I’ve been so busy talking about potential new picks and the health of the market lately that I haven’t had a chance to talk much about the actual portfolio. Just to get everyone up to speed, let’s do that today…. and for a specific reason. First things first though.

As of right now, we’re about 45% invested, which means we’re 55% cash. We own Teleflex Incorporated (NYSE:TFX) Smith International, Inc. (NYSE:SII), ADTRAN, Inc. (NASDAQ:ADTN), and PAETEC Holding Corp. (NASDAQ:PAET), each of which makes up about 10% of the total portfolio. And, we’ve got 5% allocated to IDEX Corporation (NYSE:IEX). (We may add another 5% worth of IEX at some point.)

Though the ultimate plan is to maintain a 100% stock allocation, we also need the right environment for that to feasible; that has not been feasible over the last few weeks.

Performance-wise, our portfolio value has moved in the same general direction as the market – as it should. It did not fall as far, however, since we deliberately were holding the safest and least volatile holding of all…. cash. As we described in recent updates, we’re simply waiting for what is apt to be a major bottom rather than an intermediate-term one.

Despite the slow start, and despite the fact that we’re not even 50% invested, the portfolio managed to do something interesting over the last three months – we’ve actually moved from underperforming the market to outperforming it. This is the long-term objective of our core strategies…. to beat the market, yet minimize volatility. [Side note: Volatility can be a performance killer, and not just for psychological reasons.]

To put it in more scientific terms, I seek high-alpha, low-beta positions. It can take weeks at a time for the selection techniques to yield those results, but in time – and over time – the net benefit should be more of the same kind of outperformance.

Anyway, the chart illustrates the result of reaching the ‘high alpha, low beta’ goal. That premise will be the core of most strategic discussions going forward.