Tin Cup Demonstration Portfolio (June 2021)
Model Portfolio, by Mark Robertson, Managing Partner June 1st, 2021
16% Rate of Return Since Inception (January 1995)! SWEET!
This demonstration portfolio was launched in January 1995 and has invested 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 $4,000,000 during April 2021. Tin Cup has outperformed the S&P 500 since inception and the rate of return since 1995 is now 16.0% vs. 10.5% for the Wilshire 5000.
Tin Cup: Historical Performance. Tin Cup was restored above $4 million, checking in at $4,022,184 at the end of May. The rate of return since inception is now 16.0%. Sweet!
Total assets are $4,022,184 (5/31/21) and the net asset value is $820.16. The model portfolio advanced 0.69% during May 2021. The Wilshire 5000 checked in at +0.43% for the month.
Portfolio Characteristics
With MIPAR at 5.9%, our target for the minimum overall portfolio PAR is at least 10.9%. The overall portfolio PAR is 11.9% on 5/31/2021. Quality and financial strength are sufficient at the current levels of 85.6 (Excellent) and 82%. EPS Stability is 76 for the portfolio. Sales growth is in the design target range at 12.7%.
Tin Cup Dashboard: May 31, 2021. Ranked by PAR (last column on the right.) Sell Schwab (SCHW). Accumulate a2 Milk (ACOPY) and Gentex (GNTX). Buy Addus HomeCare (ADUS).
Tin Cup Results (May)
After a brief hiatus and pause for effect, the Tin Cup balance was restored above $4,000,000 by the end of May in the face of a turbulent market that is tormented by inflation concerns, shortages of stuff, and pumped-up P/E ratios.
It’s been quite a surge. The rate of return since inception now stands at 16.0%. Perhaps more significantly, the relative return has reached +5.5%, worthy of inclusion in SuperInvestor status.
Most of the positions are near 52-week highs with Intel (INTC) as one exception and a2 Milk (ACOPY) notably as another. Ken Janke would likely characterize the weak performance of a2 Milk over the last few months as an opportunity for multi-month accumulation. We hope Ken would be right. The Chinese have still not resumed buying infant formula and milk post-Covid but that demand deficit hopefully gets restored fairly soon. Cathy Wood and ARK Investing continue to express concern over Intel’s competitive position and we’re reminded to visit their specific concerns.
Dashboard Decisions
The portfolio is well-positioned with respect to return forecast (6.0% greater than MIPAR), quality is excellent and the average sales growth is sufficient. In fact, a slower growing blue chip or medium-sized company would be a welcome addition.
The price surge at Charles Schwab (SCHW) as the infusion/integration of Ameritrade has been substantial. The combination seems to be firing on all cylinders and there’s a kindling of interest in investing via Robinhood, etc. for millennials and Gen Xers. That said, the combination has the growth rate of a mature financial company and the PAR is the lowest in the deck. After an audit (details in Manifest Investing Forum), we decide to sell Schwab and distribute the proceeds of sale as follows:
(1) Accumulate a few more shares of a2 Milk. The company occupies considerable shelf space in a number of retailers. Consumer feedback on the improved milk consumption experience has been favorable. The Chinese will likely return.The world economy will likely improve (again).
(2) Tin Cup resident Gentex (GNTX) showed up on an Ivory Soap stock screen with an emphasis on excellent quality. Accumulate to increase position size.
(3) Same Ivory Soap screen (Manifest Rank > 99.44) yielded Addus HomeCare (ADUS). We’ve noticed more health management and healthcare firms near the tops of various screening results over recent months and the business models seem to be expected to improve. The angst over Medicare and Medicaid reimbursement is real and is a risk to profitability. That said, the demographics are stacking up as a considerable tail wind in this industry and frankly, the resources (assets) of the generation approaching this season of need are formidable. People want personalized, professional and thorough care in the comfort of their own home pretty universally. A deeper industry review (study) is in order but we’ll add the position and dial up appropriate vigilance.
Tin Cup will continue to watch for solid, high-quality, medium-sized companies to add to the portfolio. Thanks, Charles Schwab. Welcome, Addus.
Tin Cup: Worksheet. (1) The cash infusion for the month ($2166.67) is added to Cash. (2) The portfolio average PAR is fine. Average growth is good. Quality is well within the target range. “Just don’t mess it up.” (3) Schwab is still exhibiting a return forecast greater than money market rates but is worthy of a Hot Seat Challenge. The decision to sell Schwab is made. (4) Accumulate additional shares of Gentex (GNTX) and a2 Milk (ACOPY). (5) Buy Addus HomeCare (ADUS).