Anonymous bloggers are often discredited because they hide behind a veil of secrecy. As such, they don’t have to suffer the consequences of their actions/comments. However, we at Stone Street Advisors have argued that anonymity is not always “bad.” Many of my followers know who I am and what I do for a “living.” I prefer to “labor in shadows” in an effort to keep my writing uncompromised from corporate edicts. I digress. This is a short note to take stock of my posts over the past two years.
I have written several times both positively and negatively about equities in the past 18 months. While these posts were not “recommendations,” most had a decidedly positive or negative bias. One article, one 21st Century Holdings (TCHC), was a toss-up – in fact, I called it an option. So how did I do? It depends. Overall, significant “alpha” was created. The amount of the outperformance, however, depends on how long you held. I never wrote follow-up posts indicating that trades had run their course. After-all, I’m not getting paid to write! Thus, if you held on each trade until today, the performance would not be as robust as it could have been had the trades been closed.
For example, I originally wrote positively about Rick’s Cabaret International (RICK) on January 19, 2011. At the time, RICK was trading at $8.50 per share. In the article I posited that “RICK shareholders could see an eye popping return of over 30% from current levels.” Indeed they did – in fact, the stock traded up 34% less than 1 month after I wrote the story. The S&P was up just 4% in that time. However, if you had bought the stock and held until today, you would have round-tripped. The stock is down 2% since the story while the S&P is up 7%. As you can see, getting out is just as important as getting in!
Overall, my “Pics” averaged 0.7% better than the S&P since the original posts appeared until today. If – as in the case of RICK – you took gains, you would have outperformed the S&P by 16.5%. On the other hand, my “Pans” showed significant outperformance, on average 46.9% better than the S&P.
Finally, as I mentioned, TCHC was trading as an option. The stock was changing hands at $3.42 a share at the time I wrote the article. The shares have since traded as high at $4.99 and as low at $2.30. That’s 45% on the up side and 33% on the downside. However, unlike options, stocks do not have expiration dates. As a result you could have won going long or short – if you weren’t greedy and took your gains. Today, the stock trades at $4.45 – up 30% while the S&P is up only 8% since the article was written. The table below is a look at all of the posts that highlighted individual investment ideas I’ve written about since joining the SSA team.
As a reminder, we at Stone Street Advisors are about teaching you how to fish. By doing your own homework, you can make informed decisions making your investments less of a gamble.
Happy 4th and happy trading.