Given it’s one of the largest publicly traded companies in the world, it is hard to imagine that Google’s (now Alphabet) IPO was 12 years ago today.  After coming out at a split-adjusted basis of $42 in August 2004, given the unconventional process by which it conducted its IPO, a lot of critics said the company had left some money on the table.  Boy did they ever!  We say that in a tongue and cheek manner, but since that IPO twelve years ago, Google (GOOGL) has gained 1,781% compared to a gain of 99% for the S&P 500.  That’s what you call generating alpha.

GOOGL’s gain has been impressive, but it actually hasn’t been close to the best performing stock over that time period.  In fact, there are ten current members of the S&P 500 that are up more than GOOGL since the date of its IPO.  Leading the way higher, shares of Monster Beverage (MNST) are up over 11,000%!  Behind MNST, shares of Priceline (PCLN) and Illumina (ILMN) are up triple GOOGL’s gain.  Additionally, Regeneron (REGN), Apple (AAPL), and Netflix (NFLX) are all up over 4,000%.  Overall, there are 23 current members of the S&P 500 that are up 1,000%+ since the GOOGL IPO 12 years ago.  If only a portfolio consisted of just these names.

It hasn’t all been roses for stocks in the S&P 500 over the last 12 years, though.  Of the 404 components that have been trading for the last 12 years, 43 are down, and that doesn’t even take into account the number of stocks that fell out of the index due to declines, outright bankruptcies, or a corporate action.  The table below lists the 17 stocks in the index that have lost more than half of their value in the last twelve years.  It may be hard to believe now, but AIG is down 95% in the last 12 years.  In order to get back to where it was 12 years ago, AIG would need to see a rally in excess of the rally that GOOGL has seen in the last 12 years.  Citigroup (C) has also lost 90% of its value in the last 12 years, so that would need to rally 900% to get back to even.  Looking at the names on the list, the majority are from the Financial sector, but there are also a number of stocks from the Energy sector as well given the carnage that sector has seen in the last twelve years.

There has been lots of chatter about “sector rotation” in 2016, much more so than we’ve seen in prior years.  We wanted to see if we could highlight this sector rotation in chart form, and the best way to do that is using a heatmap.  Below, we chart a heatmap of rolling 3-month performance (%) for the ten S&P 500 sectors, with more defensive sectors at the top of the graph and more cyclical sectors at the bottom.  Green (from lighter to darker) indicates a period of outperformance over the prior three months, while red (lighter to darker) indicates a period of underperformance.  As the chart shows, more defensive sectors have started to stumble recently while the more cyclical Technology sector and to a lesser degree Health Care and Industrials have rallied over the last three months.  We note that while the “middle” of the chart — Energy and Materials — were both extremely strong gainers for most of the year following their plunge at the start of 2016, they haven’t been ramping up to the same degree recently. Tech has seen an extremely strong performance over the last few months as the more cyclical stocks in general have benefited from improving economic sentiment.

Overall, we think this heatmap does a good job of showing rotation in and out of various sectors over the last year.  There’s only one sector of the ten — Industrials — that hasn’t gone through a period of big outperformance (dark green) or big underperformance (dark red) over the last year.

After surging off its February lows through late May, the S&P 500 Energy sector (XLE) went into a sideways trading pattern for much of the summer.  The ETF’s sideways range was between $63 on the downside and $70 on the upside.  Just over two weeks ago, the ETF tested the bottom of its sideways range, and the support held.  Now today, the ETF finally managed to break through resistance at $70 at the top of the range.  Energy bulls can rejoice for the time being.