It has been almost 4 years since we started our Buffett-Munger Screener and model portfolio. The portfolio has outperformed the S&P 500 every year and cumulatively it has gained 90% and has 30% of outperformance. The portfolio has low turnovers and we only rebalance once a year. Although almost all companies in the portfolio have had sizeable gains, we do have steep losses with one of them.
These are the details of the performances in Buffett-Munger model portfolio:
Among the current holdings in the portfolio, World Acceptance Corp (WRLD, Financial) has been in the portfolio ever since inception and the stock price has more than tripled. Bio-Reference Laboratories (BRLI, Financial) was added this year and it has gained 92%.
Among the current 25 stocks, only 4 stocks have seen losses. As a whole the portfolio has gained 90%, and it has outperformed the S&P 500 every year. The overall outperformance is about 30%.
This is just what we expected when we developed the Concept of Business Predictability. By investing the companies that have consistent and predictable revenue and earnings growth traded at fair prices, we will avoid the losers, and the winners will take care of themselves. Buffett-Munger strategy focuses on high quality predictable companies that are traded at reasonable prices, and
1. They can grow their revenues and profits consistently.
2. They can maintain and even grow their profit margins over time. They have the “moat” that prevents others to enter their market.
3. They incur little debt while growing business
4. They are at the low end of their historical valuations.
But not all companies in the portfolio did well. The worst performer is for-profit education company ITT Educational Services (ESI, Financial). We lost almost 60%. The second worst is Spanish telecom Telefonica (TEF, Financial). For ITT Educational Services, the business landscape has changed dramatically due to the regulatory changes. The company has dropped out the list of Predictable Companies. The stock will be dropped out in the next rebalance.
As a group, these companies have done well. They may not have the market momentum with them, and they may face headwinds which bring the valuations low. But if business continues to grow, we believe it is safer to invest in these companies. Indeed, these companies have outperformed the market every year since inception.
These companies also outperformed the market by wide margins over long period of time in our backtesting. For details, go to: What Worked In The Market From 1998-2008? Part II. Under-Valued Predictable Companies And Buffett-Munger Screener.
GuruFocus premium membership is needed to access the details of the portfolios and screeners. We also publish a monthly Buffett-Munger newsletter which features the picks from Buffett-Munger Screener. If you are a premium member, you can download this for free. If you are not a Premium Member, we invite you for a 7-day Free Trial.
These are the details of the performances in Buffett-Munger model portfolio:
| Symbol | Company | # of Shares | Bought on | Share Cost | Current Price | Change | Value ($) |
| WRLD | World Acceptance Corp. | 202 | 1/1/2009 | $19.76 | 66.49 | 236.49% | 13,431 |
| BRLI | Bio-Reference Laboratories Inc | 371 | 1/2/2012 | $16.27 | 31.13 | 91.33% | 11,549 |
| HRL | Hormel Foods Corporation | 268 | 1/2/2010 | $19.23 | 29.13 | 51.52% | 7,807 |
| CPRT | Copart, Inc. | 564 | 1/2/2010 | $18.31 | 27.3 | 48.20% | 7,656 |
| FCFS | First Cash Financial Services, Inc. | 194 | 1/1/2011 | $30.99 | 45.57 | 47.05% | 8,841 |
| WMT | Wal-Mart Stores, Inc. | 111 | 1/1/2011 | $53.93 | 76.04 | 41% | 8,440 |
| ESRX | Express Scripts Holding Company | 135 | 1/2/2012 | $44.69 | 62.79 | 40.50% | 8,477 |
| FDS | FactSet Research Systems Inc. | 78 | 1/2/2010 | $65.87 | 91.43 | 38.80% | 7,132 |
| NEOG | Neogen Corporation | 197 | 1/2/2012 | $30.64 | 41.83 | 36.52% | 8,241 |
| ANSS | ANSYS, Inc. | 115 | 1/1/2011 | $52.07 | 69.25 | 32.99% | 7,964 |
| NRCI | National Research Corporation | 155 | 1/2/2012 | $38.81 | 50 | 28.83% | 7,750 |
| RGLD | Royal Gold, Inc. | 89 | 1/2/2012 | $67.43 | 85.7 | 27.09% | 7,627 |
| IDXX | IDEXX Laboratories, Inc. | 78 | 1/2/2012 | $76.96 | 96.63 | 25.56% | 7,537 |
| JJSF | J&J Snack Foods Corp. | 124 | 1/1/2011 | $48.24 | 56.82 | 17.79% | 7,046 |
| LMT | Lockheed Martin Corporation | 74 | 1/2/2012 | $80.90 | 93.18 | 15.18% | 6,895 |
| CHRW | C.H. Robinson Worldwide, Inc. | 72 | 1/1/2009 | $55.03 | 60.62 | 10.16% | 4,365 |
| SIAL | Sigma-Aldrich Corporation | 90 | 1/1/2011 | $66.56 | 72.67 | 9.18% | 6,540 |
| WAG | Walgreen Company | 182 | 1/2/2012 | $33.06 | 35.81 | 8.32% | 6,517 |
| LLTC | Linear Technology Corporation | 201 | 1/2/2012 | $30.03 | 31.14 | 3.70% | 6,259 |
| WAT | Waters Corporation | 77 | 1/1/2011 | $77.71 | 79.53 | 2.34% | 6,124 |
| GD | General Dynamics Corporation | 91 | 1/2/2012 | $66.41 | 67.49 | 1.63% | 6,142 |
| JW.A | John Wiley & Sons Inc | 136 | 1/2/2012 | $44.40 | 43.99 | -0.92% | 5,983 |
| ATRI | Atrion Corporation | 25 | 1/2/2012 | $240.23 | 201.5 | -16.12% | 5,038 |
| TEF | Telefonica S.A. (ADR) | 360.2313 | 1/2/2012 | $16.75 | 13.65 | -18.50% | 4,917 |
| ESI | ITT Educational Services, Inc. | 94 | 1/1/2011 | $63.69 | 25.93 | -59.29% | 2,437 |
Among the current holdings in the portfolio, World Acceptance Corp (WRLD, Financial) has been in the portfolio ever since inception and the stock price has more than tripled. Bio-Reference Laboratories (BRLI, Financial) was added this year and it has gained 92%.
Among the current 25 stocks, only 4 stocks have seen losses. As a whole the portfolio has gained 90%, and it has outperformed the S&P 500 every year. The overall outperformance is about 30%.
This is just what we expected when we developed the Concept of Business Predictability. By investing the companies that have consistent and predictable revenue and earnings growth traded at fair prices, we will avoid the losers, and the winners will take care of themselves. Buffett-Munger strategy focuses on high quality predictable companies that are traded at reasonable prices, and
1. They can grow their revenues and profits consistently.
2. They can maintain and even grow their profit margins over time. They have the “moat” that prevents others to enter their market.
3. They incur little debt while growing business
4. They are at the low end of their historical valuations.
But not all companies in the portfolio did well. The worst performer is for-profit education company ITT Educational Services (ESI, Financial). We lost almost 60%. The second worst is Spanish telecom Telefonica (TEF, Financial). For ITT Educational Services, the business landscape has changed dramatically due to the regulatory changes. The company has dropped out the list of Predictable Companies. The stock will be dropped out in the next rebalance.
As a group, these companies have done well. They may not have the market momentum with them, and they may face headwinds which bring the valuations low. But if business continues to grow, we believe it is safer to invest in these companies. Indeed, these companies have outperformed the market every year since inception.
These companies also outperformed the market by wide margins over long period of time in our backtesting. For details, go to: What Worked In The Market From 1998-2008? Part II. Under-Valued Predictable Companies And Buffett-Munger Screener.
GuruFocus premium membership is needed to access the details of the portfolios and screeners. We also publish a monthly Buffett-Munger newsletter which features the picks from Buffett-Munger Screener. If you are a premium member, you can download this for free. If you are not a Premium Member, we invite you for a 7-day Free Trial.
