I am retired and take educated guesses on all things financial.

October 21, 2007

October 22, 2007: Beating the mutual funds as they sanitize their portfolios

Most readers know that during the November and December, mutual funds houseclean. Not wanting to have out of favor stocks in the published portfolio has developed into a mania. Overselling of stocks with potential presents a great opportunity for investors to pick up some bargains.

Here is the criteria:

Stocks that have fallen from their peak, trading at or below 30% of their 52 week high for large and mid-car and 40% for small cap.

Eliminating stocks that have had a recent reversal. Stocks trading 15% above their 52 week low for large and mid-cap and 10% for small cap are eliminated.

Stocks with an above average valuation on both an absolute and relative basis. Eliminate stocks with traditional and relative value alpha generator decile rankings of less than five.

Now, the list that should be considered for purchase towards mid-December.

Acxiom Corporation (ACXM)
Aeropostale (ARO)
Ambac Financial Group (ABK)
AmeriCredit (ACF)
Apria Healthcare (AHG)
Axcelis Technologies (ACLS)
Bankunited Financial (BKUNA)
Brunswick (BC)
Building Materials Holding (BLG)
CB Richard Ellis Group (CBG)
CEC Entertainment (CEC)
Centex (CTX)
Central Garden and Pet Company (CENTA)
Central Pacific Financial (CPF)
Charlotte Russe Holdings (CHIC)
Charming Shoppes (CHRS)
Chesapeake Corp (CSK)
Chicos FAS (CHS)
Circuit City (CC)
Coachman (COA)
Coldwater Creek (CWTR)
Collective Brands (PSS)
Community Health Systems (CYH)
Cpi Corp (CPY)
Dean Foods (DF)
Dillards (DDS)
Discover Financial Services (DFS)
Downey Financial (DSL)
DR Horton (DHI)
Duke Realty (DRE)
Entercom Communications (ETM)
Fidelity National Financial (FNF)
First Horizon National (FHN)
Flagstar Bancorp (FBC)
Foot Locker (FL)
Franklin Bank (FBTX)
Gannett Corp. (GCI)
Getty Images (GYI)
Harte-Hanks (HHS)
Headwaters (HW)
Health Management Associates (HMA)
Herman Miller (MLHR)
Hot Topic (HOTT)
Imation Corp. (IMN)
Independent Bank (IBCP)
JC Penney (JCP)
JetBlue Airways (JBLU)
KB Home (KBH)
Kelly Services (KELYA)
Kindred Healthcare (KND)
King Pharma(KG)
K-Swiss (KSWS)
LandAmerica Financial (LFG)
LCA-Vision (LCAV)
Lee Enterprises (LEE)
Limited Brands (LTD)
Liz Claiborne (LIZ)
M.D.C. Holdings (MDC)
M/I Homes (MHO)
Macy's (M)
Maidenform Brands (MFB)
MarineMax (HZO)
Media General (MEG)
Meritage Corp (MTH)
Mylan Labs (MYL)
National City Bank (NCC)
Nautilus Group (NLS)
Navigant Consulting (NCI)
Office Depot (ODP)
Office Max (OMX)
Oxford Industries (OXM)
P.F. Changs China Bistro (PFCB)
PMI Group (PMI)
Polo Ralph Lauren (RL)
Pulte (PHM)
Radian Group (RON)
Rc2 Corp (RCRC)
Regions Financial (FR)
Rent-A-Center (RCII)
Ruby Tuesday (RT)
SCP Pool Corp. (POOL)
Sears Holding (SHLD)
Select Comfort (SCSS)
Sonoco Products (SON)
Stein Mart (SMRT)
Sws Group (SWS)
Symmetricon (SYMM)
Tenet Healthcare (THC)
The Finish Line (FINL)
Timberland Company (TBL)
Toll Brothers (TOL)
Triad Guaranty (TGIC)
Tuesday Morning Corp. (TUES)
Universal Forest Products (UFPI)
Vulcan Materials (VMC)
Willshire Bancorp (WIBC)
YRC Worldwide (YRCW)

This extensive roster fits the criteria. Many of these stocks I do not like, some I know nothing about, and others are likely being dumped by mutual funds for other reasons. However, the criteria does not lie.There are a number of gems listed. We just need to find them and give our portfolios a nice Christmas present.

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