Wayman Value Investing February 2024 Portfolio

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February 2024 Outlook

The S&P 500’s vigorous stride in January, buoyed by robust economic indicators and speculation of impending Federal Reserve interest rate adjustments, has propelled it to new record highs. This upward trajectory, marked by six fresh all-time highs throughout January, signals a promising outlook for February and potentially the entirety of 2024.

However, this optimism is not without its contingencies. The Federal Reserve’s management of inflation remains a pivotal concern, with recent consumer price index data indicating persistent price pressures. While the prospect of rate cuts looms, informed investors are scrutinizing the possibility against economic indicators and market expectations. The bond market’s projection of potential rate reductions contrasts with a cautious sentiment among market experts, suggesting a tempered approach to monetary policy adjustments.

Against this backdrop, the Fed’s balancing act to mitigate inflationary risks while sustaining economic momentum underscores the complexity of the current landscape. The labor market's ability to withstand challenges, demonstrated through strong job creation and wage increases, contrasts with worries about both overheating and recessionary risks. As earnings season unfolds, mixed performance across sectors underscores the need for prudence amid elevated valuations and varying growth trajectories.

Navigating this dynamic environment demands a discerning approach to investment strategies. As enthusiasm for technology stocks and optimism surrounding earnings growth pervade market sentiment, it remains advisable to carefully consider overall risk exposure and the importance of portfolio diversification.

While the S&P 500’s ascent paints an optimistic picture, investors must tread cautiously, cognizant of inflationary pressures, interest rate dynamics, and earnings performance.

User Guide - Tracking the Spreads

What are spreads, and why should you care? I believe that tracking spreads is essential for making informed investment decisions. Each month I categorize stocks into tiers based on the spread between their calculated value and market value.

Here’s how it works:

STASH: This tier includes stocks with the largest spreads. These are the hidden gems that offer significant potential upside. Based on my valuation, now is the perfect time to capitalize on their undervalued status.

GATHER: Stocks in this tier have a substantial spread, but not as significant as those in the Stash tier. They still offer attractive opportunities for investment, and I recommend considering them for your portfolio.

STORE: The Store tier consists of stocks with modest or tightening spreads. While they may not have as much potential for immediate growth, they still hold value and can contribute to a balanced portfolio. Wayman holds these stocks, but I am not actively buying additional shares this month.

CACHE: In this tier, stocks have narrow or no spreads, indicating that their market value aligns closely with Wayman’s calculated value. It may be time to consider exiting positions in these stocks and reallocating your resources.

Categorizing stocks based on spreads helps you identify stocks with the greatest potential for growth. I believe in capturing maximum upside while minimizing potential losses, and Wayman’s tiered system allows you to prioritize your investment decisions.

Model Allocation

For the purpose of third-party portfolio tracking and validation we use the following model portfolio allocation:

• 65% invested in Stash tier stocks

• 30% invested in Gather tier stocks

• 5% invested in Store tier stocks

The Wayman portfolio is tracked and audited by Hulbert Ratings, which has been rigorously tracking the real-world performance of investment advisory newsletters for over 40 years. You can follow our performance here.

Wayman Value Investing Portfolio - February 2024

STASH

• ASO - Academy Sports and Outdoors

• APAM - Artisan Partners Asset Management

• BERY - Berry Global Group

• OBDC - Blue Owl Capital Corporation

• CE - Celanese

• CNC - Centene

• CVS - CVS Health

• FOX - Fox Corporation

• JPM - JPMorgan Chase & Co.

• MTZ - MasTec

• MCK - McKesson

• PATK - Patrick Industries

• SAH - Sonic Automotive

• SYF - Synchrony Financial

• TMHC - Taylor Morrison Home Corporation

• GS - The Goldman Sachs Group

• TRV - The Travelers Companies

• TSN - Tyson Foods

• VCTR - Victory Capital Holdings

GATHER

• ALSN - Allison Transmission Holdings

• AXP - American Express Company

• ATKR - Atkore

• CAH - Cardinal Health

• CORT - Corcept Therapeutics

• EVR - Evercore

• GILD - Gilead Sciences

• GL - Globe Life

• GEF - Greif

• KNSL - Kinsale Capital Group

• LAD - Lithia Motors

• PRGS - Progress Software Corporation

• SF - Stifel Financial

• TROW - T. Rowe Price Group

• ALL - The Allstate Corporation

• HIG - The Hartford Financial Services Group

• THO - Thor Industries

• TPH - Tri Pointe Homes

• TOL - Toll Brothers

• WGO - Winnebago Industries

• YELP - Yelp

STORE

• ABBV - AbbVie

• ARCB - ArcBest

• BLDR - Builders FirstSource

• CACI - CACI International

• CENT - Central Garden & Pet Company

• CTSH - Cognizant Technology Solutions

• EXPE - Expedia Group

• FLT - FLEETCOR Technologies

• HLI - Houlihan Lokey

• LEN - Lennar Corporation

• OC - Owens Corning

• CI - The Cigna Group

• PGR - The Progressive Corporation

• SAIC - Science Application International Corporation

• SFM - Sprouts Farmers Market

• UHS - Universal Health Services

• URBN - Urban Outfitters

CACHE

• DOOR - Masonite International (Sell Recommended Feb. 9, 2024)