Junior-High Student Wins My Stock Picking Contest
Posted: March 28, 2017
Rex Ramm, a junior high school student in Omaha, Nebraska, won my tenth annual stock-picking contest.
The contest ran for nine years from 1998 through 2006 and then was revived in 2016. At the time of the revival, I changed the rules to require that contestants choose three stocks. Previously it was just one.
The contest has never before been won by a student. Previous winners have included six professional money managers, three financial analysts, a software developer, a bank clerk and a lawyer. (There were more than nine winners because of ties in a couple of years.)
Ramm is 14 years old, and was 13 when he entered the contest a year ago. To gain his victory in the 2016-2017 competition, he defeated at least four professional money managers, along with more than two dozen other contestants.
In the contest, entrants must choose three stocks that they think will rise strongly. Ramm chose Advanced Micro Devices Inc. (AMD), which quintupled; Nvidia Corp. (NVDA), which advanced 188%; and Tesla Motors (TSLA), which gained 3%. The average gain on the three stocks was 197%.
How did he come to pick Advanced Micro Devices? “I had just built a computer,” Ramm said, “and I used of couple of their things in there.” He selected Nvidia because it seemed to have momentum, and made components for smart cars.
Silver Medal
Second play in the contest, which I call Dorfman’s Three Stock Derby, went to Ron Meyer. A retired computer operations officer at Union Pacific Railroad, racked up a 105% gain.
Like Ramm, Meyer benefitted from the 188% gain in Nvidia. He was drawn to Nvidia because, he said, “virtual reality will drive sales of graphics processing units.”
He scored a 79% return in DigitalGlobe Inc. (DGI), which is building a network of high-resolution earth imaging satellites. He thinks it might become “an acquisition target for a defense contractor.”
His final choice was NVE Corp. (NVEC), in which he had a 49% gain. “This is just a pure play on spintronics,” Meyer said when he entered the contest. Spintronics is the science of how electrons spin, and how that spin might be harnessed for magnetic or electronic products.
Bronze
Third place was won by John Williams, an insurance man who put together a 51% gain. Fittingly, his biggest hit was American Equity Investment Life Holdings (AEL), which advanced 70%. He believes the company, which specializes in annuities, could become “a takeover target for a Japanese insurer.”
William got a 58% return from Genworth Financial Inc. (GNW) and a 24% gain from General Motors Co.(GM). He noted that Genworth traded for only 0.11 times book value (corporate net worth per share) when the contest began.
For fun, and as a potential tie breaker, I asked contestants last year who they thought would be elected president. This was in March and April, some seven months before the actual Presidential vote.
About 52% of the respondents thought Donald Trump would win. Some 39% thought it would be Hillary Clinton, and about 9% figured someone else would win. I find it amusing that my little scratch poll predicted the outcome better than larger and more scientific polls.
Rules and Prize
Ramm will receive a $197.62 gift certificate at the restaurant of his choice. The amount is 1% of the point value of the Dow Jones Industrial Average as of December 31, 2016
The winner of this year’s contest will get a similar gift certificate, based on the level of the Dow as of December 31, 2017. If no certificate is available at the restaurant of his or her choice, a check will be issued.
Would you like to test your stock-picking prowess? If so, send an email to jdorfman@dorfmanvalue.com, or write to John Dorfman, Dorfman Value Investments, 379 Elliot Street, Suite 100 H, Newton Upper Falls MA 02464.
Please include the following:
- The names of the three stocks you select. You need not own them but it’s okay if you do.
- The stock symbol for each stock.
- At least one sentence on why you like each stock.
- Your phone number (important so that I can interview you if you win).
- Your home address.
- Your occupation.
Entries that do not include all of these items may be disqualified. Your entry must be time-stamped or postmarked by midnight April 15, 2017. The contest runs from that date through March 23. Result are based on total returns including price change and dividends.
Disclosure: Members of my family own Nvidia shares.