Thursday, May 12, 2011

Investment Report - May 2011: Net Payout Yields

April was a decent month for the Net Payout Yields model as it outperformed the SP500 by a slight margin (3.14% vs 2.85%). This model is naturally designed to slightly exceed the market in good months like April and more comfortably outperform in down markets like back during March.

Trades
April was a more typical trading month with only one trade. Yum! Brands (YUM) was sold as its NPY had been reduced over the last several months to below acceptable levels. This was partly because the stock had run to new highs.

Top Performers
April was a very volatile month with the Top 5 gainers all up nearly 8% or more. Being a more conservative model requiring market caps of $10B it's very unusual to see three stocks up more then 10%. Millicom International Cellular (MICC) and Lorillard (LO) had 12%+ gains and WellPoint (WLP) was up 10%. Hartford Financial (HIG) and Boeing (BA) both had roughly 8% gains. The general themes of these gainers were underfollowed sectors like insurance or cigarette companies that gained investor attention during the month.

Bottom Performers
As with the top performers, the bottom performers had two stocks that lost over 8% during the month. Highly unusual for a month with the SP500 up nearly 3%. Gilead Sciences (GILD) lost 8% due to disappointing earnings. Wells Fargo (WFC) lost 8% due to the sudden departure of the CFO and disappointing earnings as well.

Conclusion
The model continues to perform well during 2011 after a rough start back in November of last year when it almost immediately underperformed by over 2% before being fully loaded. Since then it has shown consistent and stable outperformance.


Disclaimer: Long all stocks mentioned in client and personal accounts except for YUM which was sold back in April. Please review the disclaimer page. 

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