This month, we screen for attractive “bond replacement” investment candidates using large holdings of the Matrix Advisors Value Fund (MAVFX), a $59 million NAV mutual fund managed by CNBC regular, David Katz.

We have selected the stocks that Katz reported purchasing in the fourth quarter of 2016 (the latest period for which data was available) and have limited the list based on two criteria:

  • The top 10 stocks that represented more than 2% of the portfolio’s value
  • Stocks listed had been bought by the fund in the reported quarter

These conditions were to screen for the stocks in which the manager had demonstrated the most confidence (by portfolio weight) and about which they had made an active decision to invest. As we explain in our video introduction to “Bond Replacement” investments, we are using these portfolio managers’ actions as an indication of undervaluation.

The portfolio includes several stocks which we have researched in the past few years, and have linked the name of the stock to our research on each company. The stalest valuation is for Cisco (CSCO), the analysis of which I did in 2013.

The fund holds Zimmer Biomet (ZBH), Gilead (GILD), and Procter & Gamble (PG), which are all stocks that we have valued recently. Of these, I am personally least excited about Zimmer Biomet, but the share price has risen by 10%-15% since we published our research on the firm, so this manager and the market must be seeing something in Zimmer which I am not.

The fund’s recent performance is mixed – its performance looks good on a 1-year lookback, but poor on a 3- or 5-year one. Looking over its history, it looks as though it outperformed for a long stretch coming out of the Tech Bubble through around 2012, kept pace with the market until late 2015, when it was hit by greater volatility than the market overall.

You can read the fund’s third quarter 2016 letter here and Morningstar’s review of the fund here.

Please reach out if you have any questions about this spreadsheet!