A Twist in This Year’s Stock-Picking Contest
Posted: March 28, 2016
For years, I ran a stock-picking contest in this column. It was a lot of fun, but there was one problem.
In a contest based on picking a single stock, there was an incentive for contestants to swing for the fences. There is a strong temptation to go with a risky, speculative pick that might fizzle or might soar.
Now I am reviving my contest. In an effort to reduce that temptation somewhat, I am asking contestants to choose three stocks rather than just one.
We’ll call this contest Dorfman’s Three-Stock Derby.
In an added twist, I am requesting contestants to say who they think will win the presidential election in November. The presidential pick will play no role in the scoring except as a tie breaker.
The winner will receive a gift certificate at the restaurant of their choice, with a value equal to 1 percent of the point value of the Dow Jones industrial average on Dec. 31.
If the restaurant doesn’t offer such a gift certificate, I will substitute a check. Assuming the Dow industrials don’t budge from this writing until Dec. 31, the prize would be worth $174.63.
How to Enter
If you’d like to enter the contest, send an email to jdorfman@dorfmanvalue.com or write to John Dorfman, Dorfman Value Investments, 379 Elliot St., Suite 100 H, Newton Upper Falls, MA 02464.
Your entry should include the following:
• The names of the three stocks you select. You are not required to own the stocks, but it’s OK if you do.
• The stock symbol for each stock.
• At least one sentence on why you like each stock.
• The name of the candidate you think will win the presidency.
• Your phone number (important in case you win, so that I can interview you).
• Your home address.
• Your occupation.
Entries must be submitted by April 15. The contest runs from that date through March 17. Performance will be judged by total returns, including price change and dividends.
Past Winners
I ran the old single-stock contest for nine years from 1998 through 2006.
The first contest was won by Scot Stebbins, a bond manager from Oklahoma who afterward became a friend of mine. I once took him to a fried-chicken dinner and he died not too long afterwards of a heart attack, but I deny any connection. His pick, Korean Electric Power Corp., rose 57 percent.
Craig Harris, a trust account manager at First Tennessee National Corp., won the 1999 contest with a 581 percent gain in i2 Technologies Inc. Harris owned the stock but sold it after it had doubled.
In 2000 most contestants did poorly. Only eight out of 36 picked a winning stock. The winner, with a 175 percent return in R.J. Reynolds Tobacco Holdings Inc., was Brett Gallagher of Julius Baer Investment Management in New York.
A New York City resident — Andrew Spinola, a software developer — also won the fourth contest. His pick, Carmax Group, jumped 385 percent.
The fifth year was 2002, the climactic year of a three-year bear market. The median loss by contestants was a sickening 62 percent. Philip Levy, a bond analyst at American Century Investments in California, emerged victorious with a 95 percent gain in Goldcorp.
Getting Sirius
The sixth year saw a tie for the stock-picking crown, as Jeff Coon and Cedric Walter chose XM Satellite Radio Holdings Inc., which zoomed 540 percent. Coon was from Freehold, N.J.; I never learned his profession. Walter was an analyst for Banque et Caisse d’e Luxembourg.
That year, 2003, was a bull-market year, and 38 contestants (out of 139) picked a stock that doubled or better.
In year seven, another bond analyst won. This time it was Avi Steiner of New York, who scored a 264 percent gain in US Unwired Inc.
Bernard Huber, a bank clerk in Linz, Austria, walked off with the honors in the eighth contest. His selection, Cenveo Inc., returned 336 percent.
The final year of the old contest ended in a five-way tie with five people riding to victory on a 340 percent gain in Calpine Corp. They were Andy Mitchell and Shannon Peace, both of Core Wealth Management in Santa Barbara, Calif.; Neil Rogers, a lawyer from Oklahoma City; Randy Jeffs, a money manager in Irvine, Calif.; and Charles Shepherd of Atlantis, Fla.
As you can see, amateur and professional investors have won the contest in the past. You, too, may be a winner. I encourage you to test your stock-picking prowess.