Tuesday, December 13, 2011

Cheap Stocks 26 Net/Net Index Update

Three months since launch, the Cheap Stocks 26 Net/Net Index is plain and simple getting the stuffing knocked out of it.  We are not all that surprised at this point.  The Russell Microcap Index is up 7.3% since the inception of CS26, while the Index itself is up about 2.1%.  We expect a roller coster ride with this index over the next couple of years, and believe that a 2 year timeframe is the minimum time period for proper evaluation of indexing net/nets. 

So far, much has happened to the constituents of CS26.  BigBand Networks was acquired, which resulted in a 65% gain.  Rather than replace BigBand, the proceeds now sit in cash. 

In November, Trimeris (TRMS) merged with Synageva BioPharma Corp (GEVA), and that company replaces Trimeris in the Index.

The winners to date include ModusLink (MLNK, +35.8%), Synageva (Trimeris-GEVA, +116%), and RCM Technologies (RCMT, +21%).  The losers include Advanced Battery Technologies (ABAT, -73%), Opnext (OPXT, -37%) and Volt Information (VOLT, -24%)

Stay Tuned.

*The author has no position in the companies mentioned. This is neither a recommendation to buy or sell any securities. All information provided believed to be reliable and presented for information purposes only.