I'm excited to announce this week's Outstanding Performance award winners. This week, we're highlighting an outstanding special situation short call and a long call on an undercovered and messy financial stock. Each award comes with a payment of $2,500 for doing an outstanding job of helping Seeking Alpha readers find alpha.
This week's Outstanding Performance Award winners are:
- Yuanxi Zhang for his short Top idea on WSP Holdings (NYSE:WH) published in August 2013. Return to date: +73%
- Weighing Machine for his long idea on Kingsway Financial Services (NYSE:KFS) published in October 2013. Return to date: +130%
An update to each thesis is available in the comment streams of each original article, linked above. While both articles are part of the SA PRO equity research archive available exclusively to SA PRO subscribers, we have unlocked the winning articles to all readers for the next 48 hours in honor of their winning the award.
About the winners
Yuanxi Zhang is a hedge fund analyst who focuses on special situations. He's become a top writer on the site for merger arbitrage and similar event-driven opportunities. He did well calling both sides of the NTS Realty Holdings (NYSEMKT:NLP) go-private deal, and has accrued a number of nice annualized returns for merger deals.
Yuanxi's article on WSP Holdings, his third for Seeking Alpha and his first Top Idea, offered a bigger opportunity. Citing various red flags in WH's go-private process, he called for investors to short the company. Shares fell that week as investors priced in the possibility of a deal failure, starting a roller coaster as the company extended the deal deadline multiple times over the following nine months. Yuanxi updated his case this May, saying WH again was running out of time for the deal completion. On May 30th, the ride came to an end as the company announced the termination of its go-private transaction, and shares plummeted once more.
Weighing Machine is a former global buyside analyst with over a decade of experience, and currently manages a long-short portfolio, describing himself as 'a long-term (3-5 year horizon) value investor.' Since beginning as a Seeking Alpha contributor, he has made a number of great calls on both the long and the short side - long MDCI, short FWM, short ZU, and long SEC.TO stand out as a few examples (all part of the PRO archive). He was also the first author to cover the Cynk Technology (OTC:CYNK) story.
His case on KFS made a complicated story simple. Pointing out the company's pattern of repeated, consistent, aggressive insider buying; the leadership of activist investor and board member Joseph Stilwell; and the rationalization and improved profitability of the company's operating portfolio, Weighing Machine stated that a reasonable, conservative projection of earnings could lead to 130% upside, setting a target price of 6.71. Shares cleared that mark in mid-June, and now sit at 6.78 today.
Congratulations to this week's winners! Look out for a new pair of Outstanding Performance award winners next Monday, and each Monday following.
And here's a page with all previous winners.
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're looking for:
1. 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.
2. Confluence: Every idea has a thesis. Did the idea play out for the reasons proposed or not?
3. 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.
To get exclusive access to these articles after they are selected, as well as early and archival access to many of our top performing ideas, subscribe to SA PRO.
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