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QLogic Corporation (QLGC), Dell Inc. (DELL): One Person’s Trash Is Another Person’s Treasure Portfolio

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QLogic Corporation (NASDAQ:QLGC)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 $995.07 0.5%
QLogic
$11.46 86.39 $857.85 (13.4%)
Dendreon $5.97 165.82 $645.04 (34.8%)
Dell $13.37 74.05 $994.49 0.4%
Staples
$13.48 73.44 $1,077.36 8.8%
Arkansas Best $10.83 91.41 $1,710.28 72.8%
Arch Coal $7.03 140.83 $716.82 (27.6%)
Skullcandy
$6.71 147.54 $804.09 (18.8%)
France Telecom $11.64 85.05 $839.44 (15.2%)
Xerox
$8.16 121.32 $1,061.55 7.2%
Cash $0.06
Dividends receivable $45.30
Total commission ($100.00)
Original investment $10,000.00
S&P 500 performance 7.1%
Performance relative to S&P 500 (9.6%)

Source: Yahoo! Finance.

This week’s winner
It certainly wasn’t a great week for the broad-based S&P 500, which dipped 2.4% over the past five trading sessions. That didn’t seem to matter much to network equipment manufacturer QLogic Corporation (NASDAQ:QLGC), which added on 3.7% this week following a restructuring plan announcement on Tuesday. The company’s plan involves job cuts and streamlining its operations in order to save $20 million annually. Although it’ll incur some negative impact on its GAAP earnings in the interim, I highly doubt this changes the long-term outlook or consistent profitability that drew me to own QLogic Corporation (NASDAQ:QLGC) in the first place.

This week’s loser
In spite of no company-specific news, audio accessories maker Skullcandy Inc (NASDAQ:SKUL) took it on the chin this week, down 5.4%. Skullcandy Inc (NASDAQ:SKUL) is in the midst of trying to turn around falling sales in a highly competitive environment. With its health intricately tied to Apple Inc. (NASDAQ:AAPL) and the remainder of the smartphone industry, Skullcandy Inc (NASDAQ:SKUL) will need to see steady smartphone sales growth if it hopes to meet its own sales targets this year. If the shares in my personal portfolio are any indication, I believe management is making the right moves to position itself for future growth.

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