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||7.1%|
|Performance relative to S&P 500||(9.6%)|
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.