The Concentrated GARP portfolio had a positive month of returns in May as the model gained 6.1% (net of fees) for the month, while the S&P 500 rose 3.0%.
With the summer months arriving, in my own experience trading volumes usually dry up and volatility increases for equities. I believe the slow increase of interest rates will prod many institutions to rethink their asset allocation strategies regarding bonds vs stocks.
Specifically, to take the loss of capital because of relatively minute increases in bond yields is not a good risk return decision, at least in my judgment. Large institutions are certainly aware of the issue, and with any strength in the U.S. Economy, bond yields go up and capital losses become more pronounced. The situation is not going to go away for the near future, in my opinion.
Covestor portfolio: Gigamedia (GIGM) reported a loss again on May 22, 2013 but costs were down and their efforts to scale the Gigacloud business are ramping up. After many years of promises, I believe this company is definitely in prove it mode.
Digital Globe (DGI) is a satellite provider of commercial earth imagery and information services. Digital Globe reported earnings and is in the midst of integrating their acquisition of GeoEye.
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 had an investor day in May.
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.
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 personalcomputers, laptops, tablets, and smart phones.
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 which were better than expected estimates.
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. The company announced results on April 30, 2013. They also decided to announce a reverse 5-1 stock split.
Cash America (CSH) is the largest operator of pawn shops in the United States. The company reported earnings in April and announced that it completed the private offering of $300 million of its 5.75% Senior Notes due 2018.
Build A Bear Workshop (BBW) is a provider of build your own teddy bears for small children. The company announced earnings at the beginning of May and the stock jumped as a result of better-than -expected results.
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The investments discussed are held in client accounts as of May 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.
