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:
Now, let’s get to the portfolio and see how it fared this week:
|Company||Cost Basis||Shares||Total Value||Return|
|S&P 500 performance||12.6%|
|Performance relative to S&P 500||(10.6%)|
This week’s winner
Topping the list this week were shares of Dell Inc. (NASDAQ:DELL), which added 8.3%, $1.05, after its board of directors denied Michael Dell the right to change how non-voting shareholders are counted. The board did, however, allow Michael Dell to extend the voting date on the premise that he keep his $13.75/share bid on the table. Dell Inc. (NASDAQ:DELL)’s latest offer to secure a private buyout included a $0.13 per share one-time dividend, and promised shareholders they’d receive their third-quarter $0.08 quarterly payout, as well. Activist investor Carl Icahn continues to refute that Dell Inc. (NASDAQ:DELL)’s offer is a slap in the face to shareholders, and plans to pursue a lawsuit in the state of Delaware in the best interests of shareholders.
This week’s loser
Taking it on the chin hardest this week was trucking company Arkansas Best Corporation (NASDAQ:ABFS), which shed 9.6% after it was undeniably confirmed by YRC Worldwide that Arkansas Best Corporation (NASDAQ:ABFS) had spurned its takeover offer. Following Arkansas Best Corporation (NASDAQ:ABFS)’s ratification of its collective bargaining agreement, shares of the company have been on fire. I’m not too surprised to see shares pulling back a bit here, and would expect bottom-line results rather than buyout rumors to drive the stock from here on out.
Also in the news…
Shareholders (like me) of audio accessories maker Skullcandy Inc (NASDAQ:SKUL) had high hopes heading into its second-quarter results last week. To put it mildly, its quarterly report was ug-ly! Net sales dropped 30%, to $50.8 million, as U.S. sales plummeted 39% with retailers choosing to purchase and carry less, and competition increasing. Thankfully, tight cost controls under new CEO Hoby Darling resulted in a breakeven bottom-line, which was much better than the $0.03 loss per share expected by Wall Street. Ultimately, this is an ongoing turnaround story, and I’m not planning to give up my shares. Skullcandy Inc (NASDAQ:SKUL) still has a shot at dominating the lower-end audio market, and that seems like a pretty safe bet, with the company valued at just a fraction over its book value.