End of July Update

Below are the final results of our July holdings. Our portfolio beat the S&P for a fifth consecutive month by a nominal 14bps, but by 75bps on a risk-adjusted basis based on our low beta of 0.67. Any month we add alpha is a successful holding period.

The portfolio was led by HCLP, which announced a structural reorganization and dividend increase that sent the price soaring. Other leaders were JAG, a mining company, and Alteryx, a tech company that licenses a data-manipulation program. The most disappointing selection for the month was BSET, a furniture company that has been declining for several years. We selected it on the basis of strong consumer spending and attractive multiples, but the bet did not pay off. Also weighing on the portfolio was Nexstar Media Group (NXST), which was trading up 10% before an unexpected challenge to the Tribune-Sinclair merger trashed its gains.

Starting next month, we are setting relative price targets for each of our holdings; so if we think a stock has value up to a 20% increase, we’ll sell it if it reaches that point. This should lead to higher overall gains and less concern over large market declines.

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