Sunday, December 27, 2009

Performance Review: Growth Portfolio Looks to Close out 2009 with 75%+ Gains

2009 has been a phenomenal year in the market in has gains in the SP500 look to succeed 25%. Our Growth Portfolio is on the pace for a 78% gain if the market closes at these levels with only 4 trading days left. That's easily going to be 50% points greater then the market. A remarkable year after such a weak start going into March. Also, the annualized gain should finish the year around 12.5% after 18 months of performance. Not too shabby for a very wild time period.

Our biggest holding is Apple (AAPL) and it closed out last week with an all time high over $209. Its bounce back from the $80s along with other big moves in large holding like the Hartford Financial (HIG), US Steel (X), and Freeport McMoran (FCX) not only shows the explosive growth in the market but also the different sectors and hence the reduced risk not being totally reliant on just commodities or financials like alot of top portfolios.

For 2010, we still see decent gains in the market as the melt up continues into the 1,200s. After that it really depends on what the Obama administration attempts to push into regulation and how the 2010 elections work out. Higher taxes and more regulation could easily put an end to the rally by early spring or signs that Obama will lose power in Congress could push the market higher.

On individual stock basis, we see huge gains ahead for names like AerCap Holdings (AER), Alvarion (ALVR), Liz Caliborne (LIZ), and Terex (TEX) as the global growth story continues and the market becomes more comfortable with these small cap stocks somewhat ignored in the 2009 rally. For example, AER has earnings potential of roughly $2 next year after completing it's merger with GLS, but the stock only trades in the $8s right now. A PE in the 8-10 range seems historically reasonable. All these other stocks have fundamental reasons for much higher prices that we think the market will finally realize.

In general, after the market finishes its melt up to the 1,200 to 1,250 range it'll likely become much more of a stock pickers market. The indexes might flounder for a while but some individual names might double or triple as investors finally realize their true potential.

Will post the performance table later Mon.

No comments: