Who out here has been reading DQYDJ for the last year… show of hands? Remember last year we entered into a friendly contest at Financial Uproar where we wanted to demonstrate our stock picking prowess to a skeptical audience (because auditing my returns wasn’t enough!).
So, even though we beat the S&P in 2012, we didn’t win (we got trounced, in fact). Let’s fix that in 2013, shall we? Here is our entry into the 2013 Financial Uproar Stock Picking Contest. (Scroll down for a post-mortemon 2012).
DQYDJ’s Picks For 2013
- TTM – Tata Motors – Even though the book value doesn’t inspire massive amounts of confidence in a value investor and folks like JT will caution me against trusting any measure which relies on Free Cash Flow in a foreign company, I’m a believer in Tata in 2013. No guesses as to what a dominant position in cars and trucks in India means in 2013, but I like it regardless.
- KLIC – Kulicke & Soffa Industries - Last year I picked a technology stock in my fantasy portfolio. It killed my returns. (Note: as an engineer, I never touch tech in my portfolio.) But this year? KLIC, if you go buy the numbers, is a value investor’s dream. It hits high in every category, except love from the street. Here’s to hoping that changes in 2013!
- EBIX – Ebix, Inc. – 9.69% Return on Assets, 21.02% on Equity hit approximately the right notes in this economy, but here’s a value stock which has some crossover value as a growth play. Two tech stocks – am I crazy? Yes. This is fantasy, not my real portfolio… so why not go for the gold? I heard the loser wins a plunger.
- CACC – Credit Acceptance Corp. – I know, you don’t need to tell me – credit, especially at the low end, might be a top target of the recently minted Consumer Financial Protection Bureau. I’m not particularly worried – the CFPB generally targeted larger banks in 2012, and most regulation is done at the state level. I’m confident in this pick for ’13.
DQYDJ 2012 Stock Contest Post-Mortem
My portfolio: + 17.81%
Jan 3, 2012 S&P 500 Open: 1,262.82
Dec 31, 2012 S&P 500 Close: 1,426.19
S&P Return: +12.93% (add another 2% for dividends… when S&P releases dividend totals we’ll know for sure), call it 15%.
So, roughly 3% market out-performance.
Yep, you’re right. Inteliquent was a dumb choice, down 75% (although it did pay a $3.00 special dividend, so I escaped with my scalp intact). However, the other three choices killed it, especially Vascular Solutions. AFL and PDLI I owned both in the contest and in reality, and both were solid performers – returning greater than the S&P 500 and paying a divided, to boot.
So yeah, 3/4. Oh well. May as well double down, right?
Full Disclosure: I own shares in TTM and PDLI. Even though I don’t own shares of the other companies listed today, I may purchase them in the future – especially the non-technology stocks.