It’s a new year (almost!), which means it’s time for your favorite annual tradition. No, not your birthday. Or Christmas. Or grandma telling you she loves your brother more on account of he phones more than once a year. It’s not Nelson weeping on Valentine’s Day either. Okay, that’s enough. Stop guessing.
It’s the annual stock picking contest. The rules are simple. Many of your favorite personal finance bloggers, random people I met on the internet, and I each pick four stocks which trade on any Canadian or U.S. stock exchange. We then take the average return for each contestant’s mini portfolio (including dividends but excluding any currency fluctuations) and we have them face off in direct competition to each other. A new wrinkle in the contest this year is I allowed the competitors to choose cash as one (or more) of their investment choices, which would guarantee a 1% return. Nobody took me up on this offer, unsurprisingly.
The winner gets glory and jokes made of their various shortcomings. The losers get humiliation and more jokes made about their various shortcomings. Not surprisingly, many of the entrants change from year to year. OH, DWID NELSON HURT YOUR LWITTLE FEELINGS?
That’s enough preamble. Let’s get to it. I’ll list everyone else’s entries and then go into a little more detail on my own.
Steve (whose email display name is Steve Kapitalust, a name I am at least 14% sure is a fake) decided to go with pretty much the opposite of what I like to invest in. If this is a move to troll me, mission accomplished.
Boston Beer (NYSE:SAM)
Blog reader Doug
Oh, you guys are going to like at least his first pick. FINANCIAL UPROAR: GETTING YOU HIGHLY INVESTED SINCE 2012.
Aurora Cannabis (CNSX:ACB)
Nemaska Lithium (CVE:NMX)
Painted Pony Petroleum (TSX:PPY)
Knight Therapeutics (TSX:GUD)
One of her picks was picked because it comes from Quebec, the same province that Vanessa hails from. Oh, and one was picked because it was called ISIS Pharmaceuticals, a name that was recently changed. What kind of BS contest am I running here?
iShares MSCI Canada Index (NYSE:EWC)
Ionis Pharmaceuticals (NASDAQ:IONS)
Blog reader Ben
Ben’s picks intrigue me. If he had a newsletter poorly Xeroxed and slightly off-center, I’d probably be a subscriber. His half-growth half-value portfolio might do something.
Sierra Wireless (NASDAQ:SWIR)
Dream Office REIT (TSX:D.UN) (Disclosure: I own this one)
Bank of America (NYSE:BAC)
As you might remember, John was the winner of the 2014 edition of the contest, and is currently flirting with last place in the 2015 edition. Way to be consistent, John. In what I think is a first for the contest, he actually picked a preferred share! More than one in fact! We like to have fun around here, let me tell you.
Freddie Mac preferred shares (OTCBB:FMCKI)
Dundee preferred shares (TSX:DC.PR.C)
American Hotel Income Fund (TSX:HOT.UN)
Paris Hilton thinks that last pick is hot. The TopicalJokeoMeter 3000® does not.
Robb would like everyone to know he’s “terrible at this.” I’m glad he’s not using that as an excuse to not enter, because like hell it’s stopping the rest of us.
Under Armor (NYSE:UA)
These picks are either going to finish first or last. I can feel it.
Probably my favorite competitor is Mark “please only give me vanilla, other flavors scare me” Seed of My Own Advisor. He makes sensible picks that are terrific for real-life portfolios, finishes in the middle of the pack, and then goes on with his life. Naturally, I HATE THESE PICKS SO MUCH. Much of the same this year, but with just a little energy spice thrown in.
Bank of Nova Scotia (TSX:BNS)
Crescent Point Energy (TSX:CPG)
TransCanada Pipelines (TSX:TRP)
Emerson Electric (NYSE:EMR)
Mark looks forward to his 6th place finish.
Have I made the joke yet that Avrex Money kind of sounds like T-Rex Money? (Checks) It turns out that’s the only joke I’ve ever made. Well then. Here are some picks.
Richie Brother’s Auctioneers (TSX:RBA)
Expeditors International of Washington (NASDAQ:EXPD)
Molina Healthcare (NYSE:MOH)
In honor of the author of Freedom 35 Blog, a guy who calls himself Liquid, I’m going to put down a bunch of random emoticons. Visit his blog if you don’t understand. 🙂 😉 😀 :p and whatever the fart emoticon is. There isn’t one? EMOTICONS ARE STUPID.
Waste Management (NYSE:WM)
Royal Bank (TSX:RY)
Hey, that third pick stinks. OH, LIKE YOU WOULDN’T HAVE MADE THE SAME JOKE GO TO HELL.
Janine is very nice, but that still didn’t stop me from making this joke on Twitter the morning her, Vanessa, and I went out for breakfast. In related news, I am a terrible human being.
Etiquette question: Do I have to buy breakfast for everyone the morning after a threesome, or is it okay if we split it?
— Nelson! (@financialuproar) December 21, 2013
No threesomes were had in the making of this blog post.
Aurora Cannabis (CNSX:ACB) MORE WEED
Home Depot (NYSE:HD)
Dupont Fabros Technology (NYSE:DFT)
Barrick Gold (TSX:ABX)
PK is well on his way to winning the 2015 edition of the contest. Rather than congratulating him on his great picks, I will hold it against him forever and ever until he dies before me. This is unlikely considering all the red meat I eat, but still.
NeuStar Inc. (NYSE:NSR)
Cal-Marine Foods (NASDAQ:CALM)
Tesoro Corp (NYSE:TSO)
Honda Motor (NYSE:HMC)
He would like everyone to know he doesn’t own any of these stocks and promises not to buy them for 72 hours after I publish this. And I’d like him to know I HATE YOU.
Blog reader Tyler
Tyler not only picked a preferred share, but he also picked the same one Holy Potato did. Except different. OH HOW EXCITING.
Dundee preferred shares (TSX:DC.PR.D) (full disclosure: I own this one)
CHR Health (TSX:CHR)
Imperial Ginseng Products (TSXV:IGP)
Diversified Royalty Corp (TSX:DIV)
Blog reader Jeff
I originally missed Jeff’s picks, on account of he actually got them in on the same day as the request email went out. His prompt response shocked and scared me. Weeping was had.
Prometic Life Sciences (TSX:PLI)
ATS Automation (TSX:ATA)
New Residential Investment Corp (NYSE:NRZ)
Bank of America (NYSE:BAC)
Finally, what you’ve all been waiting for…
Let’s do this thang:
Corus Entertainment (TSX:CJR.B)
Corus trades at something like 5x projected free cash flow for 2016. The market hates it because it seems like everyone is cutting the cable cord, but I think it’ll end up being fine. It’ll probably acquire some channels from Shaw in the New Year because the latter will need to sell some assets after the acquisition of Wind Mobile closes. Corus pays a 10.5% dividend that’s easily covered by free cash flow. Corus is the biggest position in my portfolio. I like it more than Uter Zorker likes chocolate.
Directcash is Canada’s second-largest, Australia’s largest, and the UK’s third-largest operator of private label ATM machines. They have approximately 23,000 units spread between the three countries, along with smatterings in the U.S. and Mexico.
Like with Corus, Directcash is a free cash flow machine that’s beaten up because of what the market perceives as potentially deadly technological innovation. Why use cash, the naysayers argue, when you can just use your phone to pay? Once that really catches on, ATMs will go the way of the dodo.
I’ll admit the trend is going that way. But in the meantime, there are still as assload of people who are willing to spend $2.50 for access to convenient cash. After soccer we always go to the same bar, and there are people using the Directcash ATM there — even though the bar accepts all forms of plastic. It continues to boggle my mind, but who am I to argue.
Insiders are buying a whack of shares lately, and the stock pays a 11.6% yield. The dividend is less than 50% of free cash flow.
Hammond Manufacturing (TSX:HMM.A)
Hey, it’s the illiquid micro-cap edition of Nelson’s picks. Because last year’s Winnipeg Free Press worked out so well!
I’ll get into more detail about Hammond on the value investing blog at some point, but the basic story is this. The stock trades at just 7 times earnings even though those earnings have been somewhat suppressed by booking losses on inter-company loans. Book value is $3.68 per share, I paid $2.05. And the company is having success exporting its wares because of the weaker Canadian Dollar. I think this trend continues.
Management owns a whack of this one (the founder controls it with multiple-voting shares), which I always like to see. And once the company is done building a new building, revenue should keep going higher. The new debt adds a little bit of risk, but I think it’s pretty manageable.
Franklin Resources (NYSE:BEN)
This is the parent company of Franklin Templeton. It’s okay that you confused it with a mining stock, I did too at first. If I was in charge a name change would be the first thing on my agenda.
Asset managers are beaten up, and BEN is no exception. It trades at approximately 11 times earnings (or 8x earnings if you strip out the massive cash pile). Management owns a whack of shares, and assets under management are going down mostly because of exposure to emerging market debt, which is getting crushed. Investors are also scared of the ETF revolution killing active managers.
Management has bought back 3% of the shares outstanding over the last year, and the dividend has been increased annually for the last 34 years. Yes, kids, I picked a dividend aristocrat. I feel so dirty.
Disclosure: I own Corus, Directcash, and Hammond Manufacturing. I will likely buy Franklin Resources soon.
And that’s about it. Stay tuned for Monday’s post where we look at the results of the 2015 edition of the contest.