In our e-letters to clients, we’ve been talking about the importance of diligence a great deal. Well, this report shows how diligence pays off in the short term and long term.
Our Focus List Stocks: Long Model Portfolio, the best of our Long Ideas, and our Focus List Stocks: Short Model Portfolio, the best of our Danger Zone picks, beat the Risk-Free Rate[1] as a long/short portfolio by 0.2% in the first half of 2024. The long portfolio was up 5.6% while the short portfolio was down -3.4% for a net return of 2.2% compared to the Risk-Free Rate at 2.0% in 1H24. See Figure 1.
From 2021 through 2Q24, our Focus List Stocks have beaten the Risk-Free Rate by 56%. See Figure 2.
This outperformance underscores just how important reliable fundamental research is in turbulent markets.
Figure 1: Focus List Stocks: Long/Short Performance vs. Risk-Free Rate: 1H24
Sources: New Constructs, LLC
Note: Gain/Decline performance analysis excludes transaction costs, dividends and rebates. The Risk-Free Rate is based on the 3-month T-bill.
Figure 2: Focus List Stocks: Long/Short Performance vs. Risk-Free Rate: 2021 Through 1H24
Sources: New Constructs, LLC
Note: Gain/Decline performance analysis excludes transaction costs, dividends and rebates. The Risk-Free Rate is based on the 3-month T-bill.
Figure 3 details the Model Portfolios’ performance, which includes all stocks present in the Model Portfolios at any point in 1H24.
Figure 2: 1H24 Long/Short Performance of Stocks in the Focus List Model Portfolios
Sources: New Constructs, LLC
Professional and Institutional members get real-time updates and can track all Model Portfolios on our site. The Focus List Stocks: Short and Focus List Stocks: Long Model Portfolios leverage superior fundamental data, which provide a new source of alpha.
We’re here to help you navigate these turbulent times. Our uniquely rigorous fundamental research consistently earns #1 rankings in several categories on SumZero.
This article was originally published on August 8, 2024.
Disclosure: David Trainer, Kyle Guske II, and Hakan Salt, receive no compensation to write about any specific stock, sector, style, or theme.
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[1] The Risk-Free Rate is based on the 3-month T-bill.