Letting Winners Run - Steven Cress On Alpha Picks' Outperformance

Core Insights - Seeking Alpha's Alpha Picks portfolio has achieved a return of 114% since its launch on July 1, 2022, significantly outperforming the S&P 500, which is up 32% during the same period [2][3][12] Alpha Picks Overview - Alpha Picks is a quantamental portfolio that selects two stocks per month from Seeking Alpha's Quant Strong Buys, focusing on mispriced securities with strong fundamentals [3][4] - The selection process involves analyzing approximately 400 Strong Buys to identify the top two stocks based on five core metrics: value, growth, profitability, analyst EPS revisions, and momentum [5][8] Performance Metrics - The portfolio includes stocks that have shown exceptional performance, with seven stocks up over 100%, including Super Micro Computer, which is up 1,000% since its recommendation [12][18] - Other notable performers include Modine Manufacturing (up 283%), M/I Homes (up 232%), and Alpha Metallurgical Resources (up 193%) [12][21] Stock Selection Criteria - Stocks must be U.S. common stocks or ADRs, have a market capitalization greater than $500 million, and a stock price above $10 to qualify for selection [5][6] - Once a stock is recommended, it will not be recommended again for a full year, ensuring a diverse portfolio [6][7] Trading Strategy - The strategy allows for a long-term approach, where stocks that double in value may only have half their position sold if they drop to a hold rating after 180 days [9][11] - The portfolio maintains transparency with performance tracking and alerts for rating changes [4][7] Dividend Considerations - Approximately 14 out of 30 stocks in the portfolio pay dividends, with yields often exceeding those of the S&P 500, providing an additional benefit to investors [20][21] Market Trends and Outlook - The Magnificent Seven tech stocks have seen significant gains, with a combined increase of 111% in 2023, driven by a flight to safety and interest in AI technologies [23][24] - As the market stabilizes and interest rates potentially decrease, there may be a rotation towards mid-cap and small-cap stocks, benefiting the Alpha Picks portfolio [25][26] Recent Performance - In the latest quarter, nearly all companies in the Alpha Picks portfolio exceeded analyst expectations, contributing to strong performance in January [26][27]