Wednesday, November 28, 2012

Follow up - and now for the dogs

A friend called yesterday with a suggestion, referring to the top 11 equity positions comment posted yesterday.  His idea - why not show us your worst performers as well.  Good idea, but not exactly a corollary to the top 11, which was largest positions.  Smallest positions would be meaningless, just a bunch of cookie jar holdovers from M&A activity and a long discarded dividend reinvestment option that was preferred by someone else.

While the top 11 includes some stocks with huge gains, both near term and over time, some are just steady performers with strong balance sheets, long term holds.  The top 11 does not include some of the strongest recent performers, like Patrick Industries with a 670% gain over the last two years or Sprint with an almost 200% gain, a buy and already a sell within the year.

So the list that follows is one of poor performers still held here, not related to how large the positions are.  As a matter of history, the only truly huge loss that was experienced here was AIG.  What a great company, until it wasn't.  It was a large position spread across all portfolios, and the only solace is that major fund companies like Fidelity, Capital Group, and T. Rowe Price were not so different.  Few knew of AIG's huge bets in credit default swaps.  The other major loss, humorous in hindsight, was a company with, I think, the ticker ATHM.  During the late 90's internet boom the stock was bought here at around $10, it rose to $250, then the internet market crashed faster than one could react and it was sold at $5.  Not much of a loss on paper, but my mind was rattled, like watching a phantom Porsche back out of the driveway.

Generally, the practice here is to sell when the investment thesis falters or the stock drops for unexplained reasons.  That means that this list does not have any huge losses, but certainly unwelcome losses that nevertheless were the result of either poor decisions or the vagaries of the market, mostly poor decisions in hindsight, some based on incomplete financial information(never should have made the choice).  And the top ten losers are:

Investment Technology Group
Hewlett Packard
QLIK Technologies
North American Energy Partners
Etrade Financial
Broadwind Energy
Exelon Corporation

Several of these will be sold near term to offset taxes, as they are hopeless.  Some will just hang out to see what happens, and two or three will get "up the bet" treatment.  These are not generally recommended stocks.


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