Bounceback Portfolio 2013 – Result

The idea of the Bounceback Portfolio is that a portfolio of the 10 worst performing FTSE 350 stocks in one year has historically beaten the index in the first three months of the following year. This is explained in further detail in the UK Stockmarket Almanac 2013 and in this post at the beginning of the year.

The following chart shows the performance of the stocks in the Bounceback Portfolio 2013

The portfolio as a whole increased 2.4% in the first quarter 2013, but this was less than the FTSE 350 Index, which rose 9.2% in the same period. This is the first time since 2002 that the Bounceback Portfolio has under-performed the index in the first quarter.

Hindsight is a wonderful thing:  obviously the time to take profits was just two weeks into the year.


Dogs of the Dow

A related strategy is the Dogs of the Dow, where the ten stocks in the Dow Jones Index  with the highest dividend yield on the final day of the year are bought. So far, this portfolio is faring better than the above Bounce back Portfolio.

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Travel & Leisure sector monthly seasonality analysis

The 2013 edition of the Almanac looks at the historic monthly performance of the FTSE 350 sectors. Here we look at the Travel & Leisure sector.

The following chart plots the average out-performance of the FTSE 350 Travel & Leisure sector over the FTSE 100 Index by month since 1999. For example, since 1999 on average the sector has out-performed the FTSE 100 Index by 2.1 percentage points in November.

Observations:

  1. The strongest months have been November and December – the sector has under-performed the market only three times in November in the last 14 years.
  2. The sector has no consistently weak months; although the sector has under-performed the market by an average of 2.6 percentage points in October, the sector has actually out-performed the market that month in eight of the past 14 years.

The 23 stocks in the FTSE 350 Travel & Leisure sector [NMX5750] are-

Betfair Group [BET] Ladbrokes [LAD]
Bwin.Party Digital Entertainment [BPTY] Marston’s [MARS]
Carnival [CCL] Millennium & Copthorne Hotels [MLC]
Compass Group [CPG] Mitchells & Butlers [MAB]
Domino’s Pizza UK & IRL [DOM] National Express Group [NEX]
easyJet [EZJ] Playtech Ltd [PTEC]
Enterprise Inns [ETI] Rank Group (The) [RNK]
FirstGroup [FGP] Restaurant Group (The) [RTN]
Go-Ahead Group (The) [GOG] Stagecoach Group [SGC]
Greene King [GNK] TUI Travel [TT.]
InterContinental Hotels Group [IHG] Wetherspoon (J D) [JDW]
International Consolidated Airlines Group SA [IAG]
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The Bounceback Portfolio for 2013

The 2013 edition of the Almanac explained the Bounceback Strategy, whereby a portfolio of the 10 worst performing stocks in the FTSE 350 in one year is held for the first three months of the following year.

A portfolio of such stocks has out-performed the FTSE 350 Index in every year since 2002.

The following table lists the 10 worst performing FTSE 350 stocks in 2012 (i.e. these comprise the Bounceback Portfolio for 2013).

Company Performance in 2012 (%)
Bumi -68.8
Eurasian Natural Resources Corporation -55.3
Centamin -52.4
Lonmin -45.5
Chemring Group -42.6
Petropavlovsk -41.3
FirstGroup -38.1
Man Group -34.2
Kenmare Resources -32.4
Bwin.Party Digital Entertainment -32.2

 

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