Wayman Value Investing March 2025 Portfolio

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March 2025 Outlook

February brought a resetting of expectations as the S&P 500 declined 1.42%, trimming its YTD return to 1.24%. What struck me was not the magnitude of the decline – which was modest by historical standards – but rather its selectivity. The Magnificent 7 were decidedly out of favor, masking what would have otherwise been a positive month for the broader market (+0.41% without these mega-caps). This divergence highlights an important reminder: in markets, the averages tell you nothing about the distribution, which is where the real story often lies.

The driving narrative shifted notably from economic fundamentals toward policy uncertainty. Markets began pricing in the potential impact of tariffs, with particular focus on steel and aluminum imports, tariffs on Canadian and Mexican goods, and escalating measures against China. Markets often digest such shifts gradually rather than immediately – the real question is whether these policy changes will ultimately reshape corporate earnings trajectories through their impact on consumer sentiment, spending patterns, and global supply chains.

Sentiment indicators tell a concerning story beneath the surface. Consumer pessimism has deepened despite objectively strong employment data and significantly lower inflation. The growing uncertainty around government and private sector employment, combined with inflation fears linked to tariff implementation, has created a psychological backdrop where consumers – the ultimate drivers of corporate profits – appear increasingly cautious. This sentiment-driven hesitation may prove more impactful than the direct economic consequences of policy changes themselves. The broader question remains whether markets are appropriately discounting the range of potential outcomes from ongoing policy shifts, or if there's a vulnerability to disappointment should consumer spending patterns deteriorate more than expected.

March presents several critical inflection points that could drive market direction. The implementation of delayed tariffs, expiration of government funding, and the FOMC meeting will all provide clarity on issues that have thus far remained somewhat abstract. Rather than attempting to forecast precise market reactions to these events, investors would be well-served focusing on portfolio resilience, appropriate risk exposures, and maintaining dry powder for potential dislocations. The confluence of policy uncertainty, shifting consumer sentiment, and still-elevated valuations creates an environment where the premium on flexibility and liquidity may be higher than usual.​​​​​​​​​​​​​​​​

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 - March 2025

STASH

• ARCB - ArcBest

• ATKR - Atkore

• ATLC - Atlanticus Holdings

• BCC - Boise Cascade Company

• CI - The Cigna Group

• CNC - Centene

• COF - Capital One Financial

• CRC - California Resources Corporation

• KBH - KB Home

• MCK - McKesson

• MHO - M/I Homes

• OC - Owens Corning

• PATK - Patrick Industries

• SYF - Synchrony Financial

• THO - Thor Industries

• TOL - Toll Brothers

• TPH - Tri Pointe Homes

• WGO - Winnebago Industries

• YELP - Yelp

GATHER

• APAM - Artisan Partners Asset Management

• ASO - Academy Sports and Outdoors

• BLDR - Builders FirstSource

• CACI - CACI International

• COR - Cencora

• EXPE - Expedia Group

• HIG - The Hartford Financial Services Group

• KNSL - Kinsale Capital Group

• LEN - Lennar Corporation

• SAIC - Science Application International Corporation

• TMHC - Taylor Morrison Home Corporation

• TROW - T. Rowe Price Group

• TRV - The Travelers Companies

• VCTR - Victory Capital Holdings

• WRB - W. R. Berkley Corporation

STORE

• AIZ - Assurant

• ALL - The Allstate Corporation

• AXP - American Express Company

• CAH - Cardinal Health

• CE - Celanese

• CTSH - Cognizant Technology Solutions

• CVS - CVS Health

• GEF - Greif

• GL - Globe Life

• JPM - JPMorgan Chase & Co.

• OBDC - Blue Owl Capital Corporation

• PGR - The Progressive Corporation

• PLMR - Palomar Holdings

• SAH - Sonic Automotive