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Core Equity Alpha — September 2026 Update

 

Core Equity Alpha is a systematic, equal-weighted equity strategy that selects holdings by a composite rank blending growth, value, and quality factors. Each month the portfolio rebalances, and this note summarizes the resulting turnover and the factors behind it.

On August 31, 2026, the monthly rebalance replaced 11 stocks out of 100.

Portfolio Characteristics

The strategy targets none of what follows. The industry mix and the financial characteristics alike are the result of ranking the universe on growth, value, and quality, and they describe the portfolio as of the ranking date rather than any objective for it.

Top Industries

Industries frequently tie at the same number of holdings, and ties are listed alphabetically with no implied ordering.

  • Computer Softw/Svcs (8 holdings)
  • Financial Services (8)
  • Precious Metals (6)
  • Asset Management (5)
  • Biotechnology (5)
  • Telecom. Services (5)

The same six industries have led the strategy since July. Precious metals fell from eight holdings to six this month and computer software and services from nine to eight; the rest were unchanged.

Fundamentals

Comparisons are to the strategy’s own eligible universe, not to a market index. All figures are medians.

  • Price to earnings: 13.5, against 18.6 for the universe
  • Earnings yield: 7.4%, against 5.4%
  • Operating margin: 38.0%, against 20.0%
  • Net margin: 23.6%, against 10.8%
  • Return on equity: 25.5%, against 15.0%
  • Return on capital: 22.5%, against 11.0%
  • Dividend yield: 0.8%, against 0.9%
  • Five-year sales growth: 8.2%, against 4.6%
  • Five-year earnings growth: 11.5%, against 3.4%

Margins and returns are 2026 fiscal-year estimates, price to earnings blends forward and trailing, dividend yield is the estimated next twelve months, and the two growth figures are realized over the five years through 2025. Not every measure is available for every company: 22 of the 100 holdings and 732 of the universe companies were missing at least one figure. Missing datapoints are excluded from the calculation.

Spotlight Buy — Methanex (MEOH)

MEOH: Methanex posted the largest improvement in its composite score among this month’s additions, driven primarily by growth. Figures are in US dollars.

  • Methanex’s profit swung on price, not volume. Realized methanol prices rose by roughly half from the first quarter while sales volumes edged slightly lower, carrying adjusted EBITDA to the highest in the company’s history. Management attributes the move to industry supply lost to the Middle East conflict.
  • The asset base was already larger going in. Methanex absorbed OCI Global’s methanol business in mid-2025, and its North American plants produced more this quarter than in any quarter before, so a given move in price now falls across materially more tonnage than it would have two years ago.
  • What the ranking reads as growth, the company is already guiding down. Third-quarter realizations are guided roughly a tenth below the second quarter’s, and Methanex has idled its Trinidad plant, about eight percent of capacity, after failing to secure a gas contract. Against that, the acquisition debt was retired in full within a year of closing.

Spotlight Sell — Frontline (FRO)

FRO: Frontline saw the largest deterioration in its composite score among this month’s removals, falling from near the very top of the ranking, driven primarily by quality, with forward return on tangible capital the decisive input. The capital base is expanding while the gains that flattered recent reported results do not repeat.

  • Frontline’s recent profits have leaned on selling ships rather than sailing them. Nearly two-fifths of first-quarter profit came from disposing of eight VLCCs, leaving adjusted profit well below the reported figure. Gains of that kind flatter one quarter and are then gone.
  • The capital base is meanwhile growing ahead of the earnings it will produce. The company ordered nine VLCC newbuildings in January and still had about half the purchase price outstanding at mid-year. Progress payments enter capital employed years before the ships carry cargo, which is precisely what a forward return-on-capital measure marks down.
  • The signal is about capital, not about the market. Two days after the ranking date Frontline reported the best quarter in its history, with tanker rates running at several times cash breakeven. A composite built on forward returns and capital employed can point the other way from a strong trailing result, and here it did.

Other Monthly Turnover

Turnover in the strategy is driven by changes in each stock’s composite rank, which blends multiple factors including growth, value, and quality. While trades reflect a combination of shifts across all three factors, we attribute the single factor that moved most decisively in the list below.

Additions

  • Value: 4
  • Growth: 3
  • Quality: 3
  • Other: 1 (see below)

Removals

  • Value: 8
  • Quality: 2
  • Growth: 1

*This period’s “Other” trades: One addition reflected a change in our research coverage.

Disclaimers

Note on examples. The securities discussed are shown only to illustrate the systematic ranking process underlying the strategy. They do not represent all securities added or removed this period and are not necessarily the most significant, best-performing, or most profitable of those trades. It should not be assumed that any were or will be profitable. Nothing herein is a recommendation to buy or sell any security.

Note on portfolio characteristics. Industry counts and financial figures describe the portfolio as of the ranking date and will change with each rebalance and with revisions to underlying data. Figures identified as estimates are third-party estimates rather than reported results. All information reflects what was available as of the rebalance date.

This document is informational and educational. It is not an offer to sell, a solicitation to buy any security, or investment, tax, or legal advice. Receipt of this document does not establish an investment-advisory relationship between Magnifina and the reader.

The strategy relies on third-party fundamental and analyst data for security selection. The continued availability, methodology, and quality of that data is not guaranteed; changes by data providers or errors in third-party data could affect strategy behavior.

All investing involves risk, including the possible loss of principal. Past performance is not indicative of future results. No representation is made that the strategy will or is likely to achieve results comparable to any discussed.

Sources

  • https://www.sec.gov/Archives/edgar/data/913290/000091957426003700/d12167097_ex-1.htm
  • https://www.sec.gov/Archives/edgar/data/913290/000091957426005942/p15060813_ex-1.htm
  • https://www.methanex.com/wp-content/uploads/NR-MDA-FS-Notes-Q2-2026-final.pdf
  • https://www.methanex.com/news/release/methanex-corporation-completes-acquisition-of-oci-globals-methanol-business/
  • https://www.methanex.com/news/release/methanex-provides-update-on-trinidad-and-tobago-operations/