Long Term GARP model’s lineup delivers

The portfolio rose 2% (net of fees) in the month of December, which was the same as the S&P 500 performance. The main reason why we believe the Long Term GARP Covestor model is unique is that, in our opinion, almost every company in the portfolio has a clear path to growing their business through their normal practices and processes.

Almost every company has proven leadership, has grown organically and created a great deal of cash flow, and has expanded through accretive acquisitions. In fact, certain of the enterprises in the portfolio have bought other companies in recent months.

With respect to the near future, I believe the key issue in the market is whether the great rotation out of bonds and into stocks is starting to take place. If the U.S. economy shows any kind of acceleration in growth, institutions are going to really be pressured to start reconsidering their asset allocation models.

In my opinion, the leakage of capital into the stock market will be a continuing theme for quite some time. Still, I have thought this before but, with the 10-year Treasury bond trading above 2.0%, I believe the upward pressure on bonds makes the hypothesis not at all farfetched.

Here’s an update on my portfolio holdings and upcoming events:

Liberty Interactive (LINTA) is the owner of QVC, Bodybuilding.com, Provide Commerce, Buyseasons.com, and Backcountry.com, and has large passive minority positions in other large, well known internet based business like the Home Shopping Network.

Liberty Interactive gained a majority stake in TripAdvisor when it bought out Barry Diller’s voting shares. The shares are attributed to the tracking stock* of Liberty Ventures Group (LVNTA).  Liberty Interactive will report earnings on February 27, 2013.

Iconix Brands (ICON) is the owner of a broad range of well known brands like OP, Mossimo, Joe Boxer, Peanuts, and Sharper Image. Iconix Brands announced the acquisition of 51% of the Buffalo David Bitton Brand, a lifestyle brand consisting of denim, sportswear, activewear and accessories, for $76.5 million in cash.

The company also raised their earnings guidance for 2013.
Quest Diagnostics (DGX) is the largest health care diagnostic testing company in the United States. The company reported disappointing earnings and guidance in January, but did raise their repurchase plans for 2013.

Intuit (INTU) recently raised their dividend to 17 cents a share in each quarter and will report earnings on February 21, 2013.

Starbucks (SBUX) is the largest coffee and tea company in the world. The company opened their first stores in India at the end of October and in Vietnam on the first day of February. The company reported  earnings in January.

Liberty Media (LMCA) has assets inside a holding company structure that includes Starz Media, the Atlanta Braves, 50% ownership of Sirius Satellite (SIRI), almost 20% ownership of Live Nation (LYV), 16% ownership of Barnes & Noble, and a few other non controlling positions of small public and private enterprises.

Liberty Media announced that it increased its stake in Sirius (SIRI) Satellite Radio to over 50% and increased its position in Live Nation (LYV). The company also completed its spin-off of Starz Media on January 11, 2013.

VCA Antech (WOOF) is the second largest owner of animal hospitals in the United States and also owns laboratories for the diagnostic testing of animals. The company announced its 3rd quarter earnings report and continues to buy new animal hospitals to build the scale of the enterprise.

IAC Interactive (IACI) owns Ask.com, Match.com, Meetic, Service Magic, Vimeo, CollegeHumor.com, and the Daily Beast, among other web sites. The company reports results for the 4th quarter of 2012 on February 6, 2013. IAC Interactive purchased Tutor.com for their first entry in the education market.

Moneygram International (MGI) is the second largest money transfer and bill payment company behind Western Union. The company will report fourth quarter earnings on February 6, 2013.

British Petroleum (BP) announced better than expected earnings for the 4th quarter of 2012.

Unilever (UL) is a massive food company based in the UK that gets over half of its nearly $50 billion of sales in the emerging markets of Asia and Africa. The company currently pays a dividend of 3.7% and has the goal of doubling its sales by 2020.

Here is a link to their most recent earnings report, which showed very good top line growth for a company as large as Unilever, in my opinion.

If you would like to open a mirroring account at Covestor.com for the Y H & C Long Term GARP Portfolio, please click here.

*A tracking stock is a type of common stock that “tracks” or depends on the financial performance of a specific business unit or operating division of a company—rather than the operations of the company as a whole. Tracking stocks trade as separate securities. As a result, if the unit or division does well, the value of the tracking stock may increase—even if the company as a whole performs poorly. The opposite may also be true.

The investments discussed are held in client accounts as of January 31, 2013. 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.