What are your 3 best bets?
Competitors who chose energy stocks did well in my 14and annual stock selection competition. Almost everyone did wrong. My contest is called Dorfman’s Three Stock Derby. Each competitor chooses three actions. The total returns for all three are averaged, and the person with the highest average is the winner.
Besides fame, the prize is a $100 gift certificate to the restaurant of his choice. Entry rules are at the end of this column.
Harry Feld, a retired chiropractor from Beverly Hills, Calif., has won this year with a 154% return on three Canadian energy stocks. Baytex Energy (BTEGF) returned 246%, MEG Energy (MEGEF) 127% and Tamarack Valley Energy Ltd. (TNEYF) 88%.
Oil prices and oil inventories have seen a big recovery over the past year, after doing miserably from 2014 to 2020. Feld believes the good times will continue to roll in the oil sector. “The transition to green energy will take a long, long time,” he says. “It will be 20 years. It could be longer.
He still likes Canadian oil stocks, especially Meg Energy and Tamarack Valley. It also favors fertilizer manufacturers, especially CVR Partners (UAN), based in Sugar Land, Texas. With high natural gas prices, he thinks fertilizer supply will be limited while demand will be high.
Feld has now excelled in three of my contests. In 2008, it came second in stock picking. In 2019-20, it placed second in my short-selling competition, in which people try to pick a stock that will decline. Now he’s moved up to number one.
The results contrasted sharply with those of the previous year. Then 35 competitors signed up and a dozen achieved returns of 100% or more as the market soared. The average yield was 79%.
This time 25 people entered and 18 suffered casualties. The median score was a loss of 7.1%, even though the Standard & Poor’s 500 Total Return Index rose 7.8% for the contest period (May 18, 2021 to April 16, 2022).
It may seem odd that most of the competitors were down while the main market index was up. But it’s not that strange.
The index has a heavy weighting in large growth stocks, which have been the market’s strongest lately. Additionally, the popularity of index investing helps the index perform well.
This year’s competitors came from California, Delaware, France, Germany, Illinois, Nebraska, Nevada, New York, Pennsylvania and Virginia.
Kimm Steven Nureck, an insurance agent from Laurel, Delaware, took second place for the second year in a row. He made big gains on two energy stocks. Devon Energy
returned 154% and Cenovus Energy (CVE) grew by 115%.
Nurec also made a profit on lucky coffee (LKNCY), a Chinese company recovering from an accounting scandal. “Wall Street left him for dead,” he commented a year ago.
Third place went to Michael Panino, a law enforcement officer from Mineola, New York. One choice drove his performance: Uranium energy, up 98%. “I think there is a shortage of surface uranium,” he wrote a year ago, “and that is starting to be reflected in the stock prices of uranium companies.”
Panino’s other two choices, Endeavor Silver (EXK) and USANA Health Sciences (USNA) both refused, but the choice of uranium was enough to earn him the bronze medal.
You can play
To participate in Dorfman’s three-stock derby, send me your three stock picks at email@example.com. If you prefer, you can mail them to John Dorfman, Dorfman Value Investments, 101 Federal Street, Suite 1900, Boston MA 02110.
All entries must include:
1. Your name
4. Email address
5. Telephone numbers for work and home.
6. The three actions you choose. Reasons are appreciated but not required.
If you finish in the top three, I would like to interview you at short notice and possibly over the weekend, so phone numbers are essential. You don’t need to own any of the stocks you select, but it’s fine if you do. The shares must be traded in the United States, but not necessarily domiciled here. Short selling is allowed but not encouraged, as I have a separate short selling contest. Exchange-traded funds (ETFs) are permitted.
Entries must be postmarked or time-stamped by midnight May 22. The next competition will run from May 22, 2022 to April 21, 2023.
There is no charge to enter. The winner will receive a $100 gift certificate to the restaurant of their choice.
Disclosure: I have no position in the stocks discussed today, personally or for clients.