Month: February 2013

CNBC Stock Draft 2012 (Final Results)

expectingalpha Watercooler

There are times in the world of investing when a relatively short period of time can seem like an eternity. Like all of those prop trading desks on the day of the Facebook IPO as they struggled to defend $38 as the closing bell rang.

In the case of the 2012 CNBC Stock Draft, we speculated that a photo finish was possible. That was only five days ago. Joshua “Reformed Broker” Brown had lagged the field for months — and had made the classic dramatic charge, dashing from last place to leading the field coming down the stretch.

To his credit, in his own words, “Five days is a long time.”

As it turned out, we could have used a Timelapse camera as our Reformed Broker’s entry (Research In Motion) had a really, really tough week — a Waterloo so to speak. In the meantime, Google stayed strong, carrying Reggie “No Glue” Middleton to victory.

We don’t know if there’s any truth to the rumor that a testy Herb Greenberg handed Josh a rose as he sulked into the sunset. Or if Jim Cramer really did give him a roll of Lifesavers and a Mean Joe Greene jersey.

Joshua Brown (JB): This is tough. I was serious about five days being a long time. But I had no idea it could be this long.

Herb Greenberg (Testy): No doubt. We were a little worried that you might go from first-to-worst in less than a week.

Jim Cramer (Booyah): House of Pain. Waterloo, baby. RIMM shot.

JB: OK, OK… but you and Herb need to accept some culpability here. Check out the twenty stocks offered up as the smorgasbord for the draft. Only five of them beat the market over the last year.

Booyah: You don’t have to out run the bull or bear. You just have to out run the other participating prey.

Testy: Touche. But you guys left a lot of potential on the cutting room floor.

Booyah: Now you know how a Lightning Round feels, huh?

Bill Ackman: Gotta feel bad for the young guys like Josh here, getting trampled. This was all going down during my discussions with debate moderator Wapner. So I called my friend, Carl to see if we could step in …

Carl Icahn: Yeah, thanks Bill. I looked it over and called Loeb and about ten other hedge fund managers to see if we could boost that RIMM noble steed. I thought about selling Netflix, Chesapeake and my Herbalife position to see if I could drum up some dry powder. In fact, I thought about joining you and going short on Herbalife for a little extra risk capital.

Ackman: Thanks, Buddy. We ran the numbers by Einhorn and Nate Silver. Turns out not even Punxsatawney Phil wanted a piece of this action.

Icahn: Yeah. I’ll give you a call next week and we can kick around some other opportunities.

Scott Wapner: Thanks, guys. I’ll set up a conference call and we can discuss and share with the investing world.

Testy: Thanks for pronouncing Herbalife correctly.

Icahn: Did I mention that I had Netflix (NFLX) all the way here? Do I get a trophy or some kind of prize?

Najerian: Do I get any credit for passing Josh in the final days with Starbucks?

Icahn: I repeat. Netflix was mine.

Scott Wapner:  Bully.

JB: We’ll gift wrap some Herbalife products on your behalf and send them over to Ackman. For now, congratulations Reggie. Time for a rematch?

Noble Steed Final Standings

1. Reggie “BoomBust” Middleton (GOOG)
2. Pete Najerian (SBUX)
3. Joshua Brown (RIMM)
4. Abigail Dolittle (DELL)
5. James Altucher (AAPL)
6. Guy Adami (RSH)
7. Paul Hickey (JCP)

Dashboard: http://www.manifestinvesting.com/dashboards/public/cnbc-stockdraft-2012

Heavy Hogs (2012): Groundhog VI Results

expectingalpha Stocks

Groundhog Frigid

The Heavy Hogs for 2012 (the most frequently selected stocks one year ago) struggled a bit during Groundhog VI — checking in at 6.3% while the Wilshire 5000 gained 16.4%.

This doesn’t bode well for the Groundhog field as our accountants continue to tally the final results. Chances are if you had Portfolio Recovery (PRAA), ResMed (RMD), Google (GOOG), Bio-Reference Labs (BRLI), Oracle (ORCL) or Walgreen (WAG) — you’re smiling. These were the only six out of the seventeen heavy hogs to outperform the market, or 35.3%. (Values shown in the accompanying table are $100 invested on 2/2/2012)

We’re accustomed to a higher number than 35.3%.

Heavy hogs dash 20130201

Our Groundhog VII Stock Selection Contest

expectingalpha Watercooler

We hold certain truths to be self-evident.

That most of us like to sleep at night.

That most of us believe in Occam’s Razor.

Most of us marvel at the performance of a relatively-passive model portfolio like our Bare Naked Million

We’ve also paid homage to Eddy Elfenbein and his six year winning streak of beating the S&P 500 with his Buy List at Crossing Wall Street.

Therefore, we’ll keep it even simpler for Groundhog VII (2013).

1. Enter by selecting a minimum of five (5) investments and a maximum of twenty (20) positions.

2. Participants will receive $1,000,000 in Groundhog dollars. The cool million will be divided evenly amongst the number of positions you decide to use. In other words, if you pick (5) stocks … we’ll divide the $1,000,000 evenly, creating a public dashboard with $200,000 each.

3. No transactions will be permitted between February 4, 2013 and February 2, 2014.

4. Entries can be made all weekend and will be accepted until the market opens on Wednesday, February 6.

Entries can be submitted by emailing manifest@manifestinvesting.com or by posting in the Groundhog Challenge forum folder at http://www.manifestinvesting.com. (Subscription or FREE trial accounts)

5. Stocks under $1 not permitted.

S&P 500 Monthly Returns (2005-Present)

expectingalpha Investing

Yes, January 2013 was a good month, a special month in the context of returns.

But there have been several months since March 2009 that have been even better.

In this graphic the red-shaded months are the months when the median return forecast was below average … and the green-shaded months when the return forecasts were outsized.

I was surprised to see the dispersion for above-average return forecasts, while the monthly returns during our “return forecast plateau” (2005-2007) are pretty tightly grouped. Hmmmmm.

Qualcomm (QCOM)

expectingalpha Stocks

Qcom banner 20130201

In the realm of mobile communications, it’s clearly a jungle out there. The battle among the major providers is in full gear and profit margins (for most participants) show the impact. Enter Qualcomm (QCOM). QCOM has the #1 market share in application and graphics processing chips and 3G/4G/LTE modems used in smart phones. Let that sink in for a minute.

Qualcomm has revolutionized the mobile phone industry. Through a commitment to research and development and via a wide berth of partnerships with other firms, innovative solutions are built and distributed across the entire wireless industry.

Growth, Profitability, Valuation

The Manifest Investing sales growth forecast for QCOM is 11%. We’re using 33% for the projected net margin. The median P/E for the period 2006-2013 is 16.8×. We’re using 18x for the projected average P/E.

Qcom model 20130131
QCOM Business Model Analysis: The products are literally ubiquitous and although innovation continues (commitment to R&D) Qualcomm is somewhat mature with respect to life cycle … and naturally lower (but still blue chip leadership) growth rates lie ahead.

Qcom profitability 20130201

Qcom pe 20130201

At the time of selection, the stock price is $62.53, the projected annual return is 18-19%. The quality rating is 91.8 (Excellent, Top Shelf) and the financial strength rating is 98 (A++). The company has no debt.

The company is now ranked #38 in the MANIFEST 40 and although a newcomer to our 40 most widely-followed stocks, investors in our community have studied, owned and profited from QCOM over the years.

And we close with an echo of last month’s closing remarks on Atwood Oceanics — only this time we’re talking QCOM: globally diversified and serving a host of wireless companies … feels like a pretty good hedge vs. geo-risk and a little like 1960s Corning, they sold the tubes to all the dueling TV makers. Placing a bet on red, black and green?