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“Perhaps the less we have, the more we are required to brag” wrote John Steinbeck in his famous novel East of Eden. We could have easily written that ourselves (assuming we had a tenth of Steinbeck’s literary talent) in describing our enthusiasm at seeing ALPS’s BFOR ETF, which tracks our B400, cross the $50 million mark this week, a short five weeks after its listing on NYSE Arca. The “less we have” part, of course, referring to the mere $50 million gathered by that fund so far given the performance of B400 lately, which is where the “required to brag” part comes in.  

A quick glace through this morning’s Market Dashboard page in the print edition of The Wall Street Journal, in the Major U.S. Stock-Market Indexes table (yes, B400 is in there) shows what we’re about to shamelessly brag about. In the 12 months ended last night, B400 out performed the broad U.S. equity market, as represented by the Dow Jones U.S. Total Stock Market Index by 690 basis points (6.9 percentage points). On a year to date basis the difference is 390 basis points in favor of B400.   

When compared against large cap stocks, as represented by the S&P 500, the out performance is even larger, at 810 bps in the last 52 weeks and 460 bps year to date. Against the S&P 400 Index of mid cap stocks, an appropriate comparison given B400’s median market cap of $4.1 billion, B400 out performed by 250 bps in the last year and 270 bps year to date. Two more indexes worth comparing it against, not least because followers of B400 ask about them from time to time, are the Nasdaq Composite and the Value Line Index, which is followed by many old school value investors. B400 bested them by 880 bps and 330 bps in the last year and 350 bps and 220 bps year to date, respectively. The table below conveniently summarizes these figures for our readers.  

Index  YTD   52-Weeks   3 Yr. Annualized   
Barron’s 40022.033.619.0
DJ U.S. TSM18.126.716.4
S&P 50017.425.515.8
S&P 40019.331.118.0
Nasdaq Composite  18.524.817.7
Value Line19.830.312.7

Earnings Season Under Way

Earnings Season officially kicked off this week with Alcoa’s report on Tuesday. However, by our tally, B400 companies started reporting as early as June 18th, with FactSet Research beating their estimate by five cents. Since then, a total of 13 B400 companies have reported quarterly earnings with seven beating their consensus estimate, two meeting it and four missing it.   

B400 companies are expected to have collectively earned $7.15 in the year’s second quarter, a 4.1% improvement over the equivalent period a year earlier. Each total is, of course, based on a different set of companies since two rebalance selections have occurred since then. However, tracking the overall direction of growth in B400 EPS reports is very useful in understanding the growth attributes of the index’s underlying components. For the full year 2013, B400 companies are expected to earn a total of $29.81, 10.8% higher than the $26.90 earned in 2012.  

We will dive deeper into B400’s earnings season in upcoming issues of this newsletter. In the meantime we leave you with the following report card showing who has reported what so far in this nascent season.

Ticker  Name  Report*  Estimate  Actual  
FDOFamily Dollar Stores7/10/131.031.05
HELEHelen of Troy Limited7/10/130.710.45
SYRGSynergy Resources7/10/130.060.06
WDFCWD-40 Company7/09/130.560.66
CAMPCalAmp Corp.6/28/130.130.05
ACNAccenture6/28/131.131.21
AZZAZZ Inc.6/28/130.630.57
BBBYBed Bath & Beyond6/26/130.930.93
LNNLindsay Corp.6/26/131.802.01
UNFUniFirst Corp.6/26/131.371.43
ORCLOracle Corp.6/21/130.870.80
PIRPier 1 Imports6/20/130.000.19
FDSFactSet Research Systems 6/18/131.151.20

* Consensus Earnings Estimates Source: FactSet Research

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