Another year is behind us, and the promise of 2012 is fresh in everybody’s eyes. Everywhere I go on the Twitter, everybody is talking about how they’re going to make 2012 their bitch. While I can appreciate the enthusiasm, we all know those grand plans will be abandoned by January 21st.
So, knowing that, we gotta capture that enthusiasm before it gets replaced with general laziness. Which is why I asked 15 of my favorite blogger friends for their top 4 stock picks for 2012. And, for the most part, they responded. It always surprises me when other bloggers are actually nice to me, and I’m much appreciative of their support. Of course, it probably helps that the winner gets a $25 gift card to none other than Amazon.
But, what good is any competition without somebody being the loser? There’s no sportsmanship here. The loser of this competition will be mocked mercifully, and hopefully we can round up some monkeys to throw their poo at whoever finishes in last. In lieu of monkeys, check out the award for the loser of this competition.
The rules are simple. Each blogger contributes 4 picks, and each quarter we check back in and see how they’re doing. The winner is crowned on December 31st, 2012, unless the world comes to an end first. In that case, we’re all losers. Dividends are counted in the results, but any currency fluctuations aren’t. Each stock is treated the same in the imaginary portfolio.
Now, this is normally the part where I tell you about my picks, which I’ll do in a second. But first, a bit of a curveball. All those index investors are all up on their high horses, telling us chumps not to bother even trying to pick stocks. In fact, these people sometimes even go as far as saying that a monkey throwing darts could do better. Fortunately, we have better ways to randomly pick a stock, thanks to the wonders of the internet. So, without further adieu, let’s take a look at Nelson’s random stock portfolio, thanks to something called Throwing Darts At Stocks.
1. White Bear Resources (WBR)
2. International Forest Products (IFP.A)
3. HomeAway Inc. (AWAY)
4. Shaw Communications Preferred Share Series A (SJR.PR.A)
Well, that was fun. And now, let’s check out my real picks, which will undoubtedly get crushed by those random picks.
1. Imitation Corp (IMN) January 1st Price: $5.72
Imitation corp was spun off of 3M Corporation back in 1996. They manufacture digital storage solutions – things like blank cds and dvds, USB flash drives, camera memory cards, – that type of thing. So yes, I realize this is a bit of a dying industry.
However, the balance sheet gets me hard in the pants. There’s not a nickel of debt, and the company is sitting on $232M worth of cash, compared to a $218M market cap. Yep, this bad boy is trading for less than the value of cash on its balance sheet. The reason is because management has been making acquisitions that have kind of flopped over the last couple years. Management has indicated they still want to continue spending shareholders’ money on ill-fated buyouts. So that’s bad.
The good is the company essentially breaks even, with a positive cash flow. At some point, shareholders are going to get fed up with current management, and lead some sort of revolt, hopefully with the end result being a senior manager or two fired. This is a classic example of paying 50 cents for 1 dollar worth of assets.
2. Research In Motion (RIM) January 1st price: $14.80
The rationale behind this is simple. I don’t really think they’ve got the potential to fully turn this around during 2012. As any shareholder of Nokia can tell you, turning around a big technology company doesn’t happen overnight.
Earlier in December, there were rumblings that Amazon was interested in making a bid for RIM. I think either they or Microsoft end up buying RIM at some point this year. It’s a takeover play.
3. Bank Of America (BAC) January 1st price: $5.56
Another classic contrarian play, it seems like the entire world hates Bank of America. They’re trading at a fraction of their book value, but nobody really knows just how toxic some of those assets are, so perhaps book value isn’t the most accurate way to determine that BAC is undervalued.
Earnings actually haven’t been bad over the past year, with the exception of the 2nd quarter loss. If the U.S. economy continues to recover in 2012, Bank of America should have a pretty decent year.
4. Diana Shipping (DSX) January 1st price: $7.48
After getting my ass absolutely handed to me last year with Paragon Shipping, I’ve decided to go back to the well and pick a shipping stock this year. Yeah, I’m a glutton for punishment.
Diana has the best balance sheet in the industry, and they actually make money, which is impressive considering the overcapacity of ships that were built right after the big shipping boom of 2006-08. This is another economic recovery play which trades for less than 10x next year’s estimated earnings. If they can show the market some solid results next year, they could have a pretty decent year.
Enough About Me. What About Other Entries?
Glad you asked. Let’s look at all the other entries, in the order that they responded.
Exchange Income Corporation (EIF)
Bank of America
Bank of Montreal
Ecological and Environment
Medical Marijuana Corp.
(Easily my favorite stock of the contest)
8. Holy Potato
Indigo Books & Music
Research in Motion
10. Nelson’s Buddy Dale
(Obviously he doesn’t have a blog, probably because he’s almost illiterate. But he wanted in, so who am I to say no? His results are just for fun. As in, he can’t win the contest.)
12. Money Mamba (My money’s on him)
And that’s it kids. Good luck to all the entries, and if any readers want in on the action, you know where the comment section is. Bloggers who are entered are encouraged to trash talk each other. I never said we were a classy bunch.