Thursday, January 19, 2012

Cheap Stocks 26 Net/Net Index Update- Up 18.6% since inception

Net/net investors are typically not accustomed to instant gratification.  But we are seeing some good early results with the CS 26 Net/Net Index, which is up 18.6% since inception (9/13/2011).  The true test is not the short-term, but a period of at least two years. 

Furthermore, the overall direction of the markets has been higher since we rolled out the Index, and the benchmark Russell Microcap Value Index is up a solid 14.5% during the same timeframe.

We need to see a period of market stress to truly re-test our net/net index approach.  It's way too early to declare this approach a success.  Our previous net/net index experiment, the Cheap Stocks 21 Net/Net Index, which  was cap weighted, and commenced in February 2008, performed fairly well.  The jury is still out on the current incarnation, which is equal-weighted. 

Top performers since inception have been  Synageva BioPharma (GEVA, +287%, formerly Trimeris), Parlux Fragrances (PARL, +67%), ModusLink (MLNK,+49%), and Adams Golf (ADGF, +40%).

Top detractors include Advanced Battery Technologies (ABAT, -66%), Opnext (OPXT, -33%), and Imation (IMN, -20%).

*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.

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