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Value Idea Contest, A Year Later

January 19, 2012 | About:

In order to encourage value investors to share their best ideas, GuruFocus has been hosting Monthly Value Idea Contest. It is almost a year since our first contest. We would like to review the previous submissions to see how well their ideas have done over the past year, and how well our judges have been doing with their choices of winners.

By the way, over time we modified our rules a bit. Currently we select four winners each month; the first place wins $500, the second place wins $200, the third and fourth place wins $100 each. You can see all the past submissions here. You can submit your best idea now.

These are the results of February and March 2011 submissions, and how the stocks have done since then.

Date Author Pick Price ($) Current Price ($) Gain (%) Links
2011-01-22 Adib Motiwala MMUS 4.84 4.4808 -7% MakeMusic (MMUS) - Niche business with free cash flow and solid balance sheet is music to my ears
2011-01-29 Henry W. Schacht VIV.pa 21.7 16.08 -26% Vivendi Speaks the Language of Love
2011-01-31 batbeer2 DELRF.PK 11.4 15.09 32% Making money, Is de la Rue a bargain ?
2011-02-04 graemew RBGPY 10.84 10.48 -3% Reckitt Benckiser: large cap, defensive, high growth, multi-national consumer products company.
2011-02-09 Alex Morris PEP 64.42 64.85 1% PepsiCo: Value with Safety
2011-02-15 Bill Smith SAM 94.19 100.67 7% Boston Beer Company - A Small Brewer Buffett Would Love
2011-02-28 Jacob Wolinsky IILG 16.91 13.5 -20% Interval Leisure: An Undervalued Stock with a Catalyst
2011-03-07 Toddius MKL 411.45 404.08 -2% Markel Corp (MKL) - Conservative Value
2011-03-09 graemew MDT 39.8 39.12 -2% Medtronic Inc (MDT): two strong drivers of future growth.
2011-03-10 Mariusz Skonieczny IDT 25.21 9.8 -18% IDT Corporation - Lots of Hidden Gems
2011-03-10 Rishi Gosalia WEN 5.06 5.4 7% Wendy's/Arby's: Business Analysis & Valuation
2011-03-13 Frogs Kiss FLL 3.68 2.75 -25% Full House Resorts, an underfollowed small cap with strong earnings and a low valuation
2011-03-14 afardshi CSTR 42.85 46.72 9% Coinstar: Deep Value and Exceptional Growth
2011-03-14 Bill Smith DLB 50.24 33.05 -34% Dolby Labs: The Kings of Immersive Audio Selling at a Discount
2011-03-14 Alex Morris BRK.A 126400 118215 -6% March Value Idea Contest: Berkshire Hathaway
2011-03-14 bjm1625 HITK 19.6 37.03 89% Small Pharma Big Value- HI-tech Pharmacal
2011-03-15 Victor Riesco MSFT 25.39 28.23 11% Microsoft: Quality Tech Stock on Sale
Among January and February submissions, the best performing ideas are batbeer2’s Making money, Is de la Rue a bargain? And Bill Smith’s Boston Beer Company - A Small Brewer Buffett Would Love. batbeer2’s idea gained 32%, and Bill Smith’s gained 7%.

The winners we selected were Alex MorrisPepsiCo: Value with Safety and Bill Smith’s Boston Beer Company - A Small Brewer Buffett Would Love. While both of them had positive returns, but we definitely missed the idea that would perform the best. The reason we did not pick batbeers2’ submission was “The management might not be stable as the company changed CEO lately. Batbeer2 does not own the shares.” But it seems that we were wrong with that.

The best performing stock for March 2011 submissions was bjm1625’s Small Pharma Big Value- HI-tech Pharmacal. The pick gained a whopping 89% since then. The second best performing stock is Victor Riesco’s Microsoft: Quality Tech Stock on Sale. Microsoft has gained 11%. We picked the Microsoft idea as the second place.

Our judges completely missed bjm1625’s Small Pharma Big Value- HI-tech Pharmacal. This was the comment from the judges about this submission: “Author did not explain why in the years from 2007 to 2008 the profit margin declined significantly. What is the risk for this to happen again? More questions to be answered: Been a fast grower in the past, what caused this growth? Is it sustainable? For 9x forward earnings, how about JNJ, MRK, ABT, PFE? They will all be around tomorrow, they are underleveraged, and pay HUGE dividends.” The author may not analyze enough in his submission, he certainly picked a winning stock.

The first place winner we picked for March 2011 was Mariusz Skonieczny’s IDT Corporation - Lots of Hidden Gems. That is a total miss. The stock has lost more than 60% since then (Correction: IDT had a spin off. It seems that the management is trying to unlocking values by splitting the company. The lost is actually is a much smaller 18%). . Our comment was “Turnaround by original CEO. Sum of each part is much higher than the combined company. The spin-off seems to serve well as the catalyst. The new management was the old CEO, but his new turnaround plan is yet to be proved. Very deep analysis and overall very convincing.” Apparently IDT has a long way to go to turn around. If the sum of each part was much higher than the combined company, it is even higher now. We will try to contact the author for an update.

Since the first quarter of 2011, the market is about flat. The average return from the submissions is also about flat. The average picks of the authors did not outperform the market.

For both of the contests, our judges correctly picked the second place. We missed the first place both times.

The true winners are those who had done great research, built confidence in their submitted ideas and invested in those ideas. Congratulations!

If you have not, we invite you to participate in the contest and submit your best ideas. The deadline for this month’s submission is coming.

About the author:

Charlie Tian, Ph.D. - Founder of GuruFocus. You can now order his book Invest Like a Guru on Amazon.

Rating: 3.3/5 (15 votes)


Sdwolff - 6 years ago    Report SPAM
Didn't you forget to include the value of Genie Energy ($10+ per share) which was spun off by IDT last year?
Gurufocus premium member - 6 years ago
Sdwolff is correct. We need to add Genie Energy in the IDT calculation. Currently Genie Energy is traded at $10.94. This will make the IDT idea much better. We have corrected the numbers in the table.

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