Index of the underdog 2 : t = 1.5 months

Good morning ladies and gentlemen,
This is a follow-up from the last time I posted the index of the underdog.
refer to link below for the original post.
http://allengineerswearjeans.blogspot.com/2010/01/index-of-underdog.html
I wanted to post this entry at the start of the month, but due to work commitments, I didn't have the time.

Going back to the topic, the index has seen a 10% rise from its base point at 100 to 110.67. STI, on the other hand, has pulled back from 2,855.68 to 2,758.90 due to sovereign wealth funds and debt problems in Europe. Prices and values for this entry are taken at the closing of 12th Feb 2010.

The Index of the Underdog(IOU) is a weighted index and the main driver of the index is not based on whose price increased the most, rather its based on whose market capitalisation increase the most relative to the total market cap.

From now on lets just call it IOU for short.

Observations
The top performer comes from New Wave Hldings increasing a whopping 33.3%. BoomZ man.
However, its interesting to note that its really just a penny stock and the 33.3% come from the fact that it increased a meer half cent(not even a cent).

The main driver for this round comes from MacarthurCook Industrial REIT. Despite some bad news coming following it in the November last year, surprising its price rose 16%. If you guys want to know about what happened in Nov, go to the link below.
http://thefinance.sg/2009/11/22/i-bought-macarthurcook-industrial-reit-on-18-nov-a-bet-gone-wrong/
Maybe investors want to find a safe place to park their money?

Just to note some changes in the IOU
1) 2 out of the 10 companies did not change in price
2) 7 out of the 10 companies increased in price
3) 1 suffered a drop in its price
4) lowerest % drop - 4.76%
5) highest % increase -33.3%
6) lowerest % increase - 2.77%

Opinions
It is intersting to note that IOU is based on 10 extremely undervalued companies, hence price doesn't fall too low. People might now want to get it, but at least they do not want to sell it. It seems rather in line with chapter 20 of intelligent investor(margin of safety).

I know many people will flame me for this. Just a thought, maybe because its so undervalued, it can only see an upside? We see the index rosed 10% while STI fell. Did we really beat the market? The numbers seem to prove so.

On top of being undervalued, these companies are also small cap. With the current consolidation tagged along with the immense amount of uncertainty, I guess investors wouldn't want to risk their capital on small companies which may face the risk of poor business or bankruptcy(worst case senario). This explains why despite one and half months, we still see that the prices of 2 companies remain stagnant and some of the rest increasing by small quantities.

With regards to the second opinion, I would say that prices did not increase from an absolute amount, but only percentage wise. I guess this is the good part of buying penny stocks, a small increase in absolute amount will translate to large percentage increases.

Conclusion
I don't its fair to draw any conclusion at this point. Its only been 1.5 months and I guess it should be considered short run. In the short run, anything can happen. This time we beat the market.
Maybe buying severely undervalued stocks in a good strategy after all.

I will follow up with the index again, stay tuned.