The Concentrated GARP portfolio saw another good month in December as the model returned 4.7% for the month, net of fees, besting the S&P 500 Index (SPX), which rose by 3.8%. For the year the portfolio was up almost 50%, which is nice considering how poor a performance it had in 2011.
Earlier in 2011 at the Covestor Next Invest Conference, I thought the model would perform well and it is good my conviction turned to better results in 2012. As far as December was concerned, it was a pretty uneventful month. Due to administrative decisions, I sold half of the GigaMedia (GIGM) holding and replaced it with what is, in my opinion, a very good business which I am incredibly familiar with.
I would expect the new position will perform well during the last six months of the year, and could do well before then. Not much happened in the other holdings so the summary of individual holdings is the same as in the previous report.
Covestor Portfolio: The Reasons for Owning the Portfolio Holdings
- GigaMedia (GIGM)– Management announced earnings on November 26 and replaced the existing Chief Executive Officer with another new CEO, Collin Hwang. The management changes continually and it provides a textbook example of why leadership and continuity are important in building a business. I have lost all confidence in this group and would love to sell the position. However, selling at less than half of cash value makes no sense to me. I wrote to management urging action to improve performance.
3. Corelogic (CLGX) is an information provider which specializes in data about real estate related industries. A large part of their data centers on property and mortgage information services. In addition, they provide credit information in a variety of industries as well. The company announced strong results and raised their guidance for the rest of 2012.
4. Cass Information Systems (CASS) provides information, invoice, and payment processing services to a wide variety of enterprises in the United States. Cass also has a small banking division as well. The company reported better-than-expected earnings on October 18, 2012 and announced a 10% stock dividend as well as a regular dividend.
5. Dolby Laboratories (DLB) provides audio and video products for the entertainment industry on a global scale. Much of their revenues come from licensing their technologies on personal computers, laptops, tablets, and smartphones. In addition, they make sound systems for a wide variety of customers, from movie studios, theaters, and network and satellite television providers. The company reported earnings on November 6, 2012.
6. Jamba Juice (JMBA) is a health food and beverage retailer with a presence in 26 states domestically, as well as operations in Canada, the Philippines, and South Korea. Jamba Juice reported earnings on November 1, 2012.
7. Cash America (CSH) is the largest pawn shop chain in North America and has 25 pct of revenues outside the us and is looking for more international acquisitions. Build a Bear (BBW) is a large company in the specialty retail space where the market has priced the stock as if they are going out of business. The issue there is they will be closing stores the next few years.
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The investments discussed are held in client accounts as of January 19. These investments may or may not be currently held in client accounts. The reader should not assume that any investments identified were or will be profitable or that any investment recommendations or investment decisions we make in the future will be profitable.