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Ten top momentum stocks

The FTSE 100 is broadly flat since it last peaked in 2007, but the blue-chip momentum portfolio is showing a 107 per cent gain.
March 10, 2015

The 10 long and 10 short FTSE 100 momentum picks selected at the end of 2014 looked as though they could prove a very risky bunch of stocks. That's because so many of them seemed to have their prospects firmly pinned to future commodity price movements. Almost all of the shorts were shares in companies that had suffered severely due to the commodity price falls experienced in the final quarter of 2014. Meanwhile, many of the longs were shares in companies that looked likely to benefit from commodity price weakness through falling input costs. While these thematically-focused momentum portfolios have both underperformed the FTSE 100 (performed worse than the index in the case of the longs and better in the case of the shorts), the overall outcome has not been too painful considering the single-mindedness of the stock picks.

As it turned out, the oil theme was not the key issue that caused the underperformance. In the case of the longs, it was two retail-related stocks that were the major disappointments (Dixons Carphone and Associated British Foods), while the shorts really came undone due to the massive outperformance of one of the only stocks in the portfolio for which commodity prices were not the overriding concern, Tesco (see table). Overall the longs were up 10.3 per cent compared with 11.2 per cent from the index, while the shorts were out in front with a 14.8 per cent gain.

 

LONGSSHORTS
NameCapital return (15 Dec 14 - 5 Mar 15)NameCapital return (15 Dec 14 - 5 Mar 15)
International Consolidated Airlines Group22.9%Tullow Oil2.7%
Barratt Developments 19.1%Weir -0.4%
Friends Life 16.0%BG 17.8%
Taylor Wimpey 15.2%BHP Billiton 24.5%
Sage Group 11.5%Tesco 47.7%
Carnival 8.2%Standard Chartered 16.1%
easyJet 7.4%Anglo American7.8%
Associated British Foods 0.9%Smiths Group15.2%
TUI AG0.7%Intertek16.1%
Dixons Carphone 0.7%Glencore 0.4%
Average10.3%-14.8%
FTSE 10011.2%-11.2%

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