Taking Another Look At Vodafone

Vodafone is my largest position and has been a big underperformer for me this year. The stock is down 5% year to date while the S&P 500 up nearly 10%. While nobody can know for certain why the stock is performing so poorly I can hazard some guesses. Telecom stocks in general are performing poorly this year as they are defensive in nature and this is a "risk on" rally. In addition, European telecoms are performing particularly poorly as a weak economy and regulation are hurting profits.

When I purchased the stock I had no illusions that the European wireless telecom market was strong. Vodafone is a geographically diversified telecom company and over time wireless telecom should grow as a cellphone is not a luxury item. Vodafone trades at a massive discount to the broader market and to US telecom stocks. When a position goes against me I look at it again to see if anything has changed. In the case of Vodafone I believe the value is still there and the stock is even more attractive than it was a few months ago.

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