Top Names, 5/11/2023

Continuing our core strategy with a surprise this time: a regional bank in our top ten

This Week’s Top Names

It was another good week for my top ten names holdings, as I didn’t get stopped out of any of them. My current best performer is Prothena Corp, plc ( PRTA 0.00%↑ ), which is up 38% since I added it on February 17th.

Looking at this week’s top ten names I was surprised to see a regional bank among them—everyone who’s read this Substack for more than a few days knows I’ve been betting against regional banks, most recently last week.

But it turns out the regional bank Portfolio Armor’s algorithm selected as part of this week’s top ten is a rare one that has benefited from the recent banking crisis, by scooping up deposits from one of the regional banks that failed. It’s firing on all cylinders now, beating both revenue and earnings expectations.

It’s #4 in Portfolio Armor’s current top ten names as of Thursday’s close.

Screen capture via Portfolio Armor on 5/12/2023.

If you’re starting our core strategy now, you’ll want to buy equal dollar amounts of each at or near these prices, if possible, today, and then enter trailing stops on each of them. Initially, I was using 10% trailing stops on all positions, but I extended that to 15% recently. As you get stopped out of positions, you’ll add new ones from the current top ten names then.

In my case, I am already running this strategy, and didn’t get stopped out of any stocks this week, so I won’t be adding a new one on today.

If you’re not buying round lots of each of these positions, it won’t be cost effective to hedge them individually, but you can hedge market risk by buying optimal puts on an index ETF such as the SPDR S&P 500 Trust (SPY). As a reminder, you can use our website or our iPhone app to scan for optimal puts.

Alternatively, holding some of our bearish bets can work as a hedge against market risk too.