Portfolio Turnover

My team and I have been discussing and considering portfolio turnover, and we were curious to hear what other teams had to say. In one training session, we were told that there is considerable variance, even among experts, when deciding how often a portfolio should turn over. We were curious if we could come to a consensus, or at least discuss the topic, as an EMC community.
Additionally, and more specifically to this competition, how quickly should we dump a stock which isn't performing well? We understand that much of the grading criteria are strategy-related, but 20% of the grade is performance. How have other teams been striking a balance between sticking to long-term strategy while also seeing good stock-growth?
With this post, we hope to inspire good EMC community discussion. We are interested to hear the thoughts of the professors, students, and our peers.

Report: NCR Corp.

Valiant Management agrees in large with the analysis of the NCR Corp. We think that because of its domination of the self-servicing machine industry and innovative strategies, NCR is a very strong company. Its machines are far more self sufficient, and require far less employee maintenance. Along with its smart cash reader technologies (now the machine can scan cash itself), selling points like these will allow NCR to continuously shut out its competition. As these machines have increased in demand, NCR will automatically gain profit and grow as a result. NCR is one of the only companies in the field to use newer innovations that differentiate themselves from the competition. We foresee not only a growth in America, but possibly an even larger growth in countries like China and India where the ratio of these machines to people is very low. For the most part we see NCR as a great company that will be both a value and growth stock. 

Now for the negatives in NCR. We agree with the analysis of the pension issues, NCR's Pension losses in 2008 have left the company with a pension debt of roughly $1 billion dollars. NCR has handled this debt badly in our opinions. Also the new strategy to change its pension funds from 40% fixed income, to 100% fixed income over the next three years. With bonds so high, we agree with the diagnosis that this is probably not the best strategy. Now where we disagree with the analysis, is in the assessment of NCR's move to try to control  the DVD rental self servicing machine. It is clear that the lifespan of DVD's is limited, and the more money put in, the more attached NCR is to this lifespan. This represents so little of their revenue (paling in comparison to the 70% of revenue that is their ATM business) and their competition has a strong foothold. Yes, NCR will most likely go positive in this area over the next two years, but what about after that? We don't think that DVDs will be used very often in ten, even five years. We understand why the deal with blockbuster makes profit off blockbuster's failure, but Blockbuster is still a dying company, and we think it could drag down NCR's profit with it. When the demand for DVDs ends,  NCR will have to suffer if it puts any more effort into this.

Overall NCR is a great company with strong focus. It is a strong, undervalued investment, especially when its forward P/E is compared with its competitors (see original paper pg. 6). Although, some of its negatives are very scary. It will grow in the coming few years, but after that we really aren't sure.

Stock Report: Walmart

We generally agree with the analysis; however, we think that the authors left out an important detail in their evaluation. It is true that Walmart has dominated among their competitors, that its market capital is significantly larger than its competitors, and that this is an incredibly successful business. However, over the past few months, it has lagged far behind the market averages, whereas Costco and Target have stayed relatively on-par with those averages. This suggests that growth is not the direction Walmart is headed toward, and that it would not make a good growth stock. It would, however make a good value stock because of its overall strength financially and large representation of its market. It also has higher earnings per share than its competitors. Walmart is being run efficiently by buying fewer and/or less expensive goods to sell and through efficient supply chain management. Industry projections expect Walmart to increase in value in the nearby future and that it is currently undervalued. It is a growing company, as shown through historical data and through its recent purchase of UK’s ASDA. This buy suggests that it will be expanding the functionality of its website, and it will be competing with such companies as Amazon.