Tin Cup Model Portfolio
Model Portfolio, by Mark Robertson, Managing Partner April 1st, 2011
Accumulate Bio-Reference Labs.
Accumulate Bio-Reference Labs
Total assets are $848,560 (3/31/11) and the net asset value is $198.21. The model portfolio lost 0.52% during March 2011 (Wilshire 5000 checked in at +0.45% for the month.) Tin Cup has generated a +1.1% total return over the trailing 12 months vs. +17.5% for the total stock market.
Tin Cup Dashboard: March 31, 2011. The holdings are ranked by PAR (last column on the right.) Bio-Reference Labs (BRLI) is accumulated for the Tin Cup model portfolio.
An Essence of Volatility. This long-term chronicle for Cisco Systems (CSCO) displays a return forecast range of -13%-to-39%. And yes, Virginia, I think was have to consider that “hump” something of a bubble. There are a couple of things that are fascinating to us. First, the return forecast was negative for an extended period during 1999-2000. In other words, there was nobody blocking the exit while the “getting was good.” During the bubble, we get some sense of surrender from Value Line as the forecasts ultimately begin to increase as the stock price screams towards its apogee. Second, the forecast return peaks in 2003, 2006 and 2009 seem to have delivered buying opportunities with above-average returns ensuing. Tin Cup remains vigilant and hopeful that the current peak forecast returns in the realm of 17-18% portend better days ahead for this world class supplier of communications equipment.
Portfolio Characteristics
With MIPAR at 7.1%, our target for the minimum overall portfolio PAR is at least 12.1%. The overall portfolio PAR is 13.2% on 3/31/2011. Quality and financial strength are sufficient at the current levels of 79.2 (Excellent) and 93%. EPS Stability is 88 for the portfolio. Sales growth is acceptable at 11.2%.
Decisions
The dashboard has been sorted by descending PAR. The overall portfolio PAR is within the target range, but we’re always looking to maintain the PAR sufficiently above MIPAR+5%.
Cisco Systems (CSCO) is a current Round Table favorite but is slightly “out of bounds” with a PAR that is more than 10% greater than MIPAR.
Bio-Reference Labs (BRLI) was our Solomon Select feature for December 2010 and the story is virtually unchanged from those days. The stock price is still pretty sluggish but BRLI continues to execute well and Ken Kavula and Cy Lynch have both shared the news of their successful contract negotiations with correctional facilities in nearly all fifty states. It’s a little unsettling that this is something of a growth industry … but it is what it is.
The accompanying graphic is another perspective on the long-term memory characteristics of the rhinos. That bubble is on the verge of becoming a distant memory for Tin Cup’s Cisco Systems.
Mark Robertson
Mark Robertson is founder and managing partner of Manifest Investing, a source for research and portfolio management focusing on strategic long term investors.