John Dorfman writes a syndicated column that appears weekly in Forbes.com, GuruFocus.com, Ohio.com, the Omaha World Herald, the Pittsburgh Tribune Review and the Virginian Pilot. In it, he tries to provide original, profitable stock ideas for readers. In contrast to almost all other investment columnists, he systematically reports on past results, both good and bad.
Recent columns are archived here.
Posted: May 15, 2024
May 13, 2024 — (Maple Hill Syndicate) – You had to pick Nvidia.
To do well in my latest annual stock-picking contest, Dorfman’s Three-Stock Derby, it helped immensely if Nvidia Corp. (NVDA) was one of your selections. Six people chose it as one of their three picks, and each of them finished among the top ten contestants.
Harriet Ruben, a retired real estate broker from Fairlawn, Ohio, won the latest contest with an 88.7% return. She scored a 144% gain in Nvidia, 96% in Meta Platforms (META), and 26% in Microsoft Corp. (MSFT). All figures are total returns including dividends.
These are popular, large-capitalization growth stocks, which are the type of stocks that Ruben favors in her actual investing. She says she has a large portfolio, which includes each of her three contest entries, plus Apple Inc. (AAPL), Netflix TK (NFLX) and quite a few other stocks.
Ruben says she listens to corporate chief executives who are interviewed on television, then follows up with statistical research on her broker’s web site. “I look for the next ‘best thing,’” she says.
Beaten Down
Using quite a different approach, Ted Dempsey of Virginia Beach, Virginia, grabbed second place in the Derby. He is 87 years old, a retired Navy officer and consultant. No longer an active investor, he liked to “speculate on stocks that are beaten down in price.”
For his contest entries last May, he chose Robinhood Markets Inc. (HOOD), Lyft Inc. (LYFT) and PacWest Bancorp, which was acquired by Banc of California Inc. (BANC). His average return on the three was 76%.
Dempsey says he was able to retire mostly because of a big gain on his investment in Labor Ready Inc., now known as TrueBlue Inc., an industrial staffing company. “I happened to know the two founders of Labor Ready,” he says. “I was probably excessive in buying it but I got very lucky.”
Bitcoin Surge
Robert “B.K.” Krout of Virginia Beach finished third with a 75.8% return. His return came on the strength of a 298% surge in Grayscale Bitcoin Trust ETF (EBTC); his other two picks declined.
Krout is a retired mechanical engineer and a volunteer with the Sierra Club Offshore Wind Group. He believes that Bitcoin prices tend to follow a pattern: “a low period for a year or so before demand and price rise again.”
Ironically, crypto currencies play only a small role in Krout’s real-life investing. He owns some Bitcoin and some Ethereum, but regards them as “speculative” and limits his crypto exposure to about 2% of his total portfolio.
His other two contest picks for 2023-2024 were Albemarle corp. (ALB) and Pfizer Inc. (PFE). He continues to like them, and also likes a number of big technology names.
Wide Spread
This year there was a huge dispersion of contestants’ results. Of the 34 people who entered, nine had returns of 50% or better, while 11 had losses. The worst loss was 39%.
The median return for contestants was 20.0%. That was close to the return on the Standard & Poor’s 500 Total Return Index, which was 20.2%.
You Can Play
You are welcome to enter the next edition of Dorfman’s Three-Stock Derby, which will be the 17th such contest I have hosted. To enter, please email or mail me the following items:
Email me your entry at jdorfman@dorfmanvalue.com. Or mail it to John Dorfman, Dorfman Value Investments, 101 Federal Street, Suite 1900, Boston MA 02110.
Entries must be postmarked or time stamped by midnight May 31, 2024. The contest period will be from the market close on that date through the close on April 30, 2025.
If you finish in the top three, I will want to interview you on short notice and possibly on a weekend, so the phone numbers are vital.
You do not need to own the stocks you select, but it’s fine if you do. Stocks must be traded in the U.S., but need not necessarily be U.S. companies. Short sales are permitted but not encouraged, since I have a separate short-selling contest. Exchange traded funds (ETFs) are permitted.
There is no fee to enter. The winner will receive a $100 gift certificate to the restaurant of her or his choice.
Disclosure: I own Apple and Pfizer personally and for most of my clients. Other managers at my firm own Nvidia and Microsoft.
John Dorfman is chairman of Dorfman Value Investments LLC in Boston, Massachusetts, and a syndicated columnist. His firm or clients may own or trade securities discussed in this column. He can be reached at jdorfman@dorfmanvalue.com.