Last week, Eli announced the launch of Outstanding Performance awards, in which we search through our long and short ideas archives looking for outstanding stock ideas that played out, and reward their authors for sharing great ideas with our readers.
Today, it is our pleasure and honor to congratulate our first two Outstanding Performance award winners:
- Winner #1: Unconventional Capital Wisdom for his long idea on Idenix Pharmaceuticals (NASDAQ:IDIX) published in July 2013. Return to date: +597%
- Winner #2: Nitor Capital for his long idea on Federated National Holdings Company (NASDAQ:FNHC) published in March 2013. Return to date: +308%
Each winner receives $2,500 for helping SA readers find alpha. Each author has provided an update to his thesis in a comment to the original article, linked above. Both articles were free to all Seeking Alpha users for a month, and are now part of the SA PRO equity research archive available exclusively to SA PRO subscribers. To get exclusive access to these articles and early and archival access to the authors' future ideas, subscribe to SA PRO.
Unconventional Capital Wisdom has published more than 50 long and short ideas on Seeking Alpha over the past year. Many of them have performed outstandingly; you can see the performance of all of his long and short ideas on our new author performance page.
Unconventional Capital Wisdom LLC (UCW) is a registered investment advisor in New York state. The firm manages long only separate accounts for individuals and institutions. UCW helps clients have a better chance at achieving above average long-term results through concentrated portfolios of quality small cap equities with quality managers trading at below average prices, all across the globe. Given the return on this call, the unconventional wisdom paid off.
His call on Idenix proved prescient. Idenix agreed to Merck’s takeover offer on June 9th, 2014 at a premium of 240%. Analysts cited IDIX’s HCV drug portfolio and intellectual property as key pieces of the deal. A pretty stunning development.
Nitor Capital has published four long ideas on Seeking Alpha since last March (see his performance here), including his thesis on Federated National Holdings, a Florida-based property and casualty insurance provider which he noted was trading at a discount to its liquidation value despite a sizable investment portfolio. Nitor, a long/short aggressive value hedge fund, argued that the sizable margin of safety and the market’s misperception of hurricane-related risks and regulatory headwinds made for an attractive play, stating that, “As long as the Company's insurance business can break even, by purchasing shares of FNHC, one would own a $145 million investment portfolio at a $30 million valuation.” Commenters found the case convincing, as did the markets. In the 16 months since, the company has posted profitable underwriting numbers and maintained its returns on the investment portfolio. The stock has gained 308% as a result.
Congrats to this week’s award winners. Look out for a new pair of Outstanding Performance award winners next Monday.
More about Outstanding Performance awards
Seeking Alpha aims to help investors outperform the markets. In awarding authors of outstanding stock ideas that played out, we hope contributors will be motivated to share more outstanding long and short ideas with our readers - which benefits everyone.
Here's what we'll be looking for:
- Performance: Above all, we're looking for ideas that made SA readers money. Risk matters, so we’ll be looking at the stock’s market cap, Sharpe ratio, etc. as well.
- Confluence: Every idea has a thesis. Did the idea play out for the reasons proposed or not?
- Compelling: For an idea to be outstanding, it needs to be sufficiently convincing that a reader would have been compelled to take a deeper look at the stock and potentially take a stake. In assessing compellingness, we’ll be looking at a number of factors including article comments (how did readers react?), historical performance (does the author have a track record of well-thought-out stock ideas?), voice of expertise (does he/she come across as someone who has unusual insight into the stock?), and how thoroughly the article covered key issues (reasons for market mispricing, catalyst(s), competitive landscape, company management, key risks, etc.). In other words, we’ll be looking for the same things readers look for when assessing an idea.
To qualify for an award, the idea needs to have been submitted exclusively to Seeking Alpha. We will also be asking award winners to publish an update to their thesis, either as a comment to the article or as a standalone article.
Generally, we'll be looking for longer-term ideas that offered meaningful upside to readers. We'll be going back as far as two years or even further. We may also reward ideas that played out outstandingly over a shorter timeframe. But we will not be using Outstanding Performance awards to reinforce extreme short-term price volatility.
If you have great stock ideas, why not become a Seeking Alpha contributor yourself? Colin and his contributor success team will make it easy to share your ideas with tens of thousands of readers.