Wayman Value Investing July 2024 Portfolio

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July 2024 Outlook

June was another robust month for the S&P 500, which rose by 3.47%. This performance followed May's broad gain of 4.80% and a modest pullback in April. The Dow Jones Industrial Average also showed positive performance, albeit more modestly, with a 1.12% increase in June. The Dow did not set a new high but ended the month at 39,118.86. For the second quarter, the Dow was down 1.73%, highlighting a contrast with the S&P 500's quarterly gain. However, the one-year return for the Dow stood at 13.67%, showcasing overall strength despite short-term fluctuations.

Trading volumes for the S&P 500 in June increased by 1% compared to May but were down 4% year-over-year. The index closed at 5,460.48, reflecting a steady increase from May's close of 5,277.51. The S&P 500's market value saw a significant increase, rising by USD 1.546 trillion for the month to a total of USD 45.843 trillion. This growth highlights the index's resilience and investor confidence, despite underlying negative breadth and geopolitical uncertainties.

The Federal Reserve's actions and projections continued to play a critical role in shaping market sentiment. In June, the Fed kept interest rates unchanged, reflecting a divided outlook among its members regarding future rate cuts. The Fed's stress test results indicated that all 31 big banks passed, bolstering confidence in the financial sector. Additionally, the Fed's inflation projections were slightly revised, expecting a decline to 2.6% by year-end 2024.

Corporate earnings also painted a positive picture, with the majority of S&P 500 companies beating earnings and sales estimates. Looking ahead, the second quarter is projected to see significant earnings growth, potentially setting a new record for operating earnings. This optimistic earnings outlook, coupled with strong market performance, suggests a favorable environment for investors, although the market remains watchful of economic indicators and Fed policies.

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 - July 2024

STASH

• ATKR - Atkore

• BCC - Boise Cascade Company

• CI - The Cigna Group

• CNC - Centene

• CRC - California Resources Corporation

• EXPE - Expedia Group

• KBH - KB Home

• KNSL - Kinsale Capital Group

• MCK - McKesson

• PATK - Patrick Industries

• SYF - Synchrony Financial

• THO - Thor Industries

• TOL - Toll Brothers

• TPH - Tri Pointe Homes

• TRV - The Travelers Companies

• VCTR - Victory Capital Holdings

• WGO - Winnebago Industries

• YELP - Yelp

GATHER

• AIZ - Assurant

• ALL - The Allstate Corporation

• APAM - Artisan Partners Asset Management

• ASO - Academy Sports and Outdoors

• CE - Celanese

• HIG - The Hartford Financial Services Group

• JPM - JPMorgan Chase & Co.

• PGR - The Progressive Corporation

• SAH - Sonic Automotive

• SAIC - Science Application International Corporation

• TMHC - Taylor Morrison Home Corporation

STORE

• ABBV - AbbVie

• ALSN - Allison Transmission Holdings

• ARCB - ArcBest

• AXP - American Express Company

• BLDR - Builders FirstSource

• CACI - CACI International

• CAH - Cardinal Health

• CORT - Corcept Therapeutics

• CPAY - Corpay Inc

• CTSH - Cognizant Technology Solutions

• CVS - CVS Health

• EVR - Evercore

• FOX - Fox Corporation

• GEF - Greif

• GL - Globe Life

• LEN - Lennar Corporation

• OBDC - Blue Owl Capital Corporation

• OC - Owens Corning

• PRGS - Progress Software Corporation

• SF - Stifel Financial

• TROW - T. Rowe Price Group

• URBN - Urban Outfitters