What a difference a year makes!
Friday was February 10th and on that date exactly one year ago in 2016, our Internet Advantage Strategy – Best Equity Picks reached its all time low in performance. That was a day before the S&P 500 reached its low point in 2016 also.
What a difference a year makes! On last Friday, February 10th, 2017, the same strategy reached its all time high in performance. Over that year, from close on February 10, 2016 to close on February 10, 2017, the Best Equity Picks portfolio was up + 50.9% net (net of 1.5% annual fee).
The irony that our portfolio hit a high exactly 12 months after it made its low is not lost on us. But it is explainable by a few key points: For one thing, the portfolio went down in 2016 by materially more than the market. It was down almost 20% when the S&P was down 10% to start 2016. So, it had more room to recover. Second, our portfolio is a mix of small caps, large caps, and mid-caps. The small and mid-caps have out-performed the large caps in the last year. The picks we invest in tend to be a little higher beta than the average stock as they tend to be growth stories.
But the most important reason is the continuous improvement in our research capabilities – and that shows in both our performance returns AND the number of companies in our portfolio that reported a surprise in their earnings results. This was especially true in the two earnings seasons before the current one. The current earnings season has also revealed many positive surprises – but its not over yet. Our revenue surprise rate in the earnings season in Q4 2016 was over 80% – meaning of the stocks that we owned on the day they announced their earnings, the company surprised to the upside on 80% of the stock picks.
We are excited about these returns and look forward to another strong year.
In related news, the IAS Equity Long/Short portfolio also made its all time high on Friday’s close also. It shares the same research but also has the option to use bearish investment picks also. We hope you reach out to us to find out more.