Reviewing My Pans For 2016: Pans Up 16%, Picks Up 70% (Part 2 Of 2)

by: Bill Zettler


This is a review of my pans -- i.e., stocks I did not recommend for purchase.

My biggest loser was Awilco Drilling, up 37% when I thought it would go down.

My biggest winner was AMD, up 297%.

During 2016, I wrote 49 articles on subjects as diverse as Saudi Arabia's oil plans, AMD's new set of chips and a one-ship oil driller. I discussed my winners in an article titled "Reviewing My Picks For 2016: Picks Up 70%, Pans Up 16% (Part 1 Of 2)."

In this article I will cover my pans or those stocks I told readers to not buy. For "pans" I usually just recommend not buying as opposed to going short or buying puts. But none the less if my picks are correct they should stay where they are or go down some amount. Since my 6 pans in 2016 went up by an average of 16% I have to say they were universally incorrect. Note I did not include any dividends in my results so I may be off a little bit on total return depending upon when the article was written.

Also I wrote multiple articles on some stocks such as Awilco Drilling (OTCPK:AWLCF) and Intel (NASDAQ:INTC) but only used the earliest recommendation for comparison.

Here are my 2016 pans.

1. Awilco Drilling : up 37%

Awilco Drilling is a one ship off-shore drilling company. It is not widely followed and has very low volume averaging less than 8,000 shares traded per day. My argument in this article "6 Reasons Why Awilco Drilling Is At The Edge Of A Chasm" was that with only one ship and one drilling contract left (down from two and two previously) they were staring at problems that just might be terminal. The day rates on the remaining contract were twice what contracts are going for now and with a rehabbed 32 year old drilling ship new (profitable) contracts would be hard to come by. Plus, they have a $100 million loan that would have to be paid off pretty much eating up all the cash on the balance sheet. So it looked to me like it quite possibly could go to zero in the first half of 2018 when the lone remaining contract came to an end. At the time of publication on Feb. 29th AWLCF price was only $3.23 but it closed the year at $4.43 rewarding patient shareholders. I was clearly wrong on this one. To read all of my articles on Awilco, click here.

2. Qualcomm (QCOM): up 19%

Qualcomm's most profitable segment is the license and royalty fees it collects for its vast collection of important and groundbreaking IP (Intellectual Property). At the time of the article QCOM was involved in a dispute with Chinese authorities over the rates being charged to Chinese cell phone companies. On the other hand QCOM complained that certain Chinese manufacturers were not paying any fees at all. QCOM has great financial metrics including cash on hand, dividend and historic growth. My fear was that QCOM's license and royalty fee rates would be lowered to the point where profits would stagnate or grow slowly. Well, an agreement was reached and the stock price started to rise shortly thereafter. Congrats to the steadfast QCOM investors who ignored my advice. By the way I also wrote another QCOM article comparing it to Intel: "Intel Versus Qualcomm: Who's The Chip Champ Going Forward?"

3. Intel: up 18%

I have been a longtime critic of Intel's management and have consistently argued that Intel is too big to grow very fast as I explained in this article "Intel: There Are No Tails Big Enough To Wag This Dog." With $60 billion in revenue and 90% of its profit coming from legacy CPU products any new products are going to take years to have a major impact on the bottom line. In the meantime, competition is increasing in the legacy areas with Qualcomm and AMD producing new servers this year. And of course AMD's desktop and notebook x86 products are competitive for the first time in a decade. However, based upon the timing of this article Intel has had a very nice return of 18% well beyond the S&P's 11%. To read all of my articles on Intel, click here.

4. GE (GE): up 12%

On Feb. 12, 2016, I published an article on GE titled "GE: Thinking Out Of The Box With Its $100 Billion Cash Hoard" in which I questioned whether GE CEO Jeff Immelt would use the $100 billion GE received from liquidating most of its financial services wisely. This is another company that is so big ($100 billion in sales) that it is hard to move it away from its legacy businesses some of which have been around for over 100 years. I recommended taking the $100 billion and issuing a huge dividend to the shareholders. Obviously GE management disagreed with me. GE's share price increase of 12% (plus some dividends too) allowed it to slightly beat the S&P's 11%. To read all of my articles on GE, click here.

5. Exxon (XOM): up 8%

I have written 5 articles on Saudi Arabia and why I think they will keep oil prices low into at least 2018. Here is one of them: "Saudi Arabia And OPEC Are Going To Keep Pumping Until Shale Investment Is Crushed." One of the predicted results of that policy would be the lowering of Exxon's vaunted AAA credit rating. And I predicted when that inevitability happened Exxon's price would go down. Well, I was right about the Saudi's and the credit rating as I showed here: "5 Reasons Why Exxon's AAA Credit Rating Is In Jeopardy." But I was wrong about Exxon's price which Increased by 8% since I wrote this article recommending Exxon be sold: "Exxon's Credit Warning Shows Saudi Arabia's Death Grip On Oil Prices Continues." Exxon has a lot of die-hard followers, and this time they were right and I was wrong.

6. IBM (IBM) up 8%, Amazon (AMZN) up 5%

In June I wrote an article comparing two of the largest cloud companies, IBM and Amazon. In my argument I said that IBM with a lower P/E, stock buyback and big dividend was a better choice than Amazon with its 200+ P/E ratio. Well with one up 8% and the other 5% I call it a tie. Here's the article: "Amazon Cloud: Zero Dividend, 294 P/E Or IBM Cloud: 3.7% Dividend, 11 P/E?"

So that's the end of my review for 2016 where my winners far outpaced my losers. May 2017 be as favorable.

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Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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