Stock Picks for 2012 Review

by JT McGee

Last year’s performance certainly wasn’t a big winner like in 2011, but I’m happy to report that for two years in a row, all Money Mamba picks beat the market.

In 2012 I selected: Adams Golf (ADGF), Transocean (RIG), Ford Motor Company (F), and Darling International (DAR). You can see the original post here.

Here’s a look back at performance:

  1. Adams Golf (ADGF) – Bought out at a 67% premium to the opening price on January 1, the acquisition was announced on March 19th when Adidas stepped in to fold the company into its golf line. This was also a pick for 2011. Total performance for both years worked out to something like 130%. If I could find more companies like this one, I’d be a happy guy.
  2. Ford Motor Company (F) – This one was a late bloomer, having taken off in the first quarter, getting crushed in the second and third quarter, and then finishing the year strong, up 20.3% plus 2% in dividends. The improvements at Ford Motor Company are nothing short of a story worth putting in every MBA text book across the country. The Ford Focus is now the top-selling car in the world while macro trends pushed the F-series truck lineup to the best year in three years. An emphasis on common platforms is also driving profit margins. I just wish it had made its latest move a little faster.
  3. Transocean (RIG) – The best performing oil stock for 2012, this one disappointed with a 16.3% return. The company didn’t settle on their Macondo BP spill as I expected in 2012, although their liability was determined on January 4, 2013, after which the stock rose for a YTD gain in 2013 equal to….16%. Go figure. I still think Transocean is remarkably undervalued as one could sell its assets for more than its enterprise value. That made it somewhat of a net-net play for me, and its assets are still underperforming. Much more earnings upside here so long as oil stays relatively pricey.
  4. Darling International – Nothing like a high beta name to send you for a loop. This one ended the year up 20%, although at one time it was up more than 40%. My price target for this one was the lowest at $18 per share, which it reached, but there’s no selling in stock market competitions and the share price languished as the Fiscal Cliff stole investor’s concerns. Still, I’ll take a 20% return any year!

Total return: 31.25% (roughly–ain’t nobody got time for perfection)
S&P 500: 13.4% +/- 2% for dividends

I hope this random game is as kind to me in 2013! Follow this link to see my stock picks for 2013. If catalysts develop on my expected timeline this year, I think 2013 could be a great year.

{ 3 comments… read them below or add one }

Andrew @ Listen Money Matters January 5, 2013 at 14:09

Wow, you killed it! Beating the market isn’t a simple feat, professional money managers including, Morningstar says that only 48% of money managers beat the market. Thanks for following up with your results, what kind of methodology do you use to make your picks?

Reply

JT McGee January 5, 2013 at 15:51

I’m a value investor at heart. I like stocks that I calculate to be undervalued by a good margin, then an even bigger margin to account for stupidity. I like a massive margin of safety between what I calculate a company to be worth and what it trades for on the market. The whole goal is to make money even if I’m wrong.

For 2011 and this year I was/am invested primarily in cash boxes – companies that have tons of cash and current assets, very little debt, and low share prices relative to the assets they have. If you can buy a pizza shop that makes $500k a year and has $1.8 million in the bank for $3 million you’d be a fool to say no. I think the same is true of stocks. That logic doesn’t always filter to the stock market, though, because people see it as buying ticker symbols, not businesses.

Reply

Peter January 15, 2013 at 06:15

Its great achievement JT McGee. And I do agree with your logic. Thanks for following up with your results.

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