The Long Term GARP portfolio performed poorly in January and fell 5.0%, compared with a 2.8% decline in the S&P 500 Index (SPX).
So far this year, the biggest stock market winners from 2013 have proven to be the biggest losers in 2014. In my opinion, part of this decline comes from the froth and excessive valuations that built up in some sectors last year.
One of the hardest hit sectors is consumer discretionary stocks, which is where many of this portfolio’s holdings are based.
In my opinion, merger and acquisition activity is going to be a continued source of strength for the markets, and the leadership of many of the companies in the Long Term GARP model portfolio may be considering such moves.
Liberty Interactive (LINTA) owns QVC, Bodybuilding.com, Provide Commerce, Buyseasons.com, Backcountry.com, and large passive minority positions in other business like the Home Shopping Network.
Liberty announced on October 10, 2013, it is recapitalizing the Liberty Interactive tracking stock into two new tracking stocks. One will for the internet-based businesses, and the other will be centered around QVC and the position in the Home Shopping Network. Owners of Liberty Interactive will receive 1 share of the digital tracking stock for every 10 shares of the QVC tracking stock they own.
In addition, Liberty Ventures announced they will create a new tracking stock to represent their 57% voting position (22% ownership) of TripAdvisor. Liberty Ventures also has a 18% ownership position in Expedia.com and 29% ownership of Interval Leisure Group (IILG).
It also owns a variety of small percentage ownership positions in publicly traded companies like Time Warner and Time Warner Cable. Here is a link to the list of assets owned by Liberty Interactive and Liberty Ventures:
Iconix Brands (ICON) is the owner of a broad range of well known brands like OP, Mossimo, Joe Boxer, Peanuts, and Sharper Image.
Quest Diagnostics (DGX) is the largest health care diagnostic testing company in the United States.
Intuit (INTU) sold one of their divisions for about $1 billion and will use the proceeds to buy back their stock.
Starbucks (SBUX) is the largest coffee and tea company in the world.
Liberty Media’s holding company structure owns 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. Liberty recently announced it aims to consolidate its stake in Sirius Satellite.
VCA Antech (WOOF) is the second largest owner of animal hospitals in the United States also owns thelaboratories for diagnostic testing of animals.
IAC Interactive (IACI) owns Ask.com, Match.com, Meetic, Service Magic, Vimeo, CollegeHumor.com, and the Daily Beast, among other web sites. The company recently announced a reorganization that will spin off Match.com and related assets.
Moneygram International (MGI) is the second largest money transfer and bill payment company behind Western Union.
British Petroleum (BP) is one of the five largest integrated oil companies in the world. BP has many projects in the pipeline all over the globe but the legal issues over the Macondo oil spill keep perceptions about the company’s prospects muted.
Unilever (UL) is a massive food company based in the UK that gets over half of it’s nearly $50 billion of sales in the emerging markets of Asia and Africa. The company pays a dividend of 3.7% and has the goal of doubling its sales by 2020.
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DISCLAIMER: 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. Past performance is no guarantee of future results.
