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Arkansas Best Corporation (ABFS), QLogic Corporation (QLGC): One Person’s Trash Is Another Person’s Treasure Portfolio

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Arkansas Best Corporation (NASDAQ:ABFS)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:

Company Cost Basis Shares Total Value Return
Exelon $31.25 31.68 $1,131.29 14.3%
QLogic
$11.46 86.39 $851.81 (14%)
Dendreon $5.97 165.82 $785.99 (20.6%)
Dell
$13.37 74.05 $979.68 (1%)
Staples $13.48 73.44 $1,023.75 3.4%
Arkansas Best
$10.83 91.41 $1,403.14 41.7%
Arch Coal
$7.03 140.83 $735.13 (25.7%)
Skullcandy
$6.71 147.54 $759.83 (23.2%)
France Telecom $11.64 85.05 $909.18 (8.2%)
Xerox $8.16 121.32 $1,067.62 7.8%
Cash $0.06
Dividends receivable $42.56
Total commission ($100.00)
Original investment $10,000.00
Total portfolio value $9,690.04 (3.1%)
S&P 500 performance 8.7%
Performance relative to S&P 500 (12.8%)

Source: Yahoo! Finance.

This week’s winner
There was absolutely no question that Arkansas Best Corporation (NASDAQ:ABFS)‘s 58.2% gain over the past week would wind up taking the top honors. The reason for the huge rally relates to a tentative agreement reached between its subsidiary, ABF Freight Systems, and the Teamsters union. Contract negotiations between the two parties have been going on for far too long, and are one of the main reasons why Arkansas Best Corporation (NASDAQ:ABFS)’s costs have been running higher than many of its peers. With this deal now in place, union members likely don’t have to worry about job cuts, and Arkansas Best Corporation (NASDAQ:ABFS) has all the tools necessary to quickly return to profitability. Deutsche Bank agreed, upgrading the stock to buy from hold, with much of the company’s uncertainty now removed.

This week’s loser
On the flip side, investors certainly didn’t receive networking equipment maker QLogic Corporation (NASDAQ:QLGC)‘s fourth-quarter report with open arms, sending shares down 5.1% on the week. I’m actually a bit surprised at the move lower, because the report itself was pretty solid with the company topping EPS estimates by $0.01, even as revenue declined 13% year over year. Following last quarters’ positive pre-announcement, and the recent strength in fiber optic companies, I believe the negativity is because investors were expecting more. But, fear not, as QLogic Corporation (NASDAQ:QLGC) still boasts an incredible cash pile of $455.5 million (equal to 51% of its market value as of this writing), and continues to deliver decent profits.

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