Crazy Morning after Gumshoe Contest

By Travis Johnson, Stock Gumshoe, October 13, 2008


The entrants to the Stock Gumshoe Weekend Contest kept their fingers crossed this morning as they watched the markets continue to bounce off of Friday’s lows — many of them picked the big morning bouncers — including GM, APWR, and several other morning rockets.

If you’ll remember, the contest had two parts: First, who provided the most interesting stock idea for this environment?

And second, who can pick the stock that will go up most between now and election day. We’ve got three weeks to go for that second part, but I can tell you about the first winner today.

If you’d like to go back and see all the entries before you learn who won, just click here to see the original contest announcement and scroll down to see all the entries.

There were no shortage of excellent suggestions and ideas thrown out over the weekend — I told folks that I would only award the price if 20 people made submissions, and we ended up closer to 200. So I can’t complain about that — should have known that the thoughtful, wise, and unusually good looking Gumshoe readers would come through. We saw many submissions from long time regulars, as well as a lot of folks stepping up to share their thoughts for the first time. All great to see.

So … drum roll, please — the winner of the first part of the contest and a cheerfully given $50 prize is …

Bob M., who submitted entry number 46. Here’s what he shared:

“WWE For those of us non-elitists out there. Price has held steady,even through these troubling times . Between $13 & $16. Not a bad dividend also,was raised to $0.36/share.They have expanded into Europe,China,India, Mexico,& South America.Guys & gals follow their story lines,essentially soap operas (telenovelas) with sweat.Legions of loyal fans worldwide & they just keep on buying those PPV’s,Action Figures,Apparel,DVD’s,etc.”

I have no idea whether WWE will be a winner — I know very little about their core business … but I can’t resist the idea. When I look at my portfolio these days I feel like I’ve been on the receiving end of a piledriver from Stone Cold Steve Austin, so it seems only appropriate to pick a company that gives the vicarious thrill of watching huge men give each other concussions.

Plus, they have a huge pile of net cash and pay a big dividend (about 10% at the moment). They’re certainly a consumer discretionary/media/licensing name, not unlike Marvel which is a favorite stock of mine, and they didn’t get beaten up nearly as much as most of the bigger name stocks we’ve seen here.

So … I have no idea how it will do, but this was the most intriguing idea to me, straight out of left field and almost never mentioned on CNBC. Thanks Bob — I’m a snarky East Coast elitist whenever I can get away with it, and I can’t say I ever liked wrestling myself, but I like your idea.

This was a very tough choice. Honorable mentions go to several folks who had intriguing ideas, including …

Entry 136: WomanWithPortfolio picked another great sector play, as she so often does, with PWR as a play on rebuilding and expanding electrical infrastructure (specifically power lines). And she had one of the more thoughtful comments about strategy, too.

Plays on agriculture of various types — there were all kinds of these, from the equipment makers, to stocks like FEED or the MOO ETF, or other popular consumer staple stocks like General Mills. All interesting, and we’ve certainly seen agriculture fall far and fast, and we will all certainly still be eating next year if we’re doing anything. Of these the one I found most compelling was the pick of Archer Daniels Midland (ADM) by Don Routledge (entry 97) — he pointed out that it’s trading well below book value, and “everybody has to eat.” True enough, and almost good enough for the win.

And with the wild morning trade, several folks shared ideas that also got a Barron’s Bounce this morning to go along with the “world is not ending” bounce — including a thoughtful look at MetLife (MET) from Mike S., and several cash-rich companies that several folks mentioned, including Deere and Caterpillar.

There were also quite a number of picks of beaten down financials — National City, Bank of America, and a few others that are all moving more or less in tandem this morning. There were also several folks lining up for lottery tickets with Fannie Mae or Freddie Mac or a variety of other companies that are close to insolvent or on the verge of bankruptcy, though the claims of some that “it’s so far down it has to go up from here” are frightening. Remember that the maximum loss is still “everything you put in,” for any equity investment.

I also saw several interesting healthcare picks — including two stocks I’ve owned, Intuitive Surgical and Accuray, but a surprisingly small number of pharmaceutical or biotech stocks. Lots of experts still consider these to be defensive, but apparently the Gumshoe faithful don’t buy that after a few years of absolute misery in most healthcare sectors. For what it’s worth, I still own Accuray, but it might be a tough few years for these makers of capital goods for hospitals — word is that lots of hospitals are still having plenty of trouble financing big ticket purchases, though that could turn around quickly, too.

And longtime valued contributor farley5 threw in an interesting pick (he calls it “risky”) in natural gas — our heavily teased old friend InterOil (IOC) that’s betting on serving up LNG to hungry Asian markets. A few other folks also saw a return to favor for energy in general, including longtime reader Advantedges, and several folks clung to the energy pipeline sector for salvation as they churn out high yields during this uncertainty (tickers thrown out for consideration included KMP and APL). Maybe the fact that Aubrey McClendon got margin calls on Friday for his massive bet on his own company, Chesapeake, means that we’re finally hitting “capitulation” in those markets, too (CHK is up 20% or so as I type, incidentally). Several folks picked Canadian Royalty Trusts, which may do very well but in some cases will face dividend cuts with lower oil and gas prices, even if you’re not worried about the tax change coming in a couple years — maybe the beaten-down prices already reflect those possible concerns, maybe not.

Of course, there were also plenty of folks who didn’t read (or care about) the “rules” — a few put buyers and short picks, which may end up doing well but aren’t eligible for the contest (the SEC may have lifted its short ban, but the Gumshoe Short Ban is still in effect). And there were several folks who picked some variation of the Midas touch — GLD or a variety of gold miners, and, surprisingly enough, only one person who recommended buying a handgun or a mountain cabin. So far this morning the fact that the world may not end is working against them, but who knows, over the next few weeks they may end up being the last ones standing.

And in that same vein, there are several people betting on a recovery in commodities to restore health to any number of mining companies, whether it’s for molybdenum or copper or rare earth minerals — if the Chinese economy continues to grow and the Chinese government keeps lending us money to keep US consumers buying their plastic gewgaws, maybe they’ll be the picks with leverage to global recovery that will fill your coffers.

Among the submissions some typically very economically sensitive names, the shipping and transport companies, also were well represented. Lots of folks like the various dry bulk shippers here (Dry Ships, Navios, and a few others), as well as several oil tanker companies (Tsakos and Frontline, among others). They certainly count as beaten-down, and many pay huge dividends … and maybe the dips in the Baltic Dry Index or tanker rates will be short-lived, or will overstate the earnings shortfalls many of these companies will experience in the quarters ahead.

And final mention should probably go to the sellers of numb minds — I noticed both Diageo and Anheuser Busch were picked. I too have admired Diageo from afar (and helped fill their coffers with my own purchases, I must admit), but thought they were too expensive — you could certainly argue that they ain’t expensive anymore. And BUD has a good deal in place to sell itself but the market is for some reason terrified that InBev will back out — if the deal goes through this quarter you could have made a 20% gain in just a couple months by buying at the lows last week. And more importantly, I would assume that last week was a very, very strong week for sorrow-drowning.

So … lots of interesting ideas, some good perspective from both the most fearful bear market sufferers and the most hopeful investors who see a bull market hiding in the rubble. I hope you had a chance to read some of the entries even if you didn’t throw out an idea yourself. I’ve gotten some help from a Canadian reader (TV Guy) who interrupted his Thanksgiving to get our tracking spreadsheet started, so that will go up online in the next day or two so you can keep track of who had the best idea for these next few weeks of maximum uncertainty. And I’ll keep it up online so even if you don’t win the next phase of the contest, you can still point to your fabulous idea next year if it turns out to be a big winner … and claim your share of bragging rights.

The winner of the second half of the prize will probably be a much more volatile and crazy pick than the WWE suggestion that wins this first half — I wouldn’t be surprised to see our winner have more than a 100% gain in that time frame, or the last-place submission go bankrupt. Now, if only I knew beforehand which was which …

Thanks again for participating, everyone — it was fun to read all the submissions, and I hope you’ve all got a little smile on your faces today as . Fates have conspired to have this “bounce” take place on a day when the debt markets are largely closed and the banks are mostly sitting in the corner, resting and trying not to faint or toss their cookies after a killer workout. Tuesday will be an interesting day, indeed.

And Tuesday will bring us back to our laser-like Gumshoe focus on a brand new teaser from somebody or other … sorting through the pile now, will write soon!

full disclosure: I own shares of Accuray and do own shares of some other unmentioned contest entries, but no other stocks mentioned above. I won’t trade in any stock mentioned above for three days.

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16 Comments on "Crazy Morning after Gumshoe Contest"

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Bob M.
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Bob M.
October 13, 2008 12:13 pm

Great! & thanks for the contest!. I will cheerfully accept the cash.Note too,that WWE put out a statement last week attesting to their financial stability in these tough times.

Graham Jervis
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Graham Jervis
October 13, 2008 12:58 pm

Well Done Bob M.

Hans
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Hans
October 13, 2008 1:22 pm

WWE is up 8% as a write now (Monday pm), while my idea FRO is up 16%…no gripes…we live in interestingly volatile times…tomorrow things are probably upside-down anyway…and forecasting the future is too darn difficult…this is a time where you take one day at a time and keep your wits about you..

turbomut
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turbomut
October 13, 2008 2:26 pm

Thanks to all for the valuable info. in this contest.
Did a print out for my file…46 pages in all

Rod  - drilling on the Borgny Dolfin
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Rod - drilling on the Borgny Dolfin
October 13, 2008 2:50 pm

this is by far the most original stock pick ever, I didn`t even know they were public! once agian the gumshoe faithful are ahead of the high priced services, and he’s out of pocket $50 himself, I wonder how many services will now tease this one. Just waiting for my inbox to fill up! I didn’t get into the contest on time but my personal favorites in the beat down stocks department are NXY, and GSI, & PDS, don’t know about recovery before the election though.

Elissa Stein
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Elissa Stein
October 13, 2008 3:24 pm

Gumshoe, that was a really a great idea and diversion. Congrats, Bob.

womanwithportfolio
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October 13, 2008 3:29 pm

It was fun to think about possible winners over the weekend, when everything was looking so gloomy. Lots of good ideas, and your timing for a contest was fabulous, Mr. Gumshoe!

Wei Ding
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Wei Ding
October 13, 2008 4:00 pm

God bless Gumshoe and Bob M. for their due diligence and creative insights.

Jerry G
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Jerry G
October 13, 2008 7:06 pm

Dear Gumshoe ……thanx, the rest of us may be “losers” …..but you did leave us with some good stock tips Thank You!

Wayne
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Wayne
October 14, 2008 12:55 am
It was truly a great idea. My “Market Overview & Ideas” print was 41 pages about 30 minutes after Market opening this morning. The popular thinking about a “Canadian Trust Collapse” when the tax rules change is screwball panic stuff. Reference KCI: a conversion by almost all companies in Canada to a “Trust” format was halted. Most existing Trusts are taking or have taken steps to protect their business model. Actual taxes that will be due when the rules force a change– if the new Government in Canada that is now forming does not return the applicable tax laws to… Read more »
Johnny
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Johnny
October 14, 2008 4:21 am

Dear Gumshoe,

As a UK resident i often peruse your site and read your posts with interest as they are always informative and to the point…

Great site and the idea for the competition was fantastic and bang on time to get rid of the blues. Just wish there was someone like yourself doing the same for UK stocks..

Congrats to Bob M…

(maybe the idea of 2 burly fellows throwing each other around the ring is prophecy hehehe !!!!)

Cheers and keep up the good work..

Johnny

Big Mo
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Big Mo
October 14, 2008 10:08 pm

I owned WWE for some time, and was up against the ropes most of the time. I finally got out at even money. Wrestled with the idea of getting in again, but decided to sit this one out in a neutral corner. I’ve been called to the mat on too many of my other long positions already lately. Tired of being down for the count.

Thomas Kueny
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Thomas Kueny
October 17, 2008 8:51 pm

Thanks for the great contest, Travis. One question, though…. had you elected to enter your own contest, which stock would have been your pick???

Robert Ward
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October 29, 2008 4:01 pm
2 years from now life without it will be unimaginable. Its impact will be greater than the railroad… automobile… personal computer… and the cell phone… turning select investors into millionaires… Ushering in a New Gilded Age Dear reader, Life as we know it is about to change. In just a few moments I’ll reveal a technology that will quickly become part of nearly everything we do. One that will catapult us into the largest economic and social transformation since the industrial revolution. But it’s not some mind boggling gadget out of a sci-fi novel. Far from it. And I won’t… Read more »
Robert Ward
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October 29, 2008 4:09 pm

Bye the way (CDY) Cardero Resouces went from $1.20 on 23 Oct. to $1.71 yesterday. Looking for $4-6.00 as the bidding for their Pampa de Ponga iron ore mine warms up. Thanks for all of the good info.

Al
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Al
October 15, 2008 1:19 pm

Hi Big Mo,
I enjoyed your little paragraph. Clever use of words.

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