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September 02, 2014

Large Cap and Value Favored for September

There are no changes to the recommendations from Northlake’s models for September. The Market Cap model favors large cap for the second consecutive month. The Style model is recommending value as it has since February. As a result of the latest model readings, there will be no changes to Northlake client holdings that follow the models. The large cap S&P 500 (SPY) and the Russell 1000 Value (IWD) will be held for at least another month.

There was some underlying movement in the models. The Market Cap model shifted a bit toward mid cap as the dollar strengthened against most foreign currencies. A stronger dollar generally favors smaller companies that have less to the translation and pricing impact of dollar strength. The Style model made its first movement in sometime in toward a growth signal. Last month, the value reading was the strongest yet on this particular signal. Insider activity and the trend indicators both shifted toward value reflecting recent corporate insider activity and a good month for growth stocks in August.

August was a below average month for each model. The new large cap signal produced a gain of almost 4% but mid cap and small cap alternatives were up about 5%. Value also gained almost 4% but trailed the gain in growth by nearly 1%. On a year-to-date basis, each model trails the return of the benchmark S&P 500 by approximately 2%.

SPY and IWD are widely held by clients of Northlake Capital Management, LLC, including in Steve Birenberg’s personal accounts. Steve is sole proprietor of Northlake, a registered investment advisor. Northlake’s regulatory filings can be found at www.sec.gov.

Posted by Steve Birenberg at September 2, 2014 09:44 AM in Models