Tin Cup Demonstration Portfolio
Model Portfolio, by Mark Robertson, Managing Partner November 1st, 2016
Accumulate CVS Health (CVS)
This demonstration portfolio invests the maximum allowable 401(k) in stocks. In the absence of choices within the portfolio, we shop outside the portfolio using the combination of return forecast and quality rating to identify candidates to be added to the portfolio. Total assets reached $1,000,000 in 17 years. Tin Cup has outperformed the S&P 500 since inception and the annualized total return since 1995 is now 17.0% vs. 9.1% for the Wilshire 5000.
Total assets are $1,461,920 (10/31/16) and the net asset value is $307.60. The model portfolio declined -4.58% during October 2016. The Wilshire 5000 checked in at -2.21% for the month. Tin Cup has generated a 12.1% total return over the trailing ten years vs. 16.1% for the Wilshire 5000 for a trailing 10-year relative return of -2.0%.
Tin Cup Dashboard: October 31, 2016. Ranked by PAR (last column on the right.) Accumulate CVS Health (CVS). http://www.manifestinvesting.com/dashboards/public/tin-cup
Portfolio Characteristics
With MIPAR at 6.6%, our target for the minimum overall portfolio PAR is at least 11.6%. The overall portfolio PAR is 13.4% on 10/31/2016. Quality and financial strength are sufficient at the current levels of 96.0 (Excellent) and 91%. EPS Stability is 83 for the portfolio. Sales growth is good at 10.7%.
Decisions
The monthly contribution and October dividends total $2621. The company at the top of the sweet spot is CVS Health (CVS) as the company shows up on a number of screens, including Triple Play screening results.
The cash on hand will be invested in CVS.
Last month, we mentioned that we’re thankful for maximum position sizes less than 10% of total assets. We’re not thankful that we had the opportunity to be grateful again this month. Illumina (ILMN) took a shot to the midsection during October, with some reducing growth expectations as guidance was lowered fairly significantly. When a stock that is deemed potentially overvalued by Morningstar, S&P and Goldman Sachs hits a speed bump — it’s not pretty. Illumina is still highly ranked but we’ll be watching the earnings report on 11/1/2016 and forecasts will likely be trimmed during November.
CVS Health (CVS): Triple Play Map. With an 11% low total return forecast, a 3-5 year projected average P/E of 17.5x vs. 15.5x and future net margins closer to 4% vs. 3.5% today qualifies as a triple play candidate for further study.
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.