Wayman Value Investing September 2024 Portfolio
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September 2024 Outlook
August proved to be a month of resilience for the U.S. stock market, with the S&P 500 posting a 2.28% gain despite early volatility. This performance brought the index close to its mid-July record high, ending just 0.33% shy of that mark. Year-to-date, the S&P 500 has delivered an impressive 18.42% return, showcasing the market's strength in the face of ongoing economic uncertainties. Notably, while the famed "Magnificent 7" stocks continued to influence market movements, their dominance appeared to wane somewhat in August.
Sector performance in August revealed interesting shifts in investor sentiment. Consumer Staples emerged as the month's top performer with a 5.78% gain. Conversely, Energy struggled, declining 2.32% as fuel prices unexpectedly dipped during the peak summer driving season. The Dow Jones Industrial Average continued its upward trajectory, setting four new closing highs and ending the month at a record 41,563, up 1.76%. This performance underscores the ongoing strength in large-cap stocks, which outpaced both mid and small-cap segments of the market.
Looking ahead, all eyes are on the Federal Reserve as we approach the September FOMC meeting. Recent minutes from the July meeting revealed discussions about potential interest rate cuts, a topic that gained further traction following Fed Chair Powell's remarks at the Jackson Hole Economic Symposium. The market is now speculating on the timing and magnitude of these cuts, with a growing consensus anticipating action at the upcoming meeting. This potential policy shift could have significant implications for equity valuations and market dynamics in the coming months.
Corporate earnings continue to provide a solid foundation for market optimism. With 98% of Q2 2024 results reported, earnings appear to be on track for a new quarterly record. Moreover, projections for Q3 and Q4 suggest this trend may continue, potentially supporting further market gains. However, investors should remain vigilant as the market navigates the complex interplay between monetary policy, economic indicators, and corporate performance.
As we enter September, several key factors warrant close attention. The resolution of the interest rate debate will be crucial, as will the market's ability to build on August's gains and potentially establish new highs. Additionally, global economic developments, particularly in major markets like China and Europe, could influence U.S. market performance. While the overall trend remains positive, the increased volatility observed in August serves as a reminder that careful analysis and strategic positioning will be essential for navigating the market landscape in the months ahead.
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 - September2024
STASH
APAM - Artisan Partners Asset Management
ATKR - Atkore
BCC - Boise Cascade Company
CNC - Centene
CRC - California Resources Corporation
EXPE - Expedia Group
KBH - KB Home
MCK - McKesson
SYF - Synchrony Financial
THO - Thor Industries
TPH - Tri Pointe Homes
VCTR - Victory Capital Holdings
WGO - Winnebago Industries
YELP - Yelp
GATHER
ARCB - ArcBest
ASO - Academy Sports and Outdoors
CI - The Cigna Group
HIG - The Hartford Financial Services Group
JPM - JPMorgan Chase & Co.
KNSL - Kinsale Capital Group
MHO - M/I Homes
PATK - Patrick Industries
PLMR - Palomar Holdings
SAH - Sonic Automotive
TMHC - Taylor Morrison Home Corporation
TOL - Toll Brothers
TROW - T. Rowe Price Group
TRV - The Travelers Companies
STORE
ABBV - AbbVie
AIZ - Assurant
ALL - The Allstate Corporation
ALSN - Allison Transmission Holdings
AXP - American Express Company
BLDR - Builders FirstSource
CACI - CACI International
CAH - Cardinal Health
CE - Celanese
CORT - Corcept Therapeutics
CPAY - Corpay Inc
CTSH - Cognizant Technology Solutions
CVS - CVS Health
EVR - Evercore
GEF - Greif
GL - Globe Life
LEN - Lennar Corporation
OBDC - Blue Owl Capital Corporation
OC - Owens Corning
PGR - The Progressive Corporation
PRGS - Progress Software Corporation
SAIC - Science Application International Corporation
SF - Stifel Financial
URBN - Urban Outfitters