What a Year!

by Travis Johnson, Stock Gumshoe | December 23, 2013 5:28 pm

Visions of Sugarplums dance in our heads, and a new year of hyperbole beckons!

Know how you can tell that it’s been a crazy bull market? Look at the tracking spreadsheets[1] here at Stock Gumshoe.

We’ve covered a couple handfuls of teaser picks that have gone up by more than 100% this year, which is a little unusual in itself, but look more closely and you’ll also see that the top performers on the spreadsheet at this point in 2013 are all small cap stocks that are unprofitable … you have to get down to the sixth-best performer (Aceto, ACET, a specialty chemicals company) to find one that’s making a profit, and you have to get down to number eight on the list before you find a company with a market cap over a billion dollars (that’s Alnylam, ALNY, a large and unprofitable biotech stock — and one that also topped the 2012 spreadsheet).

In fact, biotech has been a big theme again this year — you’ve probably heard some mutterings about a “biotech bubble,” which would help to explain why so many early-stage biotech companies have done so well this year… though biotech stocks that take a leap based on clinical trial results are with us every year.

Tech stocks, too, are big winners again this year, as they frequently are — when you’re looking for sharp gains in a single year, it’s hard to find that without companies that have shocking product successes or scientific breakthroughs, are riding a big wave of profit increases in a sector, or that get acquired at a big premium.

And we’ve had solid breadth indicated on the tracking spreadsheets too — for the first time in a while, there are more teased picks in 2013 that went up than went down. It’s close, but there are definitely more winners. You’d expect that in a year when the S&P 500 was up close to 30%, but it’s still nice to see.

And even the worst teaser stock pick, HRT Participacoes (HRP.V, HRTPY), is only down 83% or so … for the first time I can remember, not a single teaser pick from the year went down 95%+ or fell into bankruptcy. It’s sad that this is a big deal, but big it is.

The biggest surprise? For me, it’s the weakness in energy stocks. We know that the gold[2] and mining stocks are likely to be the worst performers in a year like this when those commodities collapsed — certainly my gold and mining-related stocks have been spanked in 2013, along with most others.

But oil[3] and natural gas[4] prices are higher than they were a year ago, albeit off their highs of the Summer, so why are there so many energy stocks that did so poorly in 2013? Some of them are explorers that got hyped up on exploration possibilities and didn’t deliver, of course, a problem that hits at least a couple stocks every year, but even a few of the big, “supposed to be steady” new high-yield oil trusts took a clobbering. There are specific reasons for many of them, as usual, but that’s still a surprise — there weren’t many energy stocks among the top performers (excepting NXT Energy, an oil exploration services microcap, and Cheniere Energy, LNG, which rode the wave of enthusiasm for LNG export), and energy was firmly overrepresented on the bottom half of the spreadsheet.

We’re talking about a pretty high hurdle this year for those who are seeking relative gains (ie, trying to do better than the market in any given year) — if you had bought the S&P 500 index on January 1 of 2013 and just held it, you’d be sitting on a portfolio that’s grown by roughly 30% on the year … so all those picks that were made early in the year and are only up by 5-10% are, relatively speaking, losers.

But still, I’ll take a good year and the warm feeling it brings to your belly … and no, I can’t take credit for a good year in teaserdom, I’m sure that when I did my brief look at each of those picks over the year that was, there were probably several stocks among the list of the top ten or twelve performers that I thought were ridiculously overvalued before they went up by 100%, and probably quite a few that were on the list of worst performers that I owned or thought of positively at the time.

But you can’t put relative returns in your bank account, and you can’t invest in the rearview mirror — so as I raise a glass this New Year’s Eve I’ll be hoping that 2014 will bring a bevy of winners and another nice, bullish backdrop for all the crazy promises we cover in the year to come.

Stock Gumshoe HQ will be dark and quiet this holiday season as we all spend time with our families, but we’ll be back and raring to go as we cover the teasers and promises of the new year. Merry Christmas, Happy New Year, and thanks for making Stock Gumshoe a part of your investing life!

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