A Baytex Energy drilling operation near Pigeon Lake, Alberta, Photographer: Norm Betts/Bloomberg
Contestants who picked energy stocks did well in my 14th annual stock picking contest. Almost everyone else did badly. My contest is called Dorfman’s Three Stock Derby. Each contestant picks three stocks. Total returns for the three are averaged, and the person with the highest average is the winner.
Aside from glory, the prize is a $100 gift certificate at the restaurant of the winner’s choice. Entry rules are at the end of this column.
Harry Feld, a retired chiropractor from Beverly Hills, California, 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 stocks have staged a big revival in the past year, after doing miserably from 2014 to 2020. Feld thinks the good times will continue to roll in the oil patch. “The transition to green energy will take a long, long time,” he says. “It’s going to be 20 years. It could be longer.”
He still likes Canadian oil stocks, including Meg Energy and Tamarack Valley. He also favors fertilizer makers, particularly CVR Partners (UAN), based in Sugar Land, Texas. With natural gas prices high, he thinks fertilizer supply will be constrained while demand runs high.
Feld has now excelled in three of my contests. In 2008 he came in second in stock picking. In 2019-2020, he placed second in my short selling contest, in which people attempt to choose a stock that will decline. Now, he has moved up to first.
Huge Change
The results were a huge contrast to those from a year earlier. Then, 35 contestants entered and a dozen achieved returns of 100% or more, as the market soared. The average return was 79%.
This time, 25 people entered and 18 suffered losses. The median score was a loss of 7.1%, even though the Standard & Poor’s 500 Total Return Index was up 7.8% for the contest period (May 18, 2021 to April 16, 2022).
It may seem odd that most contestants were down while the leading market index was up. But it’s not so strange.
The index has a heavy weight in large growth stocks, which have been the market’s strong suit lately. Also, the popularity of index investing helps the index do well.
This year’s contestants came from California, Delaware, France, Germany, Illinois, Nebraska, Nevada, New York, Pennsylvania and Virginia.
Runners Up
Grabbing second place for the second year in a row was Kimm Steven Nureck, an insurance agent from Laurel, Delaware. He scored big gains on two energy stocks. Devon Energy
Nureck also showed a profit on Luckin Coffee (LKNCY), a Chinese company recovering from an accounting scandal. “Wall Street has left it for dead,” he commented a year ago.
Third place went to Michael Panino, a law enforcement officer from Mineola, New York. One pick drove his performance: Uranium Energy, up 98%. “I think there is a shortage of above-ground uranium,” he wrote a year ago, “and it is starting to be reflected in the stock prices of uranium companies.”
Panino’s other two picks, Endeavour Silver (EXK) and USANA Health Sciences (USNA) both declined, but the uranium pick was enough to earn him the bronze medal.
You Can Play
To enter Dorfman’s Three-Stock Derby, send your three stock picks to me at [email protected]. If you prefer, you can mail them to John Dorfman, Dorfman Value Investments, 101 Federal Street, Suite 1900, Boston MA 02110.
All entries should include:
1. Your name
2. Address
3. Occupation
4. Email address
5. Phone numbers for work and home.
6. The three stocks you choose. Reasons are appreciated but not required.
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 any of the stocks you select, but it’s fine if you do. Stocks must be traded in the U.S., but not necessarily domiciled here. Short sales are permitted but not encouraged, since 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 contest will run from May 22, 2022 through April 21, 2023.
There is no fee to enter. The winner will receive a $100 gift certificate to the restaurant of her or his choice.
Disclosure: I have no positions in the stocks discussed today, personally or for clients.
Source: https://www.forbes.com/sites/johndorfman/2022/05/06/stock-picking-challenge-what-are-your-3-best-bets/