Q1 earnings: sizing up the portfolio’s performance

April 2013 brought with it first quarter “earnings season.” The following Crabtree Technology model holdings reported earnings in April: Measurement Specialties (MEAS), Verizon (VZ), IBM (IBM), Hexcel (HXL), ICU Medical (ICUI), Mine Safety Appliances (MSA), Teledyne Technologies (TDY), and Stamps.com (STMP).

Other companies that reported were: LSI Logic (LSI), Cabot Microelectronics (CCMP), Telenav (TNAV), eHealth.com (EHTH), Cerner (CERN), CalAmp (CAMP), Asiainfo-Linkage (ASIA), Cynosure (CYNO), Heartland Payment (HYP), Accelyrs (ACCL), Cray (CRAY), MagnaChip (MX) and Silicon Graphics (SGI).

Positive performances came from Stamps.com, Cerner, Hexcel, ICU Medical and Heartland Payment. On the other hand, IBM, Accelrys, Teledyne Technologies and Telenav either had a disappointing March quarter, poor outlooks, or both.

In our view, if there was a trend to be discerned from this first batch of earnings (more to come in early May), it is that the global economy has been slowed, perhaps temporarily, by the U.S. budget “sequestration” and the uncertainty that has accompanied it.

Even for the best performers, the outlook was nearly always tempered by concern that, after four years into a recovery, the economy is pausing to catch its breath.

Overall performance for the Crabtree Technology model in April also “paused,” in a way. The model declined 1.0% in the month (net of fees), compared with a -0.4% loss for the Russell 2000 benchmark and a 1.8% gain for the S&P 500 (SPX), which is comparatively good performance for the period. Our internal benchmark, the Merrill Lynch Technology 100 (MLO) fell by 0.3% during March.

The month of May will bring with it the remainder of Q1 earnings season reports, followed by our mid-quarter re-balancing of the Crabtree Technology model. Others may “Sell In May And Go Away” but that is just market timing to us, and we do not do it, preferring to stick with our own investment discipline. We will have a full report about our new holdings in our next monthly manager letter.  But if you have any questions or comments, you can reach us any time at info@crabtree-am.com.

The investments discussed are held in client accounts as of April 30, 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.