Recap from August’s Picks
The Exec Comp Aligned with ROIC Model Portfolio (-0.1%) underperformed the S&P 500 (+0.3%) from August 14, 2020 through September 14, 2020. The best performing stock in the portfolio was up 9%. Overall, seven out of the 15 Exec Comp Aligned with ROIC Stocks outperformed the S&P from August 14, 2020 through September 14, 2020.
Only my firm’s research utilizes the superior data and earnings adjustments featured by the HBS & MIT Sloan paper, “Core Earnings: New Data and Evidence.” The success of this Model Portfolio highlights the value of my firm’s Robo-Analyst technology[1], which scales forensic accounting expertise (featured in Barron’s) across thousands of stocks.
This Model Portfolio only includes stocks that earn an attractive or very attractive rating and align executive compensation with improving ROIC. I think this combination provides a uniquely well-screened list of long ideas because return on invested capital (ROIC) is the primary driver of shareholder value creation.[2]
New Stock Feature for September: Humana Inc.
Humana Inc. (HUM) is the featured stock in September’s Exec Comp Aligned with ROIC Model Portfolio.
Humana has grown revenue and after-tax profit (NOPAT) by 8% compounded annually over the past decade. Over the past five years, Humana has grown NOPAT by 10% compounded annually. Humana’s NOPAT margin increased from 3% in 2014 to 5% over the trailing-twelve-months (TTM), while its invested capital turns improved from 2.9 to 3.3 over the same time. Rising margins and invested capital turns drive Humana’s ROIC from 8% in 2009 to 15% TTM.
Source: Forbes