As readers may have noticed, we have begun tracking our top 20 US equity picks in our Equity Radar model that we often use in webinars, the morning call and presentations. The portfolio was off to a strong start in June, up 5% as of June 6, but the pressure from the escalating trade war between the US and China hit the portfolio’s semiconductor holdings.
Red Hat also delivered a disappointing earnings release with a billings shortfall that took the market by surprise given the consensus that Red Hat has a very attractive long-term outlook. As of yesterday the portfolio is down 0.26% with the benchmark S&P 500 up 0.53%. Since inception the portfolio is up 0.07% with the S&P 500 up 0.05%
July portfolio rebalancing
Based on changing scores in our Equity Radar model, nine stocks are leaving the portfolio. Below is an overview of the changes.
Selling: ABIOMED, Best Buy, Cisco, DXC Technology, Garmin, NetApp, Red Hat, S&P Global, State Street
Buying: Micron Technology, HollyFrontier, H&R Block, KLA-Tencor, Intel, Valero Energy, Ralph Lauren, Expeditors International of Washington, IPG Photonics
The current portfolio is still dominated by IT stocks but today’s rebalancing means that two energy companies (Valero Energy and HollyFrontier) are entering the portfolio which is a natural extension of the bull market in global energy stocks. The portfolio characteristics are concentrated around high quality, high momentum and high reversal scores.
Top 20 US equities in our Equity Radar model: