Our Focus List Stocks: Short Model Portfolio[1], the best of our Danger Zone picks, fell 14% compared to 5% for the S&P 500 and outperformed by 9% as a short portfolio in 1Q25.
Note that short portfolios outperform when they fall more than the index.
Figure 1: Focus List Stocks: Short (down 14%) vs. S&P 500 (down 5%) in 1Q25
Sources: New Constructs, LLC
The Focus List Stocks: Short Model Portfolio outperformed shorting the S&P 500 by 45% from the start of 2021 through 1Q25. See Figure 2. This outperformance underscores how important trustworthy research is.
Figure 2: Focus List Stocks: Short Performance Since Beginning of 2021
Sources: New Constructs, LLC
Figure 3 details the Model Portfolio’s performance, which includes all stocks present in the Model Portfolio at any point in 1Q25.
Figure 3: 1Q25 Performance of the Focus List Stocks: Short Model Portfolio
Sources: New Constructs, LLC
Performance includes stocks in the Model Portfolio in 1Q25 as well as those removed during the same time (1).
Professional and Institutional members get real-time updates and can track all Model Portfolios on our site. The Focus List Stocks: Short Model Portfolio leverages superior fundamental data, which provides a new source of alpha.
We’re here to help you navigate these turbulent times. Our uniquely rigorous fundamental research consistently earns #1 rankings in several categories on SumZero.
Check Out the Indices Based on New Constructs Research
While we’re writing about how our Focus List Stocks: Short Model Portfolio finds overvalued stocks, we should highlight the indices we’ve developed with Bloomberg’s Index Licensing Group. Both outperformed the S&P 500 in 1Q25. See Figures 4 and 5.
- Bloomberg New Constructs Ratings VA-1 Index (ticker: BNCVA1T:IND)
- Bloomberg New Constructs 500 Index (ticker: B500NCT:IND)
Figure 4 compares the performance of the Very Attractive Stocks Index, managed by Bloomberg, to the S&P 500. In 1Q25, the Bloomberg New Constructs Ratings VA-1Index (ticker: BNCVAT1T:IND) was up 4.6% while the S&P 500 was down 4.6%.
Figure 4: Very Attractive-Rated Stocks Strongly Outperform the S&P 500 in 1Q25
Sources: Bloomberg
Note: Past performance is no guarantee of future results.
Figure 5 compares the performance of the Bloomberg New Constructs 500 Total Return Index, managed by Bloomberg, to the S&P 500. In 1Q25, the Bloomberg New Constructs 500 Total Return Index (ticker: BNCVAT1T:IND) was down 3.6% while the S&P 500 was down 4.6%.
Figure 5: Bloomberg New Constructs 500 Index Strongly Outperforms the S&P 500 in 1Q25
Sources: Bloomberg
Note: Past performance is no guarantee of future results.
This article was originally published on April 9, 2025.
Disclosure: David Trainer, Kyle Guske II, and Hakan Salt, receive no compensation to write about any specific stock, sector, style, or theme.
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[1] Stocks are in the Focus List Model Portfolios for different periods of time as we open and close positions during the year. When measuring outperformance of the Focus List Model Portfolios, we compare each stock’s return to the S&P 500’s return for the time each is in the Focus List Model Portfolios. This approach provides more of an apples-to-apples comparison of how each stock performed vs. the S&P 500.