One year after selecting a number of undervalued companies, it’s time to look back. Is this a strategy worth pursuing?
|SDLPF||Seadrill Partners LLC||-82.1%|
|VVPS.VI||Volksbank Vorarlberg e. Gen.||-45.45%|
|SWN||Southwestern Energy Co.||27.75%|
|XIN||Xinyuan Real Estate Co. Ltd.||-43.48%|
|GPOR||Gulfport Energy Corp.||-66.77%|
|CRZO||Carrizo Oil & Gas, Inc.||-76.19%|
|DNR||Denbury Resources, Inc.||-77.67%|
|IRS||IRSA Inversiones y Representaciones SA||-58.76%|
|AR||Antero Resources Corp.||-30.94%|
|RZA||Reinsurance Group of America, Inc.||-4.3%|
I think it would be an understatement to say that the portfolio did not do well. It wasn’t a good year for shares in general, but many have already recovered from their March/April crash. Some of the shares in the portfolio did recover, but they were already on a downward trend.
In hindsight, I already predicted that a backtest of this selection criteria was not very promising.
Note that Carrizo Oil & Gas merged with Callon (CPE). Shareholders received 1.75 shares CPE in return for one share CRZO.
In spite of the performance, I’m choosing to believe in value investing for one more year.
I’m also sticking with the same ratios:
With that in mind, here are the criteria for this month’s selection:
|DNR||Denbury Resources, Inc.||0.23|
|SBOW||SilverBow Resources, Inc.||3.91|
|BHF||Brighthouse Financial, Inc.||28.85|
|PVAC||Penn Virginia Corp.||11.35|
|DXYN||The Dixie Group, Inc.||0.88|
|NOG||Northern Oil & Gas, Inc.||0.81|
|FLY||FLY Leasing Ltd.||6.74|
There are some penny stocks in there, which means there’s significant risk. We’ll see next year.
My philosophy: If you want to invest and your goal is to try to beat the market, you need a system. You need a system that can decide for you what to buy, when to sell and not to panic when things go down. Everything starts with selecting stock. You should not just select random stock here and there based on whims or things you read. No, create a system that suites your style and follow it. These posts give you example of what such a stock selection could look like.
Disclaimer: Don't believe anything I say or write. Always do your own research before making any investment decisions.