Our domestic fund got off to a positive start in January despite a rough month from Under Armour.

 

January 2017

Since Inception (Annualized) Inception Date: 11/1/2010

The Motley Fool Great America Fund (TMFGX)

0.65%

12.15%

Russell Midcap Index

2.41%

13.29%

Russell 2000 Index

0.55%

12.81%

For a standardized list of performance for the Great America Fund, please click here. For fund holdings, please click here.

The fund sold out of its positions in Leucadia National Corp., Boston Beer Company, and Wynn Resorts Ltd. The only new entrant to the fund was Varex Imaging Corp., which was spun out of longtime holding Varian Medical Systems.

Top-performing stocks were IPG Photonics (up 16.5%), Splunk, Inc. (up 13.1%), Oaktree Capital Group (up 12.5%) and Natus Medical (up 12.2%). Both Splunk and Oaktree Capital followed a typical pattern of seeing a share-price bounceback after a lackluster stock performance in the previous year. This type of reversion to the mean happens frequently in January. It even has a name: “the January effect.” But it’s certainly not the case that everything that fared poorly in 2016 has already seen positive stock performance.

The three largest detractors from performance for the month were Under Armour (down 23.6%), Horizon Global (down 18.5%), and Aceto (down 13.1%). Under Armour started the year off very poorly, consistent with how it ended 2016. Sales momentum has slowed, though the company still saw revenue growth above 20%. However, Under Armour expects revenue growth to continue decelerating to below 20%. Of greater concern is its failure to translate still-healthy sales growth into earnings growth. Earnings and earnings per share will come in well under 2016 levels in 2017, as inefficiencies in manufacturing and investments in continued growth will cost the company. Under Armour has seen its price-to-earnings multiple decline precipitously, from levels of 80 to 100 to somewhat lower than 50 today. And that’s still far higher than the market’s P/E of around 23. 

 

Lastest Insights