๐ฆ๐๐ข๐ง๐๐ญ๐ข๐จ๐ง ๐ฏ๐จ๐ง ๐๐๐ฅ๐ฎ๐ ๐ฎ๐ง๐ ๐๐จ๐ฆ๐๐ง๐ญ๐ฎ๐ฆ has outperformed the overall market. This is especially true for a diversified portfolio. I consistently apply these findings: For portfolio construction, a three-step analysis is used for a single-stock strategy to invest in the companies with the best risk-return ratio. The analysis and selection process is as follows:
๐๐๐ฅ๐ฎ๐-๐ ๐๐ค๐ญ๐จ๐ซ๐๐ง: Finding the 10% companies with the strongest undervaluation using carefully selected value metrics.
๐๐ฎ๐๐ฅ๐ข๐ญรค๐ญ๐ฌ-๐ ๐๐ค๐ญ๐จ๐ซ๐๐ง: Filtering the companies with very good fundamentals.
๐๐จ๐ฆ๐๐ง๐ญ๐ฎ๐ฆ-๐ ๐๐ค๐ญ๐จ๐ซ: Selecting stocks with the highest price momentum.
This procedure was developed following the "๐๐ซ๐๐ง๐๐ข๐ง๐ ๐๐๐ฅ๐ฎ๐ ๐๐ญ๐ซ๐๐ญ๐๐ ๐ฒ" by James O'Shaughnessy and was multiplied by the quality factor (๐๐ข๐จ๐ญ๐ซ๐จ๐ฌ๐ค๐ข ๐ -๐๐๐จ๐ซ๐) and the ๐๐๐ฃ๐ฎ๐ฌ๐ญ๐๐ ๐๐ฅ๐จ๐ฉ๐ ๐๐จ๐ฆ๐๐ง๐ญ๐ฎ๐ฆ (Andreas Clenow) further refined, in order to smooth out strong price movements due to exceptional situations and to follow the classic ๐๐๐ฅ๐ฎ๐ ๐๐ซ๐๐ฉ ๐๐ง๐ญ๐ ๐๐ ๐๐ง๐ณ๐ฎ๐ฐ๐ข๐ซ๐ค๐๐ง.
The approach involves a predominantly ๐ฅ๐๐ง๐ ๐๐ซ๐ข๐ฌ๐ญ๐ข๐ ๐๐ง ๐๐ง๐ฅ๐๐ ๐๐ก๐จ๐ซ๐ข๐ณ๐จ๐ง๐ญ with a ๐๐ข๐ฏ๐๐ซ๐ฌ๐ข๐๐ข๐ณ๐ข๐๐ซ๐ญ๐๐ง ๐๐๐ซ๐ญ๐ฌ๐๐ก๐ซ๐ข๐๐ญ๐๐ง๐ฉ๐จ๐ซ๐ญ๐๐จ๐ฅ๐ข๐จ. Monthly rebalancing takes place.
$CVI (+0,13ย %)
$PBF (+0,07ย %)
