We’re preparing to shut down Gumshoe HQ for a week or so — one vestige of my former life in academia is a strong belief that no one should work between Christmas and New Year’s Day, so we will not be publishing anything new until next year (don’t worry, we’ll still keep an eye on our email — nothing too dastardly will slip by for long). And we’ll give your inboxes a break, too, and not even send out reruns to keep you busy next week — so there’s another reason to count your blessings!
But before we close up shop, we need to check in on our tracking spreadsheets and see what has worked this year — we focus on the stinkers each year at Thanksgiving as we sift through to find our “Turkey of the Year,” but as we close out 2011 we want to have a wee bit more optimism … to blow our little horns and throw our confetti in hopes that yes, we will pick those exciting 400% gainers in 2012.
And yes, thanks to the nose-to-the-grindstone work of our most industrious Gumshoe minions (Ok, minion), the tracking spreadsheet is now up to date again for the first time in many, many months. There are still a few bad lines of data in a few of the sheets, particularly the older ones from previous years where we might have missed a stock split or a ticker change here and there, but for the most part the tracking is live and current and accurate. I don’t want to use too much hyperbole of my own, but it’s dang near a Christmas miracle.
So now that we’ve got the info, which ideas rang the bell over the last twelve months?
Well, as has been fairly typical in most years about a third of the teased picks have had a positive return and about two thirds have lost money (that’s by absolute return — we don’t have the computing chops with our Google spreadsheets to give you relative returns, though we’ll check that for a few of the standouts).
Unlike most years, there aren’t any doublers that were picked this year — we have usually seen at least a few stocks that provided a return of more than 100% as the year closes, but not in 2011 (there have been a few 100%+ gainers on price spikes, but they didn’t hold those gains). Like most years, as we noted in November, there have been a handful of near total losses — down anywhere from 80-100% for stocks that were either just promoted junk, or microcap gambles … or plain old bad ideas or bad luck from resource or biotech stocks that always seem to be just a spot of news away from doubling or collapsing (ie, Money Map’s BioSante Pharmaceuticals and their collapse on the failure of their “female viagra”, or DeHaemer’s Petro Matad on their dismally disappointing drilling results).
We do have a week left of 2011, so things could change a bit, but of picks that were teased in 2011 these are the standouts:
Takeover targets usually top the list, since even if the market swoons a bit that cash buyout offer is entered in permanent ink on the spreadsheet — so two of the top teaser performers this year are stocks that were either taken over, or are in the process of being acquired: Motorola Mobility (MMI) is the number one teaser pick of the year, with a 75% gain for Hilary Kramer as Google proceeds with their attempted friendly takeover, and Nalco Holdings is number three with a 44% gain for Mitchell Clark thanks to their merger with EcoLab (ECL).
Both of those picks were made in June, when the S&P was almost 10% higher than it is now, so they did even better on a relative basis — and interestingly enough, if you had taken the ECL shares instead of cash for your Nalco shares you would have been even slightly better off than the cash settlement, not what I would have expected after a generally rough six months for the market.
Squeezed in between those two takeover picks was a stock that made its own catalysts, apparently — no takeover talk I’ve seen, but Pizza Inn has made a remarkable gain in just over two months for a pretty new penny stock newsletter. This one actually was first covered in the Friday File, so not everyone had the chance to see it but we did rerun the article for non-Irregulars a few weeks ago during our annual membership drive for charity.
PZZI is a tiny stock, a Texas-based pizza chain that has some interesting potential to build a new chain on top of their nostalgia-driven existing network, and it’s now well off its highs of a few weeks ago (it reached $7 briefly, it’s now at $5.50). It’s only a $50 million company, so it doesn’t take much to make them move, but they are surprisingly profitable for such a small chain and I’ll be keeping an eye on them — if they can become a growth company they could potentially have a nice run.
The fourth place finisher at this point is one that I wrote about so long ago that I had forgotten the story — it was teased way back in January by Louis Basenese and the White Cap folks, Mitek Systems (MITK). This one was pitched as a stock with great potential as they provide mobile banking software to financial firms — specifically remote deposit capture software to let you take photos of checks with your iPhone instead of bringing your deposit to a bank teller or ATM. The shares did uplist to a “real” listing on the Nasdaq, and they’ve been putting up nice revenue growth numbers — this is one of those picks that actually did double this year, albeit briefly, getting to $13 for a few minutes in September before falling back down. Not many analysts covering this name yet, the two earnings estimates are widely variable (one guesses 25 cents in earnings next year, the other 52 cents … so take your pick). A nicely emerging stock so far, though it didn’t help that their last quarter came in at a small loss instead of the small profit that many had been expecting.
And number five? That’s our old friend Westport Innovations (WPRT), touted by David Gardner back in May at about $23 as a “no choice solution” for our energy problems. This is the very definition of a “story stock” — it’s a $1.5 billion company that is nowhere near being profitable, and has missed analyst profit estimates four quarters in a row, but it has such a compelling business and great technology that it seems like it just has to work. I’ve written about WPRT many times though I haven’t owned it recently, and did profile it for the Irregulars a few years ago when it was only listed in Canada, but this is all about the speed with with the long-haul trucking business will adopt diesel engines. Which in turn is all about the speed with which the government will incentivize them, and the fueling network is built.
The latest story on Westport has been that they’re a natural beneficiary of the Nat Gas Act that would provide further incentives that fleet owners need to make big investments in natural gas trucks — that’s H.R. 1380, which has been in committee since April despite 180+ cosponsors, and S. 1863, which was introduced on the Senate side in November and is also in committee. Fleet owners are getting additional motivation to move to natural gas now as the cost differential between nat gas and diesel fuel remains consistently huge, but it’s really going to take the heavy hand of government if you want to make the development of fueling networks and a rapid fleet buildout happen more quickly.
Westport’s best business continues to be their joint venture with Cummins, Cummins Westport, which has been consistenly profitable for a long time and supplies the “easy” nat gas engines — those for localized fleets like garbage trucks, delivery trucks, city buses, etc., where refueling networks aren’t as much of an issue, and I continue to wish I could buy just that business — but in the meantime, WPRT seems destined to move based on political winds … if oil falls to $50 the shares might crater, but if Congress puts in place a multi-year incentive program to encourage buying natural gas big rigs the stock could easily double. WPRT has been predicting a profit right around the corner for more than three years, so don’t hold your breath on a quick turnaround in financial fundamentals, this is all about sales potential in a new world order where natural gas vehicles are favored by government and by big fleet owners — which should happen, but it might not happen on your timeframe.
So those are the picks that have done best after being teased in 2011 — and it’s worth noting that despite the fact that we’ve covered about 200 stocks this year that were heavily teased, and despite the fact that almost all of those teases promised the potential for at least 100% gains, some in short order, those five stocks are the ONLY teased picks from 2011 that returned more than 30%. And I can’t be too critical — the stocks I’ve profiled for the Irregulars this year have not done terribly well, either, with less than half of our ideas beating the market so far and only one of them (Golar, back in August) doing well enough as of now to have cracked that top five.
Do any of the other picks that we’ve covered this year catch your eye? Any surprises from the tracking spreadsheets, or stocks that were teased in previous years that have made big moves in 2011? Let us know what you thought of the year in teasers with a comment below.