Wayman Value Investing June 2024 Portfolio

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June 2024 Outlook

The S&P 500 has continued its upward trajectory, buoyed by strong first-quarter earnings that have alleviated investor concerns about inflation and potential delays in Federal Reserve interest rate cuts. In May, the index gained 4.2%, even amidst worries about slowing economic growth, weakening U.S. consumer sentiment, and the threat of stagflation. Year-to-date, the S&P 500 is up 12%, as investors now anticipate lower inflation, accelerated earnings growth, and interest rate cuts in the latter half of 2024.

Inflation and interest rates remain pivotal market catalysts as we move into June. The consumer price index rose by 3.4% year-over-year in April, a significant drop from the 2022 peak of 9.1%, yet still above the Federal Reserve's 2% target. Federal Reserve Chair Jerome Powell emphasized in a recent speech that achieving the 2% target won't be easy and acknowledged that recent inflation readings have been higher than anticipated. Consequently, the Fed plans to maintain the current interest rate range of 5.25% to 5.5% for an extended period.

The Federal Reserve's restrictive monetary policy is impacting the economy, as seen in the revised first-quarter GDP growth estimate of 1.3%. The bond market currently forecasts a 98.7% chance that the Fed will maintain the current interest rate range in its June meeting. This outlook aligns with efforts to ensure that inflation trends lower in the second half of the year.

Despite fears of a recession, the U.S. economy shows resilience. The labor market, although softened, is not signaling an imminent recession, with 175,000 jobs added in April and wages up 3.9% year-over-year. Investors remain focused on corporate profits, which have shown robust first-quarter growth of 6% year-over-year. Analysts predict S&P 500 earnings to rise by 9.3% in the second quarter and anticipate a full-year earnings growth of 11.4% in 2024.

Looking ahead, investors have reasons for optimism. Historically, the S&P 500 performs well in election years, especially in the summer months. With a favorable historical performance under first-term presidents, investors can approach the market with cautious optimism.

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 - June 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

• ALSN - Allison Transmission Holdings

• APAM - Artisan Partners Asset Management

• ARCB - ArcBest

• ASO - Academy Sports and Outdoors

• BLDR - Builders FirstSource

• CE - Celanese

• EVR - Evercore

• 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

• AXP - American Express Company

• CACI - CACI International

• CAH - Cardinal Health

• CORT - Corcept Therapeutics

• CPAY - Corpay Inc

• CTSH - Cognizant Technology Solutions

• CVS - CVS Health

• 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