The Equities.com Turnaround Portfolio, our collection of one downtrodden stock from each sector that we began tracking on Sept. 25, is back in (the) black. After weeks spent in the negative, our collection of “losers” we thought had a decent chance of turnaround can now say it has posted a net gain.
This is a nice reversal of fortune from last time we checked in three weeks ago, when our portfolio was down 6.08 percent. At that time, collective wisdom seemed to have won out. Why invest in a group of companies that are either down YTD or are still rebounding from a significant loss in valuation?
Let’s take a closer look at some of the biggest loser-winners, and one big loser-loser.
However, the Turnaround Portfolio has, to some degree, begun living up to its name, and a few formerly moribund stocks have posted impressive gains. Notably, Quicksilver Resources (KWK) is up 37.17 percent since inception. Behind Quicksilver's surge is our materials pick Cliffs Natural Resources (CLF) with a 24.91 percent gain. Embodying the spirit of the Turnaround Portfolio, at the time we devised the portfolio Cliffs was the worst performing YTD stock in the S&P 500, and while it is still down for the year it has rebounded nicely.
The Big Stinker, and A Few Little Stinkers
But then there’s the big stinker, which is doing its best to weigh the entire portfolio down. Financial sector pick Tower Group International (TWGP) has made some gains back, but has still been hammered in the last two months. The Bermuda-based insurance company continues to reel from claims made as a result of Superstorm Sandy, and has continued ratcheting up losses while refusing to release its long-delayed second quarter earnings report, and has shed 49.27 of its value since Sept. 25.
Weight Watchers (WTW) also remains in turmoil after usspending its dividend and issuing a dire 2014 forecast. Utilities sector pick Atlantic Power Corp (AT) plunged over the last three weeks, after the company missed bottom-line estimates and analysts specualted they might suspend their dividend.
Other Components of Note
JC Penney (JCP) has rebounded significantly, which has regained 19 percent in value since three weeks ago on news that hedge funds have taken a vested interest in the troubled retailer, though it is still in the red. Sprint Corporation (S) and Zynga Inc. (ZNGA) also have notched double-digit percentage gains since the portfolio’s inception.
Turnaround Portfolio Performance Check-In:
The portfolio is up 0.86 percent since Sept. 25, with a split right down the middle between losers and winners—with the big gains from Quicksilver and Cliffs slightly offsetting the massive losses from Tower Group.
Past Turnaround Portfolio Check-Ins
- Introducing the Turnaround Stock Portfolio…
- Turnaround Stock Portfolio Week #2: Our Losers Are Winners! (So Far)
- Turnaround Stock Portfolio Week #3: Our Losers are Losers! (Especially Tower Group)
- Turnaround Stock Portfolio Week #4: Our Losers Have (Just Barely) Prevailed!
- Turnaround Stock Portfolio Week #5 and #6: Are You Afraid of Our Losers Yet?