Welcome to week 139 of my stock-picking throwdown with Mr. Market. Let's get right to the numbers:
|Harris & Harris
|IBM (NYSE: IBM )
|S&P 500 SPDR
Source: Yahoo! Finance.
* Tracking began on Aug. 7, 2008.
** Adjusted for dividends and other returns of capital.
Mr. Market had a good week but my tech portfolio had a really good week, adding 132 basis points to my lead in our three-year challenge to see who can add the most value. Strong earnings reports from the market's fast-movers helped my cause.
The tech-heavy Nasdaq added 2.01 percentage points during the week, easily outpacing both the S&P 500, which added 1.34 percentage points, and the Dow, which added 1.33 percentage points. Large caps still lead year-to-date, however. The Dow 30 entered the holiday weekend up 8.02% so far during 2011, CNBC reports.
Diversified equipment maker United Technologies (NYSE: UTX ) led the Dow rally, up 4.4% after reporting strong results from its Carrier air conditioning unit and raising full-year guidance. Peer General Electric (NYSE: GE ) wasn't as fortunate. Earnings rose 77% but analysts had hoped for more revenue growth from the company's industrial products group, The Associated Press reported. Shares of GE ended the week down a half-percent.
But the week's biggest winners were small caps. Biotech Amarin (Nasdaq: AMRN ) nearly doubled on news that patients responded well in a new phase 3 clinical trial of its cardiovascular disease treatment, Anchor. Mattress specialist Select Comfort (Nasdaq: SCSS ) advanced more than 30% after reporting quarterly results and full-year guidance that bested Wall Street's projections.
Select Comfort's report is particularly encouraging. After years of stumbles, CEO William McLaughlin and his team seem to be executing. His compensation is rising again as a result. (McLaughlin saw his cash compensation fall from $1.09 million in 2006 to just $122,000 in 2008.)
The week in tech
This is as it should be. As an investor, I'm always happy to pay for executives who create a culture of outperformance. Especially when research shows that too many corporate officers take home big paydays while doing nothing for shareholders, as seems to be the case at Rite Aid.
Put Apple's (Nasdaq: AAPL ) Steve Jobs and Tim Cook at the other end of the spectrum. The Mac maker destroyed estimates once more in reporting fiscal second-quarter results this week as iPhone unit sales soared 113%, thanks in part to adding Verizon as a distribution partner.
Growth throughout the business overshadowed iPad fulfillment issues as revenue jumped 83% and diluted per-share earnings improved 92%. Cash from operations nearly tripled and Apple ended the quarter with more than $65 billion in cash and investments.
In short, the results suggest a wholesale shift toward smart, tightly integrated iOS devices that offer a wide variety of apps. The iEmpire has become what Microsoft (Nasdaq: MSFT ) was in its heyday. All that's missing is a federal antitrust case.
As inventors, history tells us we want to be invested at the front end of these shifts. For it's when disruptions take hold and become mainstream that billions in new stock market wealth is created.
Look at David Gardner. He produced a decade of 20% returns in the real-money Rule Breaker portfolio by betting on a collection of innovators, and then holding them for the long-term. Tom Gardner's "simpleton portfolio" was also a 10-year winner. I believe that, with my tech portfolio, I will achieve similar success.
Now let's move on to the rest of today's update:
- Motley Fool partner site Xconomy.com recently published an interview with Rod Smith, IBM's vice president for Emerging Internet Technologies. In it, he explains the real-world benefits of the computing technology that made the Watson supercomputer a Jeopardy! champion. Find the interview here.
There's your checkup. See you back here next weekend for more tech stock talk. In the meantime, don't forget to keep up with my tech portfolio by adding these stocks to your watchlist today: