Asif Suria of SINLetter is running a stock picking contest where he has invited top stock bloggers to a stock picking challenge. The contest involves selecting 3 picks (long or short) that will perform best in the first quarter of 2008 along with predicting the S&P 500 level at the end of the first quarter in case there is a tie.
Asif warned me a couple of weeks ago that he was planning such a contest. However, I completely forgot about it until I received an email on New Year’s Eve. I quickly pulled together a list of stocks I was interested in and submitted the following picks:
LOEWS CP (LTR): Loews will be unlocking a lot of value for its shareholders in the first quarter of 2008. The spinoff and split-off of the Lorillard tobacco unit will likely boost this undervalued conglomerate’s share price in early 2008. I haven’t quite pulled the trigger on this stock, but it might happen any day now. Price: $51.33
MOTHERS WORK INC (MWRK): This maternity wear designer and retailer had a rough 2007 but sales are finally starting to pick up again. Last year’s unusual fashion trend of maternity like clothing dramatically increased the supply of options for pregnant mothers looking for fashion and suppressed Mothers Work’s profits. Those trends will likely pass soon and this niche clothing company will likely see shares recover in the first quarter and beyond. This company’s dominance in the maternity market will continue to generate significant free cash flows into the future and it has a lot of potential for internationally expansion. Price: $18.40
THE STEAK N SHAKE (SNS): Sardar Biglari of Western Sizzlin and the Lion Fund will shake things up for Steak n Shake in 2008. I actually wanted to pick Western Sizzlin for this contest, but OTC stocks are not being allowed. Given that, I think SNS is the next best pick for the unlocking of value in underperforming restaurants. Price: $10.91
All the starting prices for these long picks were established on January 2, 2008. So far I’m doing terribly, as you might expect from a value investor in a short term contest. I’m down -10.42%. Fellow value investing blogger, Geoff Gannon, is just edging me out with a -7.73% change in value for his Gannon On Investing picks. Thankfully, I’m at least ahead of Vitaliy Katsenelson, author of Active Value Investing, who’s had terrible luck so far with his picks.
It should be fun to see how this contest turns out. You can track the current rankings at the Top Financial Bloggers Face-Off page. I’ll be checking it out every week or so to see if I climb in the rankings. My results will likely largely depend on the progress made on the Loews spinoff and Sardar Biglari activist moves towards Steak n Shake by the end of the first quarter.