The Concentrated GARP portfolio had a disappointing month in February as it lost 5.2%, much worse than the 4.5% gain of the S&P 500 Index (SPX).
When a portfolio so dramatically underperforms an index, investors certainly have a right to question what happened.
In this particular case, the top two holdings in the portfolio, which make up over 50% of the total weight of the portfolio, had poor market reactions to their reported earnings for the final quarter of 2013.
The biggest issue was the nearly 25%, one-day loss in the market value of DigitalGlobe (DGI) after its earnings release. In my opinion, when you own stocks, such sudden declines can be part of investing. It is the risk investors take in order to potentially reap the financial benefits of equities.
Here’s a rundown on the the Concentrated GARP portfolio’s holdings.
Gigamedia (GIGM) reports earnings later in March.
DigitalGlobe (DGI) is a satellite provider of commercial earth imagery and information services. The company had a terrible reaction to their 4th quarter 2013 earnings and bought a new company targeting the oil and gas industries.
Corelogic (CLGX) is an information provider which specializes in data about real estate related industries. A large part of its data centers focus on property and mortgage information services. In addition, the company provide credit information in a variety of industries as well. The company reported on February 25, 2014.
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 the company’s revenues come from licensing its technologies on personal computers, laptops, tablets, and smart phones. In addition, they make sound systems for a wide variety of customers such as movie studios, theatres, and network and satellite television providers.
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.
Cash America (CSH) is the largest operator of pawn shops in the United States. The company reported disappointing earnings for the fourth quarter of 2013.
Build-A-Bear Workshop (BBW) is a provider of build-your-own teddy bears for small children. Build-a-Bear continues to become more efficient by closing down non-performing stores and having better results with their remaining locations.
Telefonica Brazil (VIV) is the second largest provider of cable tv and wireless phone services in Brazil.The company reported earnings on February 26, 2013, which were solid.
DISCLAIMER: The investments discussed are held in client accounts as of February 28, 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.
