Stocks Nov 1 to today

Here is a quarterly review of the stocks I owned from Nov 1 (start of Q3 earnings blitz) through today:

GRMN $34.19 to $41.36 up 20%. Reasons for stock price change: Very strong earnings. Analysts predicting growth in all of the company’s segments.

AFAM $15.96 to $18.70 up 18%. Reasons: Company did not report a charge-off on earnings as competitors did. Broader industry confidence.

RIMM $19.30 to $16.80 down 13%. Reasons: weaker earnings than expected, lack of confidence in company’s positioning and future strategy.

RWC $0.99 to $1.25 up 25%. Reasons: Strong earnings, higher sales and profits.

BAC $6.40 to $7.29 up 14%. Reasons: Stronger earnings, more confidence in company’s financial position with Basel III approaching, less fear of litigation risk from credit crisis and need to raise capital

LUV $8.46 to $9.62 up 13%. Reasons: Strong earnings, better than expected industry results, increased confidence in the airline industry and the economy

BKS $11.83 to $11.95 up 1%. Reasons: Shares skyrocketed on new Nook and e-Reader business when the Kobo business sold for $315 million. Then came back down on analyst rumors that the Nook business is unprofitable and losing cash.

NYT $7.16 to $7.90 up 10%. Reasons: Confidence in the web subscription plan, Buffett bought a newspaper so the industry confidence improved.

TFM $39.07 to $44.74 up 15%. Reasons: Stronger than expected earnings.

AMED $10.06 to 10.04 flat. Reasons: Weak earnings. Downgrade by analyst, broader market increase canceled each other out.

The weighted average return was about 13%. Meanwhile, the market was up about 8%. I honestly believe a lot of that was luck. I am happy to beat the market at all at this point, and I imagine that future returns will be smaller, especially if the market is down.

I’m timing this now because it’s the last weekend lull before EOY earnings start to hit in early February, and I’d like to read some 10Ks when that happens.  The timing is arbitrary, and in isolation this sample size is too small to say anything definitive. For example, if I had looked at this a few weeks ago, BKS would have been the best trade. And it still may be. But now it appears close to flat. A few earnings cycles will give a better picture of performance.

Now, here is my investment thesis, or reasoning behind buying these stocks. Note that the theses are fairly simple. No complex formulas.

GRMN: Market was down on company because of low Auto profits, but other segments (Marine, Aviation, Outdoor, etc.) made up the majority of the company’s income and were growing. Cheap price considering company has a huge cash position and excellent balance sheet.

RIMM: Analysts are overly concerned about U.S. results and not focused on the cash flow, balance sheet, and international. Company is well positioned as a software and hardware maker and should maintain a positive profit margin. Company has plenty of time to innovate with no large upcoming debt obligations. Established niche with secure corporate sector.

AFAM: Strong balance sheet and earnings, the least debt among all of its competitors. Trading near book value with low P/E.

RWC: Low market cap, good product at a good price. Potential for rapid growth if company can effectively market its product. Potential takeover candidate at present value.  Greater reward than risk in my opinion.

BAC: Was able to purchase this stock at a better price than Buffett’s $7 options.  Company was cheap on speculation about litigation risk. 

LUV: Good balance sheet, fleet of planes is not too old. Profitable company trading at a cheap valuation. Like their differentiation and marketing campaign with the “no baggage fees,” no hassle role they are taking.

BKS: Was able to purchase this stock at a much better price than John Malone’s $17 options. Takeover candidate because of the Nook.

NYT: Established itself as the market leader in news journalism. I see it holding its position because of loyal readers, and internet subscription model allows it to collect revenues from people all over the world. Low P/E and valuation. Able to get the stock at the same price as Carlos Slim.

TFM: Good balance sheet, good niche with high-end groceries. Friend recommended it based on holiday sales potential.

AMED: Low valuation based on previous years’ earnings. The in-home care segment is cheaper than hospital care and I believe it has a place as medicare and senior care evolved.