BTH Tactical

Published by Barry Hirowatari

As the 2013 New Year began I ran my stock screens and was excited to see the selections that my model produced for the month. A name I had not heard of, CaesarStone (CSTE), came to the top of my screen and I began further research. In terms of fundamentals, the stock was 1) top 5 percentile in earnings, 2) top 6% percentile in relative strength, ranked 7/197 in industry groups, traded at a trailing PE of 18.

I found an interesting story behind CasearStone. The company was 51% owned by a kibbutz in Israel with a population of 750 (which made every member a millionaire on paper). As the CSTE chairman says “the fact that the way we want to live is socialist, it’s like you have a split in your head. During the day you are a capitalist, then you go home and you become a socialist”.

CSTE manufactures engineered quartz surfaces for countertops and back splashes. It was a unique company with phenomenal earnings and overlooked by the market. I bought the stock on January 03, 2013at $16.62 which was near a new high. The stock broke out, volume increased and the stock exploded to the upside. As the stock moved higher I continued to add to my position until it was my biggest weight in the portfolio. On February 03, 2014 the stock triggered by hard wired sell signal at $43.60. The gain on the stock was a pleasing +162%. This is an example of my model filtering out great companies, adding to winning positions and the hard wired sell discipline for a timely exit.