What underperformers of the last few months do we like?

Last time MM went bargain hunting in the underperformers via Lend Lease (LLC), Magellan (MFG) and Elders (ELD), things didn’t turn out too well. We subsequently closed ELD for a loss (-9%) while we hold LLC (down -11%) & MFG (up +6.7%).

Today, we’ve looked at things slightly differently, as discussed at length, bond yields have controlled equities through 2023, with the lack of traction by the small caps illustrating the point perfectly, i.e. small companies often need to borrow to fund growth, and with these costs rising plus the additional premium usually allocated to smaller companies borrowing it’s been hard work for the space to embrace the recovery in say the cashed up US big tech space.

• The small caps should embrace a recovery in bonds (yields lower) if/when it unfolds.

Hence, this time around, we have looked at four companies that recently reported well but have reversed lower during the current weak market and what is likely to have been a degree of profit-taking.

There were plenty of stocks that have endured a really tough 1-2 months, but today is all about looking at companies that recently reported well but have surrendered some of their subsequent gains.