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Exelon Corporation (EXC), Dendreon Corporation (DNDN), Dell Inc. (DELL): One Person’s Trash Is Another Person’s Treasure Portfolio

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Exelon Corporation (NYSE:EXC) 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

Orange

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 $969.09 (2.1%)
QLogic $11.46 86.39 $952.02 (3.8%)
Dendreon $5.97 165.82 $761.11 (23.1%)
Dell $13.37 74.05 $937.47 (5.3%)
Staples $13.48 73.44 $1,249.95 26.3%
Arkansas Best $10.83 91.41 $1,983.60 100.4%
Arch Coal $7.03 140.83 $549.24 (44.5%)
Skullcandy $6.71 147.54 $814.42 (17.7%)
Orange $11.64 85.05 $837.74 (15.4%)
Xerox $8.16 121.32 $1,176.80 18.9%
Cash $0.06
Dividends receivable $99.26
Total commission ($100.00)
Original investment $10,000.00
S&P 500 performance 12.2%
Performance relative to S&P 500 (8.9%)

Source: Yahoo! Finance.

This week’s winner
Topping the list of gainers this week was biotech firm Dendreon Corporation (NASDAQ:DNDN), up 3.8%, which, if you recall, was the worst performer in the previous long week. Although no company-specific news drove shares higher, anticipation from bulls must be building that, with a favorable opinion of Provenge from the European Medicines Agency’s panel, an approval might be right around the corner in Europe. It may not get Dendreon Corporation (NASDAQ:DNDN) to profitability anytime soon, but an EMA approval is a must if Dendreon Corporation (NASDAQ:DNDN) is going to be a successful company and perhaps draw the attention of a larger rival.

This week’s loser
Once again getting this week’s dubious award for worst performer is no stranger to the category, Arch Coal Inc (NYSE:ACI). It’s ironic, as well, that the best and worst performers from last week swapped places this week! Arch Coal Inc (NYSE:ACI)’s 6.5% tumble has everything to do with its second-quarter earnings results, which showed a 21% decline in revenue, to $766 million, despite a narrower adjusted loss of just $0.29 per share. Comparatively, the loss was $0.05 per share less than the Street expected, but revenue fell about $153 million short of estimates. Arch Coal Inc (NYSE:ACI) plans to focus on cost-cutting through the remainder of 2013 until pricing improves, and I’ll be looking forward to see if it can diversify its revenue stream meaningfully through its exports.

Also in the news…
In this week’s episode of “Dell Inc. (NASDAQ:DELL)‘s of our Lives,” we learned that the buyout offer by Michael Dell and Silver Lake Partners is on increasingly shaky ground. Dell Inc. (NASDAQ:DELL)’s board of directors denied his voting change request to not count shareholders who do not vote in the opposition column, but did grant him and Silver Lake the possibility of another round of voting delays on the proposed buyout if it sticks to its slightly higher bid of $24.6 billion, or $13.75 per share ($0.10 higher than the original bid), which was announced last week. Michael Dell has been adamant in his stance that he won’t raise his offer, so this battle royale is certainly about to get interesting.

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