Value Model Portfolio
Kalkine’s Value Model Portfolio is based on equity asset allocation philosophy across diversified sectors including stocks that typically are trading below the intrinsic value. The objective is to utilize the qualitative and quantitative factors based on extensive stock research considering certain fundamental metrics, and valuation parameters for suggesting the stock in the model portfolio. The foundation of the Value Model Portfolio is to identify quality stocks through tactical sector allocation. Stocks with strong fundamentals that are trading at a discount to its fair value while also evaluating other factors such as trending themes, macro and micro economic insights, volatility, and associated business risks etc.
Kalkine follows an exclusive FIVE-T framework in analyzing and selecting stocks within each tactical sector allocation.
What you get?
Exposure to mid-capitalization and large-capitalization dividend paying stocks.
Asset Type
Listed-Equities on the Australian Stock Exchange.
Objective
The goal is to identify value stocks which may be trading below the intrinsic value.
Strategy
Buy and Hold stocks for a period of upto 2 years or more with low risk and consistent performance.
Stock Selection Approach
The model portfolio is constructed based on ‘Value Investing’ principle of ‘Benjamin Graham’ across defensive dividend paying sectors such as Consumer Staples, Utilities, Power, and Energy Sectors etc. The inclusion of the stocks is driven by the strong fundamentals (revenue growth and EBITDA margins), low valuation multiples, technical signals (based on Relative Strength Index, and moving averages), shareholder returns (in the form of Buy-Back, Dividend yield % and ROE%) and sound balance sheet (low leverage ratios – debt-equity, debt-EBITDA).
Methodology
Tactical Dividend Paying Sector Allocation
(Utilities, Consumer Staples & Durables, Healthcare, Retail, other trending sectors)
Selection Universe*
(ASX-listed stocks typically with market capitalisation of
AUD 1 Billion or more)
Stock Screening*
Financial Metrics
(Revenue Growth, EBITDA Margins, Dividend Yield, ROE%, Debt-to-EBITDA ratio)
Valuation Multiples
(P/E, EV/EBITDA, P/Sales)
Technical Indicators
(RSI, Moving Average)
Periodic Portfolio Monitoring
(News, Corporate Events, Macro-economic changes etc.)
Periodic Portfolio Rebalancing
(For any change in sector allocation)
Source: Kalkine Group
*For stock selection, a set of quantitative criteria have been defined and measured. For instance, for 1) Tactical Sector Allocation - the trend in terms of past 3-months sector benchmark index performance is looked at, 2) For Selection Universe – ASX-Listed stocks typically above AUD 1 billion market capitalization have been considered with exceptions possible 3) For Stock Screening – Fundamental metrics such as Trailing 12-months Revenue Growth > Peer Median, trailing 12-months Dividend yield > Peer Median apart from other quantitative factors have been considered. Technical Metrics such as RSI, Moving Averages are considered.
Guidelines
12 stocks weighted equally.
User Profile
The Value Model Portfolio is appropriate for an individual with a low-to-medium-risk appetite and a time horizon of more than 2 years. Extreme market volatility in a short time horizon may impact the returns, therefore consistent dividend-yielding mid-cap and blue-chip stocks with sound fundamentals and potential business growth have been considered in this Model Portfolio.
Typical Target Audiences for this portfolio may include a 20+ year old Individual with a low risk-taking appetite, high debt profile, and low savings looking for regular income.
Portfolio Monitoring
Periodic depending on the news, events, macro changes, and geopolitical impacts.
At a Glance
Rebalance Frequency
As per the company specific event
Next Rebalance
Tentative (25-07-2024)
The table below shows the portfolio’s rebalances done till now.