‘The Tweed Report’ by Guest Author Roger Tweed

Guest Author Roger Tweed

Guest Author Roger Tweed

Come Fly Away – Our portfolio again outperformed the S&P 500 over the past seven weeks. Big gains from JetBlue Airways (JBLU) and Facebook (FB) spearheaded our portfolio’s almost 2% gain, while the S&P 500 gained 0.15%. Although geopolitical contributed to losses in Goodyear (GT), Vanguard FTSE Europe (VGK), and International Paper (IP), the majority of our positions had gains during the period. Since its January 9 inception, our portfolio has risen 12.18%, while the S&P 500 has gained 8.21%.

JetBlue is now our best performing position, following its 15.7% gain over the past seven weeks. The stock was helped by falling oil prices and an upgrade from an analyst who noted that the company will be making changes in its services to emphasize profit. JetBlue is already one of the more profitable airlines.  

Facebook gained 12.5% as the stock broke through the $62 level and has now settled into the mid-$70s, near its all-time high. Facebook continues to accelerate its profit growth, and is the main beneficiary of the switch from print to mobile advertising. Hewlett-Packard (HPQ) gained 8.4% as PC sales picked up, revenues increased by 1%, and the company was cash flow positive for the first time in several years. Hertz Global (HTZ) gained 5.7% despite reporting a bad quarter and continuing to struggle with restating its previous yearly earnings. I believe that this gain was the result of traders betting that the current CEO will soon be replaced, freeing the company to compete more successfully in the very profitable U.S. rental car market, where it is one of only three major players.

Goodyear lost 10.2% as the company reported a 5% decline in second quarter revenue and an 8% drop in U.S. tire sales in the quarter. Also weighing on the stock were fears of renewed recession in the Euro Zone. These fears, which grow as tensions increase in the Ukraine-Russia conflict, drove Vanguard FTSE Europe down 5.9%.   International Paper (IP) also fell 5.9% as it reported 2nd quarter earnings in-line with expectations, but falling revenues. International Paper would also be hurt by declining Euro Zone economies.

Despite all the turmoil roiling stocks since July 3, our portfolio managed to post a healthy gain, while the S&P 500 remained flat. I believe that growth stocks Facebook and JetBlue, along with energy positions Linn Co., LLC (LNCO) and Anadarko Petroleum (APC) will sustain this outperformance through the fall.


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