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:
1). Exelon
2). QLogic
3). Dendreon
4). Dell
5). Staples
6). Arkansas Best
7). Arch Coal
8). Skullcandy
9). France Telecom
10). Xerox
Now, let’s get to the portfolio and see how it fared this week:
| Company | Cost Basis | Shares | Total Value | Return |
|---|---|---|---|---|
| Exelon | $31.25 | 31.68 | $1,114.82 | 12.6% |
| QLogic | $11.46 | 86.39 | $856.99 | (13.4%) |
| Dendreon | $5.97 | 165.82 | $673.23 | (32%) |
| Dell | $13.37 | 74.05 | $995.97 | 0.6% |
| Staples | $13.48 | 73.44 | $1,061.21 | 7.2% |
| Arkansas Best | $10.83 | 91.41 | $1,571.34 | 58.7% |
| Arch Coal | $7.03 | 140.83 | $698.52 | (29.4%) |
| Skullcandy | $6.71 | 147.54 | $820.32 | (17.1%) |
| France Telecom | $11.64 | 85.05 | $912.59 | (7.8%) |
| Xerox | $8.16 | 121.32 | $1,091.88 | 10.3% |
| Cash | $0.06 | |||
| Dividends receivable | $42.56 | |||
| Total commission | ($100.00) | |||
| Original investment | $10,000.00 | |||
| Total portfolio value | $9,839.49 | (1.6%) | ||
| S&P 500 performance | 10.4% | |||
| Performance relative to S&P 500 | (12%) |
Source: Yahoo! Finance.
This week’s winner
Leading the pack for a second week in a row was trucking company Arkansas Best Corporation (NASDAQ:ABFS), which added an additional 12% on top of last week’s 58% gain. The impetus for the move was peer YRC Worldwide, Inc. (NASDAQ:YRCW) confirming it had submitted an initial proposal to acquire Arkansas Best, which it’s had an interest in acquiring for quite some time. Although details aren’t available with regard to what YRC Worldwide, Inc. (NASDAQ:YRCW) would be willing to offer, I’d have to assume by Arkansas Best Corporation (NASDAQ:ABFS) declining to initiate talks that shareholders can expect its value to rise even further with a tentative deal now in place with the Teamsters union.
This week’s loser
On the other hand, it was “bury your head in the sand” time for Dendreon Corporation (NASDAQ:DNDN) shareholders, who saw their stock lose 14.3% of its value this week after another disappointing quarter. Although Dendreon’s loss widened to $0.48 per share, it met the Street’s estimates. Sales of its advanced prostate cancer treatment Provenge, however, fell 18% to just $67.6 million, well short of the $80 million Wall Street expected. Dendreon Corporation (NASDAQ:DNDN) blamed increased competition and a lack of favorable reimbursements from insurers as the reason sales have stagnated. It’s quite apparent that Dendreon really needs that European approval if it’s going to have any chance at being profitable.
Also in the news…
In this week’s episode of “Dell Inc. (NASDAQ:DELL) of Our Lives” we learned that activist investor Carl Icahn and Southeastern Asset Management have teamed up to offer the most creative bid yet. Under their proposal, shareholders would receive $12 per share in cash or additional shares and would hold a stub (which as of yet hasn’t precisely been valued) that would remain the public portion of the company. Both Icahn and Southeastern feel this is a smart way to play a prospective turnaround, assuming Dell Inc. (NASDAQ:DELL)’s board of directors changes, that is! Perhaps by next week we’ll have better details into Icahn and Southeastern’s offer.
Office supply chain Staples, Inc. (NASDAQ:SPLS) made waves this week, hitting its highest level in three months, on news that it plans to become the first major retailer to offer 3-D printing systems for sale. For the low, low price of $1,299.99, you can now buy a Cube 3-D printer made by 3D Systems Corporation (NYSE:DDD) from Staples, Inc. (NASDAQ:SPLS)’ website. The trend toward 3-D printing certainly has investors excited, as there are plenty of practical applications around the household. More than that, however, these 3-D printers could be a prudent move for small businesses looking to mock up designs before committing to production.
