Global Economic Intersection
Advertisement
  • Home
  • Economics
  • Finance
  • Politics
  • Investments
    • Invest in Amazon $250
  • Cryptocurrency
    • Best Bitcoin Accounts
    • Bitcoin Robot
      • Quantum AI
      • Bitcoin Era
      • Bitcoin Aussie System
      • Bitcoin Profit
      • Bitcoin Code
      • eKrona Cryptocurrency
      • Bitcoin Up
      • Bitcoin Prime
      • Yuan Pay Group
      • Immediate Profit
      • BitIQ
      • BitQH
      • Bitcoin Loophole
      • Crypto Boom
      • Bitcoin Treasure
      • Bitcoin Lucro
      • Bitcoin System
      • Oil Profit
      • The News Spy
      • Bitcoin Buyer
      • Bitcoin Inform
      • Immediate Edge
      • Bitcoin Evolution
      • Cryptohopper
      • Ethereum Trader
      • BitQL
      • Quantum Code
      • Bitcoin Revolution
      • British Trade Platform
      • British Bitcoin Profit
    • Bitcoin Reddit
    • Celebrities
      • Dr. Chris Brown Bitcoin
      • Teeka Tiwari Bitcoin
      • Russell Brand Bitcoin
      • Holly Willoughby Bitcoin
No Result
View All Result
  • Home
  • Economics
  • Finance
  • Politics
  • Investments
    • Invest in Amazon $250
  • Cryptocurrency
    • Best Bitcoin Accounts
    • Bitcoin Robot
      • Quantum AI
      • Bitcoin Era
      • Bitcoin Aussie System
      • Bitcoin Profit
      • Bitcoin Code
      • eKrona Cryptocurrency
      • Bitcoin Up
      • Bitcoin Prime
      • Yuan Pay Group
      • Immediate Profit
      • BitIQ
      • BitQH
      • Bitcoin Loophole
      • Crypto Boom
      • Bitcoin Treasure
      • Bitcoin Lucro
      • Bitcoin System
      • Oil Profit
      • The News Spy
      • Bitcoin Buyer
      • Bitcoin Inform
      • Immediate Edge
      • Bitcoin Evolution
      • Cryptohopper
      • Ethereum Trader
      • BitQL
      • Quantum Code
      • Bitcoin Revolution
      • British Trade Platform
      • British Bitcoin Profit
    • Bitcoin Reddit
    • Celebrities
      • Dr. Chris Brown Bitcoin
      • Teeka Tiwari Bitcoin
      • Russell Brand Bitcoin
      • Holly Willoughby Bitcoin
No Result
View All Result
Global Economic Intersection
No Result
View All Result

Consensus Stock Picks in Top Small-Cap Mutual Funds

admin by admin
November 15, 2012
in Uncategorized
0
0
SHARES
0
VIEWS
Share on FacebookShare on Twitter

Investing Daily Article of the Week

by Ari Charney, Featured Expert, Investing Daily

Most investors would love to know which small companies are on a trajectory to eventually become an established large-cap name. After all, if you’re able to get into a stock before it’s started its long climb up the capitalization ladder, then that means you’ll have years of gains ahead of you.

But it’s difficult for the retail investor to find such companies amid the clutter. And many smaller companies are underfollowed by Wall Street analysts, so you won’t necessarily have the comfort of institutional affirmation. However, the information vacuum can create pricing inefficiencies, and that translates into the opportunity to find a promising small company before it’s been bid up by the Wall Street crowd.

So how can the average investor discover such companies? One of my favorite idea-generation tools is to use Morningstar’s Premium Fund Screener to find consensus picks among the top-performing mutual funds.

In the past, I’ve performed variations of today’s screen to intriguing effect, both here and here. One previous article examined consensus picks among top-performing funds regardless of style or category, while another looked at the stocks most commonly held among the subset of market-beating mutual funds I’ve profiled in the pages of Benjamin Shepherd’s Wall Street.

This time around, I altered my screening criteria to focus just on mutual funds that specialize in picking small-cap stocks. I then created what I consider an absurdly high threshold for performance. Although I prefer to only consider mutual funds that beat the market or their benchmark over a period of at least 10 years or longer, I also wouldn’t mind near-term performance that similarly outpaced the market. To that end, I screened for funds that beat both the S&P 500 and the small-cap Russell 2000 index over the one-, three-, five-, and 10-year trailing time periods.

But I’m also wary of excess volatility. And because smaller-cap stocks tend to exhibit higher volatility than large caps, I wanted funds whose performance data suggest they exploit risk successfully. So I looked for funds that beat both benchmarks on a risk-adjusted basis over the past three years, as well as funds that lost less than both benchmarks during the bear market year of 2008. That doesn’t mean the individual stocks we’ll uncover will necessarily reflect a fund’s general risk-averse approach, it merely increases that possibility.

Finally, I wanted funds helmed by a team in which at least one portfolio manager had at least five years of experience in running money.

Here is the list of the nine funds that made the cut:

  • Consulting Group Small Cap Value Equity (TSVUX)

  • Franklin MicroCap Value A (FRMCX)

  • Fidelity Small Cap Discovery (FSCRX)

  • Goldman Sachs Small Cap Value A (GSSMX)

  • Hancock Horizon Burkenroad Small Cap A (HHBUX)

  • ING JPMorgan Small Cap Core Equity Portfolio Advisor (IJSAX)

  • JPMorgan Small Cap Equity A (VSEAX)
  • T. Rowe Price Small-Cap Stock (OTCFX)

  • T. Rowe Price Small-Cap Value (PRSVX)

Though all of these funds produced enviable returns, not all are suitable for the average investor’s portfolio. For instance, the funds denoted as “Class A” have sales loads of as much as 5.75 percent, which would be deleterious to long-term returns. Other funds have limited availability due to only being offered in certain plans or brokerages.

However, the Fidelity fund as well as the two T. Rowe Price funds don’t charge loads and are widely available. The one concern is that all three could conceivably suffer from asset bloat at some point. The smallest of the three holds more than $3 billion in assets, which is still a sizable amount of money for stocks that generally have limited liquidity.

I then used Morningstar’s Portfolio X-Ray tool to see which stocks were most commonly held among these nine mutual funds. I looked for names that were held by at least four funds. Here’s the list, with the number of funds that hold each stock listed in parentheses:

  • Brinker International (NYSE: EAT) (5)
  • EastGroup Properties (NYSE: EGP) (4)
  • Proassurance Corp (NYSE: PRA) (4)
  • Southwest Gas Corp (NYSE: SWX) (4)
  • Texas Capital Bancshares (NSDQ: TCBI) (4)

The next step was to examine each fund’s portfolio to see when they purchased their initial position in the stock, as well as whether they’ve added shares to their existing holdings recently.

Ideally, I was hoping to find a stock that was either a relatively recent addition or had its holdings boosted significantly. The one stock that cleared those hurdles is Texas Capital Bancshares.

JPMorgan Small Cap Equity A established its initial position in the regional bank during the third quarter, with a 1.56 percent allocation, which makes it the 25th largest holding in its portfolio of nearly 70 stocks.

The three other funds that hold shares of the stock initiated their positions as far back as 2004. However, all three boosted their holdings in the stock by an average of 2.8 percent during the third quarter. And the stock is among the top 15 holdings in each of these three funds, which is noteworthy because the smallest portfolio of the three still has at least 220 stocks in its portfolio.

Texas Capital Bancshares was also the only stock out of the five aforementioned names that displayed strong relative strength against the S&P 500 over the trailing three-month and 12-month periods. Indeed, the stock has been on a tear this year, with a nearly 48 percent return year to date. Even so, it’s still down 12.9 percent from its 52-week high. And for those worried about how it might perform during a downturn, it lost more than 10 percentage points less than the broad market during 2008.

Furthermore, the company seems to have solid fundamentals underpinning its performance. Its revenue grew 24.4 percent annually over the past three years, while profits have average 46.3 percent growth over that same period. The bank has $88.2 million in cash and equivalents on its balance sheet and no long-term debt.

Of course, the next step in due diligence is to examine the bank’s history of loan losses to see how that’s trending. So additional fundamental analysis is warranted. But I think we’ve gotten a pretty good start.

Read More by This Author

  • Time to Bulk Up on This MLP?

  • Canada Tells China It’s Open for Business

  • Market Timing: Is the Market About to Trigger a Sell Signal?


About the Author

Ari Charney is the managing editor of Benjamin Shepherd’s Wall Street and Jim Fink’s Options for Income. He is also an associate editor of Personal Finance.

Prior to joining Investing Daily, Ari took an unlikely path toward dispensing investment advice. Shortly after graduating with a bachelor’s degree in political science from New York University, Ari sampled some of Wall Street’s best-known brokerages and investment banks for several months as a temporary associate. His favorite memory was being paid an absurdly high hourly wage to point and yell at the bond salesmen on the legendary Bear Stearns trading floor when they had incoming phone calls.

Thereafter, Ari spent a substantial portion of his career at financial industry rating services. First, he pored over spreadsheets for the corporate accounting department at Moody’s Investors Service. Later, he analyzed investment newsletters for nearly eight years at The Hulbert Financial Digest (HFD).

While working for the HFD, Ari discovered his passion for helping self-directed investors select the right investment newsletter. Since joining Investing Daily, he’s extended that passion further by guiding investors toward the right securities for their portfolios.

In addition to writing about investment newsletters for the HFD and MarketWatch, Ari has also written about food, music, comics and culture for publications ranging from Mass Appeal to Punk Planet. In his free time, he and his wife tote their son along on their ethnic dining adventures in pursuit of the fabled Bosnian burger and the Thai restaurant with the secret Laotian menu.


Previous Post

Germany, France GDPs Positive in Q3 2912, Barely

Next Post

Europe is in Recession

Related Posts

Weaker Dollar Keeps Bitcoin Above $30K As Analysts Target 60% BTC Dominance
Economics

Weaker Dollar Keeps Bitcoin Above $30K As Analysts Target 60% BTC Dominance

by John Wanguba
May 20, 2022
Ethereum Developers Tip The Merge Might Happen In August ‘If All Goes As Planned’
Business

Ethereum Developers Tip The Merge Might Happen In August ‘If All Goes As Planned’

by John Wanguba
May 20, 2022
Commonwealth Bank Puts Crypto Trading Test On Ice As Regulators Hesitate
Business

Commonwealth Bank Puts Crypto Trading Test On Ice As Regulators Hesitate

by John Wanguba
May 20, 2022
Musk Hints He Could Reprice Twitter Deal As He Looks At Fake Accounts
Business

Musk Hints He Could Reprice Twitter Deal As He Looks At Fake Accounts

by John Wanguba
May 18, 2022
Madonna Joins Hands With Digital Artist “Beeple” To Launch New NFTs
Business

Madonna Joins Hands With Digital Artist “Beeple” To Launch New NFTs

by John Wanguba
May 18, 2022
Next Post

Europe is in Recession

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Browse by Category

  • Business
  • Econ Intersect News
  • Economics
  • Finance
  • Politics
  • Uncategorized

Browse by Tags

adoption altcoins banking Binance Bitcoin Bitcoin adoption Bitcoin market Bitcoin mining blockchain BTC business Coinbase crypto crypto adoption cryptocurrency crypto exchange crypto market crypto regulation decentralized finance DeFi digital assets Elon Musk ETH Ethereum Ethereum blockchain finance funding government investment market analysis Metaverse mining NFT NFT marketplace NFTs nonfungible tokens nonfungible tokens (NFTs) price analysis regulation Russia social media technology Tesla the US Twitter

Archives

  • May 2022
  • April 2022
  • March 2022
  • February 2022
  • January 2022
  • December 2021
  • November 2021
  • October 2021
  • September 2021
  • August 2021
  • July 2021
  • June 2021
  • May 2021
  • April 2021
  • March 2021
  • February 2021
  • January 2021
  • December 2020
  • November 2020
  • October 2020
  • September 2020
  • August 2020
  • July 2020
  • June 2020
  • May 2020
  • April 2020
  • March 2020
  • February 2020
  • January 2020
  • December 2019
  • November 2019
  • October 2019
  • September 2019
  • August 2019
  • July 2019
  • June 2019
  • May 2019
  • April 2019
  • March 2019
  • February 2019
  • January 2019
  • December 2018
  • November 2018
  • October 2018
  • September 2018
  • August 2018
  • July 2018
  • June 2018
  • May 2018
  • April 2018
  • March 2018
  • February 2018
  • January 2018
  • December 2017
  • November 2017
  • October 2017
  • September 2017
  • August 2017
  • July 2017
  • June 2017
  • May 2017
  • April 2017
  • March 2017
  • February 2017
  • January 2017
  • December 2016
  • November 2016
  • October 2016
  • September 2016
  • August 2016
  • July 2016
  • June 2016
  • May 2016
  • April 2016
  • March 2016
  • February 2016
  • January 2016
  • December 2015
  • November 2015
  • October 2015
  • September 2015
  • August 2015
  • July 2015
  • June 2015
  • May 2015
  • April 2015
  • March 2015
  • February 2015
  • January 2015
  • December 2014
  • November 2014
  • October 2014
  • September 2014
  • August 2014
  • July 2014
  • June 2014
  • May 2014
  • April 2014
  • March 2014
  • February 2014
  • January 2014
  • December 2013
  • November 2013
  • October 2013
  • September 2013
  • August 2013
  • July 2013
  • June 2013
  • May 2013
  • April 2013
  • March 2013
  • February 2013
  • January 2013
  • December 2012
  • November 2012
  • October 2012
  • September 2012
  • August 2012
  • July 2012
  • June 2012
  • May 2012
  • April 2012
  • March 2012
  • February 2012
  • January 2012
  • December 2011
  • November 2011
  • October 2011
  • September 2011
  • August 2011
  • July 2011
  • June 2011
  • May 2011
  • April 2011
  • March 2011
  • February 2011
  • January 2011
  • December 2010
  • August 2010
  • August 2009

Categories

  • Business
  • Econ Intersect News
  • Economics
  • Finance
  • Politics
  • Uncategorized
Global Economic Intersection

After nearly 11 years of 24/7/365 operation, Global Economic Intersection co-founders Steven Hansen and John Lounsbury are retiring. The new owner, a global media company in London, is in the process of completing the set-up of Global Economic Intersection files in their system and publishing platform. The official website ownership transfer took place on 24 August.

Categories

  • Business
  • Econ Intersect News
  • Economics
  • Finance
  • Politics
  • Uncategorized

Recent Posts

  • Weaker Dollar Keeps Bitcoin Above $30K As Analysts Target 60% BTC Dominance
  • Ethereum Developers Tip The Merge Might Happen In August ‘If All Goes As Planned’
  • Commonwealth Bank Puts Crypto Trading Test On Ice As Regulators Hesitate

© Copyright 2021 EconIntersect - Economic news, analysis and opinion.

No Result
View All Result
  • Home
  • Contact Us
  • Bitcoin Robot
    • Bitcoin Profit
    • Bitcoin Code
    • Quantum AI
    • eKrona Cryptocurrency
    • Bitcoin Up
    • Bitcoin Prime
    • Yuan Pay Group
    • Immediate Profit
    • BitIQ
    • Bitcoin Loophole
    • Crypto Boom
    • Bitcoin Era
    • Bitcoin Treasure
    • Bitcoin Lucro
    • Bitcoin System
    • Oil Profit
    • The News Spy
    • British Bitcoin Profit
    • Bitcoin Trader
  • Bitcoin Reddit

© Copyright 2021 EconIntersect - Economic news, analysis and opinion.

en English
ar Arabicbg Bulgarianda Danishnl Dutchen Englishfi Finnishfr Frenchde Germanel Greekit Italianja Japaneselv Latvianno Norwegianpl Polishpt Portuguesero Romanianes Spanishsv Swedish