O'Reilly Automotive 401k (PSSP) Plan PSDS Scan 12-31-2010

The O'Reilly 401k plan and the Balanced portfolio both made incremental improvements over last year. Company stock ORLY had a very good 2010 but only a small 5yr APR improvement because the stock is so volatile. This year the Retirement Stable Asset Fund was represented in the scan by VRST the Vanguard Retirement Savings Trust fund. All but 3 of the plan investment options are in the Balanced portfolio this year. The employee portfolio largest holding by far is company stock. This is a good plan with better fixed income than equity options the last 5 years.

Recent 401k Plan "Fat Tails" Stress Test 12-31-2010

One of my "prudent investor" activities is to run a portfolio scan using the Cauchy "Fat Tails" PDF with the same 5yr market data used in the Gaussian "Normal" PDF design scan. This provides model data I use in my "pension plan" solvency risk check. It helps me "insure" that I am within the Dutch insurance industry maximum acceptable failure probability of 0.3%. I consider this model risky but still useful and thought others might be interested in 401k plan "Fat Tails" stress testing. Please keep in mind this is a tool not a rule for managing risk.

CBS Corp. 401k Plan PSDS Scan 12-31-2010

The CBS 401k Plan Balanced portfolio 5yr performance improved over last year and was helped by company stock CBS. That portfolio invested 2.1% of the Plan in the stock and the employee portfolio invested 7% in the stock. The Plan has a very large investment in GICs that I believe are mostly for older defined benefit retirees which is common in many older company retirement plans. You can see the GIC in the 3D scan. All in all a good Plan and a good but volatile company stock.

Prudential Financial 401k (ESP) Plan PSDS Scan 12-31-2010

Again this year the Prudential Financial 401k Plan was not helped by company stock PRU which has a negative 5yr APR = -2.85%. The Balanced portfolio has a 5yr APR = 5.95% with a Sharpe ratio of 1.64. This Plan has above average fixed income options and below average equity options especially the Prudential SMA options. A good balanced fund like PRPFX and a good international fund would help. There is not much more to say.

Watson Pharmaceuticals 401k Plan PSDS Scan 12-31-2010

The Watson Pharmaceuticals 401k Plan changed trustees and investment options effective January 2011. The new trustee is Charles Schwab and most of the investment options are from the new trustee. The SEC 11-k report as of June 2011 showed most of the plan assets in the Schwab Managed Retirement Trust Fund. I have no information on the employee asset allocation today. In the scan I used the new investment options and where 5yr data were not available I used the corresponding Vangurd fund. A uniform portfolio is provided for comparison purposes. The Balanced portfolio improved over last year and is very close to the uniform portfolio. Interesting.

Illinois Tool Works 401k (SIP) Plan PSDS Scan 12-31-2010

The Illinois Tool Works 401k (SIP) Plan investment options are all SMA funds and indexes. The Plan trustee is Northern Trust and the record keeper is ING. SMA funds are not traded on an exchange. The Plan does post periodic return data on a Plan website and that data was used in the scan.

*********CORE FUNDS
Stable Asset Fund  ITW.saf
Diversified Bond Fund   ITW.dbf
Large Company US Stock Fund   ITW.lcs
Mid & Small US Company Stock Fund   ITW.mss
*********TARGET RETIREMENT FUNDS
Retirement Fund    ITW.rtf
2015 TDF   ITW2015
2020 TDF   ITW2020
2025 TDF   ITW2025
2030-2050  ITW2030
**********INVESTMENT INDEXES
Citigroup 3-Month T-Bill   ITW.tbl
Barclays Capital US Aggregate Bond Index    ITW.agg
S&P500 Index   ITW.spy
Russell 2500 Index   ITW.iwm
87.5% EAFE / 12.5% EEM    ITW.bld

The Balanced portfolio 5yr return APR = 5.25% is average with a Sharpe ratio of 2.44 which is above average.  The plan and the employee portfolio were helped by company stock ITW but it is volaitle.

Mead Johnson Nutrition 401k (RSP) PSDS Scan 12-31-2010

Mead Johnson Nutrition was a Bristol Meyers Squib spin off in 2009 and the stock MJN does not have 5yr market data and is not in the scan. The Balanced portfolio is a little below average in performance with a 5yr APR = 4.89% and a Sharpe ratio of 0.96. The employee portfolio invested 5.3% of the Plan in the stock MJN that is doing well, much better than BMY. A pretty good plan and if company stock continues to do well next year performance could be above average.