Wayman Value Investing November 2023 Portfolio

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November 2023 Outlook

In October, the S&P 500 continued to trend lower, driven by concerns that the Federal Reserve might have reached its terminal interest rate to combat inflation. The index dropped by 2.2%, and although inflation is down from its 2022 peak, it remains above the Fed’s target. Despite this, the U.S. economy shows resilience, and investors anticipate interest rate cuts in 2024.

Key factors in November include inflation and interest rates, with the consumer price index showing a year-over-year increase of 3.7% in September. U.S. GDP growth exceeded expectations, but economic growth is expected to slow in the coming months, possibly due to rising consumer debt and inflation.

The Federal Reserve has raised interest rates multiple times but may opt for one final rate hike in 2023. The bond market suggests a low probability of further rate hikes. The Fed faces a critical juncture in its battle against inflation and must navigate a potential economic slowdown without triggering a recession.

While the labor market remains strong, U.S. economic growth is expected to decelerate in the fourth quarter. Some believe there is a disconnect between robust economic data and lackluster stock market performance.

Earnings growth is impacted by rising interest rates and decreased consumer confidence. The third quarter is set to be the first quarter of positive earnings growth for the S&P 500 since 2022’s third quarter. Some sectors like communication services and consumer discretionary show significant earnings growth, while materials and energy sectors face declines.

Looking to November, the S&P 500 has yet to reach new all-time highs in 2023, but historical averages suggest potential gains in the year ahead. However, a cautious approach is recommended, considering the economic landscape and interest rate dynamics.

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

Wayman Value Investing Portfolio - November 2023

STASH

• ASO - Academy Sports and Outdoors

• APAM - Artisan Partners Asset Management

• ATKR - Atkore

• BERY - Berry Global Group

• OBDC - Blue Owl Capital Corporation

• CE - Celanese

• CNC - Centene

• CVS - CVS Health

• EVR - Evercore

• FOX - Fox Corporation

• JPM - JPMorgan Chase & Co.

• LAD - Lithia Motors

• MTZ - MasTec

• MCK - McKesson

• PATK - Patrick Industries

• SAH - Sonic Automotive

• SYF - Synchrony Financial

• TMHC - Taylor Morrison Home Corporation

• GS - The Goldman Sachs Group

• HIG - The Hartford Financial Services Group

• TRV - The Travelers Companies

• THO - Thor Industries

• TPH - Tri Pointe Homes

• TSN - Tyson Foods

• VCTR - Victory Capital Holdings

GATHER

• ALSN - Allison Transmission Holdings

• ARCB - ArcBest

• BLDR - Builders FirstSource

• CACI - CACI International

• CAH - Cardinal Health

• EXPE - Expedia Group

• GILD - Gilead Sciences

• GL - Globe Life

• GEF - Greif

• DOOR - Masonite International

• OC - Owens Corning

• SAIC - Science Application International Corporation

• SFM - Sprouts Farmers Market

• SF - Stifel Financial

• TROW - T. Rowe Price Group

• ALL - The Allstate Corporation

• CI - The Cigna Group

• TOL - Toll Brothers

• URBN - Urban Outfitters

• WGO - Winnebago Industries

• YELP - Yelp

STORE

• ABBV - AbbVie

• CENT - Central Garden & Pet Company

• CTSH - Cognizant Technology Solutions

• CORT - Corcept Therapeutics

• FLT - FLEETCOR Technologies

• HLI - Houlihan Lokey

• LEN - Lennar Corporation

• PGR - The Progressive Corporation

• UHS - Universal Health Services