Dell Inc. (DELL), Xerox Corporation (XRX): One Person’s Trash Is Another Person’s Treasure Portfolio

Last November, I announced my intention to create a portfolio of 10 companies that investors had effectively thrown away and given up on, in the hope of showing that deep-value investing, and contrarian thinking, can actually be a very successful investing method. I dubbed this the “One Person’s Trash Is Another Person’s Treasure” portfolio and, over a 10-week span, I highlighted companies that I thought fit this bill and would expect to drastically outperform the benchmark S&P 500 over the coming 12 months. If you’re interested in the reasoning behind why I chose these companies, then I encourage you to review my synopsis of each portfolio selection:

Exelon
QLogic
Dendreon
Dell
Staples
Arkansas Best
Arch Coal
Skullcandy
France Telecom
Xerox

Now, let’s get to the portfolio and see how it fared this week:

Source: Yahoo! Finance.

This week’s winner
Supplanting trucking company Arkansas Best Corporation (NASDAQ:ABFS) — which has shot to the moon on takeover speculation and a resolution with its union — was coal miner Arch Coal Inc (NYSE:ACI). Arch tacked on 7.5% this week following an article from Forbes on Monday that highlighted the company’s attempt to forge export partnerships on the West Coast of the U.S. to Asia-Pacific nations like China that have a big demand for thermal coal for electricity-generating purposes. Both India and China are still very early in their industrialization process and the need for coal in these regions is expected to remain robust for at least the next decade, playing perfectly into Arch Coal Inc (NYSE:ACI)’s strategy.

This week’s loser
On the other side of the coin was networking equipment maker QLogic Corporation (NASDAQ:QLGC), which tanked 4.8% on the week after disclosing that its CEO, Simon Biddiscombe, had resigned on Friday. In the interim, QLogic’s CFO, Jean Hu, will be the acting CEO. Anytime the management of a company changes, it provides a level of uncertainty that’s bound to unnerve investors. I’d urge current shareholders (of which I’m one) to remember that QLogic Corporation (NASDAQ:QLGC) has been consistently profitable for years, has $5 in net cash per share, and is poised to benefit from higher infrastructure spending. Patience will pay off here!

Also in the news…
In this week’s episode of “Dells of our Lives,” we were privy to the company’s first-quarter earnings results — and here’s a hint: They weren’t good. Revenue at Dell Inc. (NASDAQ:DELL)‘s laptop segment sank 16% while overall PC-related sales tumbled 9%. Somehow, thanks to growth in its IT segment, Dell was able to deliver a market-topping $14.1 billion in revenue; however, adjusted EPS was only $0.21, which was well below the $0.35 in EPS the Street was expecting. On the offer front, Dell Inc. (NASDAQ:DELL) has requested additional information about Carl Icahn’s offer, but it certainly appears, following these results, that current shareholders may be more willing to “talk turkey” if it ensures that a buyout occurs.

Credit: Dell Inc. (NASDAQ:DELL)