Tracking the Performance of 'Just One Stock'

by: New Low Observer

On a regular basis, Seeking Alpha profiles a money manager to obtain his/her insight on the best pick for a long or short investment opportunity. Seeking Alpha has provided these insights since late November 2009 until the present. Initially, Seeking Alpha called it the “High Conviction” picks and was later changed to “Just One Stock” or “Just One ETF.”

We decided to provide a performance update of the stocks since the beginning of 2010 until the end of June based on the closing price as of July 14, 2010. As some might expect, the results have demonstrated the difficulty of making individual recommendations.

In aggregate, 66% of the stocks declined in value and 34% of the stocks increased in value. Out of the 99 companies that we could verify as recommendations starting on January 2010, the average change was a decline of –7.21%. This is contrasted by a year-to-date [YTD] performance of the S&P 500 and Russell 3000 of –1.79% and –1.26%, respectively. We noticed that stocks recommended with a price below $10 lost an average of –12.66%, significantly about the average for the group. Stocks that were recommended with a price above $10 had losses of –5.65%, reasonably below the average for the group.

Of the best performing stocks, the top two are standouts. The recommendation by Cara Goldenberg at Permian Investment Partners lived up to its top billing. Mrs. Goldenberg’s recommendation of Valeant Pharmaceuticals (NYSE:VRX) has racked up a return of 40.13% in 141 days. Mrs. Goldenberg is known for having presented her top investment picks to Mr. Warren Buffett. Buffett, being impressed with Mrs. Goldenberg’s selections, invited her to Omaha to discuss her methodology.

The other top recommendation was by Jeff Bogue at Bogue Asset Management for his selection of the ETN iPath VIX Short-Term Futures Exchange Traded Notes (NYSEARCA:VXX) which racked up a stunning 35.40% in 92 days. Although Bogue didn’t advise the use of VXX as a core holding, it was well timed nonetheless.

Below is a list of the 5 best performing stocks that were recommended since January 1, 2010. The list represents the top 15% of all the net positive returns that were recommended on a total return basis (dividends including appreciation.) Select the date to view the original Seeking Alpha interview with the recommended stock.

Best performing recommendations

Date Symbol Rec. Price As of 7/14/2010 % Change
February 24, 2010 VRX $36.76 $51.51 40.13%
April 14, 2010 VXX $19.15 $25.93 35.40%
February 9, 2010 PNK $7.42 $10.03 35.18%
January 25, 2010 MOVE $1.83 $2.30 25.68%
March 1, 2010 BOOT-OLD $15.42 $19.10 23.87%
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Finally, we get down to the specifics of those selections that didn’t fare so well since their recommendation. While the possibility does exist for these stocks to come from behind, the challenge is all the more difficult when the starting line is moved back 30% or more. Because money managers are putting their reputation on the line when making individual recommendations, it would be useful to put these losses in perspective. Hopefully the stocks in this category can provide us with lessons on how to avoid similar pitfalls. Alternatively, there may be attributes to these companies worthy of your re-consideration.

Below is a list of the 10 worst performing stocks that were recommended since January 1, 2010. The list represents approximately 15% of all the net negative returns that were accrued. Select the date to view the original Seeking Alpha interview with the recommended stock.

Date Symbol Rec. Price As of 7/14/2010 % Change
January 11, 2010 APWR $19.11 $8.08 -57.72%
January 12, 2010 CYTX $7.22 $4.01 -44.46%
February 12, 2010 AOB $4.22 $2.39 -43.36%
February 18, 2010 TLVT $33.41 $19.00 -43.13%
January 13, 2010 LGDI.OB $1.54 $0.90 -41.56%
April 5, 2010 TRIT $15.48 $9.10 -41.21%
April 16, 2010 EK $7.39 $4.71 -36.27%
April 29, 2010 DRYS $6.17 $4.06 -34.20%
April 27, 2010 AUXL $34.76 $22.92 -34.06%
May 7, 2010 COCO $14.27 $9.52 -33.29%
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Disclosure: No positions