Our Focus List Stocks: Short Model Portfolio[1], the best of our Danger Zone picks, outperformed the S&P 500 as a short portfolio by 14% (18.7% vs. 4.6% for the S&P 500) in 1Q26. See Figure 1.
Longer term this Model Portfolio has beaten shorting the S&P 500 by 60% since the start of 2021 through 1Q26. See Figure 2. This outperformance underscores how important reliable fundamental research is.
Figure 1: Focus List Stocks: Short vs. S&P 500 in 1Q26
Sources: New Constructs, LLC
As a short portfolio, the Model Portfolio’s return increases when the underlying stocks go down.
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 1Q26.
Figure 3: 1Q26 Performance of the Focus List Stocks: Short Model Portfolio
Sources: New Constructs, LLC
Performance includes stocks in the Model Portfolio in 1Q26 as well as those removed during the same time (0 stocks).
The Focus List Stocks: Short Model Portfolio leverages superior fundamental data, which provides a new source of alpha. Professional and Institutional members get real-time updates and can track all Model Portfolios on our site.
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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. All three have outperformed the S&P 500 over the past five years. See Figures 4-6.
- Bloomberg New Constructs Core Earnings Leaders Index (ticker: BCORET:IND)
- Bloomberg New Constructs Ratings VA-1 Index (ticker: BNCVA1T:IND)
- Bloomberg New Constructs 500 Index (ticker: B500NCT:IND)
The Bloomberg New Constructs Core Earnings Leaders Index, which allocates based on Earnings Capture and Core Earnings, beat the S&P 500 by 28% over the past five years. The Index (ticker: BCORET:IND) was up 86% while the S&P 500 was up 58%.
Figure 4: Bloomberg New Constructs Core Earnings Leaders Index Outperforms S&P 500: Last 5 Years
Sources: Bloomberg as of March 27, 2026
Note: Past performance is no guarantee of future results.
The “Very Attractive Stocks” Index, which allocates to stocks that get a Very Attractive rating by our AI Agent for Investing, beat the S&P 500 by 30% over the last five years. Bloomberg’s official name for the index is Bloomberg New Constructs Ratings VA-1Index (ticker: BNCVAT1T:IND). Figure 5 shows it was up 88% while the S&P 500 was up 58%.
Figure 5: Very Attractive-Rated Stocks Strongly Outperform the S&P 500: Last Five Years
Sources: Bloomberg as of March 27, 2026
Note: Past performance is no guarantee of future results.
Our “Core-Earnings Weighted S&P 500” Index, which weights the largest 500 U.S. companies by Core Earnings instead of market cap, beat the S&P 500 by 20% over the past five years. Bloomberg’s official name for the index is Bloomberg New Constructs 500 Total Return Index (ticker: B500NCT:IND). Figure 6 shows it was up 79% while the S&P 500 was up 58%.
Figure 6: Bloomberg New Constructs 500 Index Strongly Outperforms the S&P 500: Last Five Years
Sources: Bloomberg as of March 27, 2026
Note: Past performance is no guarantee of future results.
This article was originally published on April 7, 2026.
Disclosure: David Trainer and Kyle Guske II 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.