The Core model managed by Robert Foo combines a macroeconomic approach and behavioral finance. The end result is an analysis of how investors will react to various market influencers. The model’s goal is to outperform the market over full economic cycles.
The top holding in the model is Direxion Daily Small Cap Bear 3X Shares (TZA). TZA attempts to deliver results equal to 300 percent of the inverse of the Russell 2000 index, a representation of 2,000 of the smallest securities. The majority of the fund was invested in Russell 2000 index swaps on November 3rd, 2010. On the same day, the fund was trading at a premium to NAV.
Another large holding in the model is the real estate advisory firm, Grubb & Ellis Co (NYSE: GBE). After closing at $1.12 on November 2nd, 2010, GBE is down about 19 percent from its $1.39 closing price November 2, 2009. In June, the company sold an additional $1.5 million in unsecured convertible notes. With the proceeds of all unsecured note sales (a grand total of $29.4 million), they planned to fund their growth initiatives and operating expenses. The notes are due in 2015.
Liz Claiborne Inc (NYSE: LIZ) is also a top holding in the Core model. The company’s sales have been falling over the past three years, dropping from $4.6 billion in 2007 to $4 billion in 2008, and finally to $3 billion in 2009. In June, LIZ announced their new licensing deal to have their products marketed in Canada, increasing the company’s global presence. This followed the May opening of the company’s first Juicy Couture brand store in Canada. These moves have helped LIZ increase its stock price from $5.57 on November 2nd, 2009 to $6.20 on November 2nd, 2010, a more than 11 percent increase.