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Disappointing the Street


Where Others Fear To Tread

There doesn’t seem to be much upside to disappointing Wall Street. Not meeting analysts’ expectations for significant operating metrics can lead to rating downgrades and target-price reduction, which often contribute to big-time selloffs in a company’s stock. On the other hand, markets can often have a short memory -- or no memory at all. This motif involves a strategy that assumes that, more often than not, a stock-price decline following a negative surprise doesn’t necessarily track lockstep with a long-term valuation adjustment that is really warranted[1]. Long positions are entered with the expectation that the price will recover, while understanding the risk that any negative surprise could include a long-term negative shift in a company’s fundamentals.[2] This motif uses a strict rules-based approach to identify stocks of companies that have suffered a recent negative earnings or revenue surprise leading to a subsequent negative stock-price reaction. In addition, these companies have had active stock option issuance over recent years, however, the stock prices are not currently testing recent share price ranges. The motif is rebalanced monthly, and selected stocks are generally held for three rebalance periods. See More
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Portfolio Index 1 YR Return
Disappointing the Street Benchmark
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Weight Segment & Stocks Symbol 1 YR Return
20.8% Industrials 22.4%
11.0% Graco Inc. GGG 6.9%
9.8% 8xxxxxx 8xx 8xxx 8x 88.8%
20.5% Consumer Discretionary 6.0%
20.5% Netflix Inc. NFLX 6.0%
16.5% Health Care 43.3%
10.3% Bruker Corporation BRKR 43.1%
6.2% 8xxxxxxxx 8xxxxx 8xxx 8xxx 88.8%
12.1% Consumer Staples 20.9%
6.6% 8xxxxx 8xxxxxx 8xxxx 8xx 88.8%
5.5% 8xxxxxxxxxxxxxxxx 8xxxxxx 8x 88.8%
8.6% Telecommunication Services 14.3%
8.6% 8xxxxx 8xxxxxxxxxxxxx 8xxxxxxx 8xxx 8xxx 88.8%
8.3% Information Technology 0.8%
8.3% 8xxxxx 8xxxxxxxxxxx 8xxx 8xxx 88.8%
6.9% Real Estate 10.5%
6.9% 8xxxx 8xxxxxxxxx 8xxxxx 8xxxx 8xxx 8x 88.8%
6.3% Financials 19.2%
6.3% 8xx 8xxxxxxxxxx 8xxxxxx 8xxx 88.8%
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