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Top Stock Picks 2010 Quarterly Update (Oct)

At the beginning of 2010, I picked 4 top stocks as part of a blogger stock picking competition.  With the market rally thus far in 2010, one would assume that all my picks are up, but unfortunately, that is not the case.  Here are the details.

My Top 4 Stock Picks for 2010

Hanwei Energy (HE.TO) – This Chinese company provides products and services for the oil pipeline transportation, wind and coal energy industries.  Even though they have been oversold, they maintain a strong balance sheet.  They currently trade at less than half their book value, carry no long term debt, and have $0.28/share cash on their balance sheets.  Trading price as of Dec 31, 2009: $0.82.

As a penny stock, this one was expected to have a lot of volatility.  Unfortunately, it has moved severely to the downside and has remained down for 2010 thus far.   As of Oct 1st, 2010, this stock trades at $0.40 which represents a 51.2% loss thus far (ouch!).  Disclaimer:  I own a small position in HE.

Manulife Financial (MFC.TO) – Most of you have probably heard of Manulife Financial as they are the largest insurance company in Canada (in terms of market cap).  I believe that Manulife has been oversold but hopefully return to strength in 2010. Trading price as of Dec 31, 2009: $19.33.

MFC is another stock that has been very disappointing thus far as I expected it to bounce back strong by the end of the year.  The only bright side of the stock is the dividend.  As of October 1st, MFC closed at $12.76 with $0.39 in dividends.  This represents a 32% loss including dividend.  Disclaimer:  I own shares of MFC held in my SM portfolio.

Cenovus Energy (CVE.TO) – I picked Cenovus as my oil play.  Never heard of them?  Neither did I until I looked up the constituents of the energy index.  Encana recently split into two companies; ECA is now a natural gas company while all the oil and gas assets have gone to CVE. Trading price as of Dec 31, 2009: $26.50.

CVE was my pure energy play of the group and seemed like a logical pick as an ECA spinoff.  As of Oct 1st, CVE closed at $30.30 with a $0.40 dividend representing a 15.8% gain including dividend.

QLT Inc (QLT.TO) – This is a riskier play of the batch as I picked them solely on their financial statements.  QLT is a pharmaceutical company that creates and commercializes eye treatments.  They trade below their book value, have no long term debt, and carry $3.81/share in cash on their balance sheet.  Trading price as of Dec 31, 2009: $5.23

Although this was a risky play, it has worked out so far!  As of Oct 1st, QLT closed at $6.32 representing a 20.8% gain.

With 2 of the 4 picks taking a huge losses, the whole portfolio is negative year to date ( -11.65%).  With only a few months left in the year, I don’t suspect this portfolio will return to black.

Here are some other results from other bloggers:

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FT About the author: FT is the founder and editor of Million Dollar Journey (est. 2006). Through various financial strategies outlined on this site, he grew his net worth from $200,000 in 2006 to $1,000,000 by 2014. You can read more about him here.

{ 13 comments… add one }
  • Money Smarts Blog October 8, 2010, 9:04 am

    Wow that Four Pillars guy really doesn’t know how to pick stocks! :)

    Mike

  • FT FrugalTrader October 8, 2010, 9:08 am

    LOL, all the Canadians in the group didn’t fare too well!

  • Ron October 8, 2010, 9:33 am

    Ouch, rough year for the stock pickers..

    I gave up on stock picking a few years ago. Takes too much time, is way too stressful and most retail investors tend to fail at it. I prefer to find good fund managers with excellent track records, or, just invest in the indicies.

    During boom times everyone loves picking stocks because its fairly easy to win. It’s when the house falls apart that we all get slaughtered and don’t know what to do.

    If 80% of fund managers (read: professionals) can’t beat the index, how on earth can individual’s?

    ..just my 2 cents..

  • Brandon October 8, 2010, 11:11 am

    Funny how if you had’ve stuck to bank preferreds you’d be 3rd overall with next to zero risk…

  • Brandon October 8, 2010, 11:28 am

    There’s also some irony in “Where Does All My Money Go” having a negative return :)

  • Echo October 8, 2010, 11:55 am

    FT, I’m sure you normally wouldn’t put too much ‘stock’ into these competitions, but since you own two of your picks you are probably not too happy with the results?

    • FT FrugalTrader October 8, 2010, 12:02 pm

      @ Echo, the biggest hit was with MFC, my cost base is around $4k, and worth about $1.5k and resides in the leveraged SM portfolio. It’s also my biggest loser in the portfolio. I own very little HE, so the loss isn’t too drastic and was purchased with part of my “risk money”. On the bright side, my overall SM portfolio is up about 9% for 2010 thus far.

  • Echo October 8, 2010, 12:23 pm

    @FT, that’s good that your SM portfolio is doing so well (even with MFC in there). Hopefully the banks get another boost when/if they raise their dividends next quarter.

  • Adam October 8, 2010, 5:42 pm

    I also hold MFC in the $20 dollar range. What a magnificent disappointment that company has been. I bought it with an expectation that they would raise the dividend after that 50% cut. They built up a fortress of capital, and now what? Once I am back to breaking even, I may just dump them. TSX is around 12500 today and MFC has no interest in taking part, it actually moved lower as the TSX rose.

    Who knows…

  • Andrew @ Money Crashers October 9, 2010, 8:32 pm

    It’s definitely an incredibly tough game, but I at least appreciate you being so open with your picks and updating us on the progress…HE is a pretty interesting one and China is not a bad way to go these days with the huge economics potential, but at the same time, it’s always scary investing in these foreign companies who don’t have as much restrictions and regulations as American companies.

  • Steve Zussino November 1, 2010, 1:46 pm

    Don’t quit your day jobs guys.

    There is a reason why most fund managers can’t beat the S&P 500.

    It is tough.

  • FT FrugalTrader November 1, 2010, 4:12 pm

    lol true dat, it’s a good lesson to never base your portfolio on 4 speculative stocks!

  • Bernie November 20, 2010, 9:38 pm

    I suspect that if outside Canada investors understood how the
    Government of Alberta is planning to implement Bills 24,25,26 in the
    Legislature while there are cases in the Alberta courts regarding the
    property rights of CBM and the Pore space of minerals trying to
    circumvent the legal process,they might not be so bullish to invest in
    a Banana republic. Oh and since Prime Minister Trudeau didn’t enshrine
    Property Rights in the Constitution , it is a free for all here in
    this troubled Country for anyone who cant afford high powered lawyers
    to fight for their rights, and even those who can afford them may well
    spend years and millions of dollars in litigation fighting for their
    investment dollars back. Good luck with your energy investments if you
    already have them. They may not be as safe as you were told they were.

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