We started writing the Razor’s Edge blog about a year ago as a way to reach out to the investment community through our research. The dual purpose being to highlight some of the most timely and interesting stocks in our research coverage, but also to demonstrate that we have made our research platform specifically to meet the needs of busy but engaged investors, be it individual or institutional. The response has been overwhelmingly positive and we will continue to blog because of this reception.
Now, for much of the past year, the stock market has been getting kicked in the teeth and investors would be hard pressed to find an investment strategy that performed anywhere near acceptable levels. However, we are starting to see the market regain a bit of stability over the last month, and the volatile swings are becoming less frequent and less violent in nature. This year’s market has been dominated by fear and uncertainty rather than valuations, as we have seen quite a few high quality companies with strong fundamentals that have been beaten down in this downturn. We believe we are seeing a calming in the market or at least return to some sense of normalcy. This is not to say that there won’t continue to be volatility, specifically in certain sectors and industries. As the markets try to absorb the massive layoff numbers that seem to be hitting the wires each day and the potentially dismal retail returns for this holiday season, we still see opportunities.
Over the last month, the broad market indexes have all slowed their collapse with the S&P 500 down 2.8%, the DJIA down 1.5%, and the Nasdaq down more heavily dropping 4.6%. However, over the last month our blog’s undervalued recommendations are up 12.5% (by simple average from the date of the recommendation to close 12/10), while our overvalued calls are down 9.5% by the same method.
Some highlights from the long side include one of our infrastructure plays, Vulcan Materials Company (VMC). We recommended (link) this company on November 25th based on the fact that President-elect Obama has been pledging a massive effort in infrastructure investment. The stock was under $50 when we wrote the post, but now Vulcan is trading just below $70 at this point. Surely, this nearly 40% two-week return surely got a boost from Jim Cramer of CNBC’s Mad Money making it one of his top infrastructure stocks as well(http://www.cnbc.com/id/27999508/) on the 1st of December.
