Value Microcaps PICKSIX LOTTO CHAMPION

[lentinman]

R59 FINAL MEMORIAL: Taken from Ibox.

This board has been created to honor the Champion Stockpicker on the Value Microcaps Board in the latest Pick Six Lotto contest. The Champion will have a chance to semi permanently let others know his/her stock picking techniques as well as his/her favorite stocks. The Champion can provide background information on their investing experience as well as any area where they feel they have special expertise.


PICK SIX LOTTO EIGHT (PSL8):
http://investorshub.advfn.com/boards/board.asp?board_id=11462

January 14th to April 25th.
80 Participants -- Gainers: 29, Losers: 51
Average gain: -3%


WINNER: Researcher59: http://investorshub.advfn.com/boards/profile.asp?user=49488


Top 10 Posters

   1 RESEARCHER59      40.49%  
   2 LITTLEFISH        25.24%  
   3 RRUFFF            23.95%  
   4 LBAS              21.28%  
   5 CLIFFVB           20.60%  
   6 ROGUEDOLPHIN      17.28%  
   7 ECOBLOT           17.04%  
   8 CL001             15.62%  
   9 NILES CRANE3      15.48%  
  10 NORTHERNLIGHTSK05 11.80%

Top 10 Stocks

   1 MAK.AX  464.21%  
   2 LWLG.OB 226.92%  
   3 OFI      93.52%  
   4 HLB.TO   85.42%  
   5 CLF      82.81%  
   6 CPST     71.25%  
   7 IDSA     54.77%  
   8 EXM      51.69%  
   9 FPP      44.44%  
  10 BSIC.OB  43.81%

Persons in First Place during the contest.

Researcher 59
CL001
Timhyma
Cliff
Echoblot

R59' VITAL STATISTICS

He started out week 1 in 40th place, moved into the top 10 in weeks 2 and 3 and was first for weeks 4 and 5. He then dropped out of first for weeks 6-9. In week 10 he jumped into first place by 19% over second. His lead stayed in the 15-22% range to the end. His high was +42% in the next to last week.

R59's COMMENTARY

PERSONAL BACKGROUND

I’m 48 and live just outside NYC, the financial capital of the world (’59, the suffix of my alias is my year of birth and seems to be drifting ever further into the past). I was introduced to investing by my father when I was just 12 years old and looking for better returns than just the interest on my bank account. I was working as a paper boy and earning what seemed a small fortune of $25 per week and decided to risk some money on one of my father’s then favorite stocks, a company called “Interstate United”. He invested about $500 of my savings and a few years later I had a better than 50% gain, which profoundly impressed me and whetted my appetite for future investing. The psychological groundwork for taking calculated financial risks was etched in my mind.

I spent most of my career with IBM as a networking software specialist and the final five years with AT&T which my IBM division was spun off to. My educational background is a BS in Computer Science from Pace U. and an MBA in finance from NYU. In October 2002 I was let go by AT&T in a major round of cutbacks, and being single and risk tolerant, I decided to devote my full attention to investing. Throughout my career investing was almost like my second profession and I was very successful during the late 80’s and especially the bull market of the 90’s in aggressively managing my money, which I invested almost exclusively in the technology sector, which I knew best. I was always at least 10% on margin. I had plenty of losers but numerous big winners as well, most notably DELL which became over a 100 bagger for me in a six year period and represented roughly 50% of my portfolio at its peak ….. my overall returns were much better than the major market indexes even though my time for research was very limited by my full time job, a part time MBA program as well as social and sports activities.

I fared remarkably well in the first two years of the 2000 – 2002 bear market, losing only about 10%, helped by a big bet on ESST, which became a multi-bagger in spite of the poor market. I had a much smaller portfolio in those days and put at least 15% into ESST, an emerging leader a semiconductor niche. Then in early 2002 I decided to move heavily back into the technology sector which I had partly diversified out of in the late 90’s ….. I was crushed by a 61% loss that year, the result of poor investment decisions, bad luck and a terrible market for the tech sector along with margin borrowing that worked against me. WCOM was the biggest of my many losers that year. CEO Bernie Ebbers told shareholders that Worldcom’s financial woes were just a Wall Street misperception and not reality. I trusted him, figuring he’d never lie like that or else he’d wind up in the “big house” (jail). That’s where he is today. My large WCOM position became nearly worthless and it was like an unwelcome but essential wake up call. Fortunately my portfolio valuation, having grown over many years, was large enough to sustain the losses of 2002 and still remained substantial enough to allow me to try full time investing ….. the timing was perfect since the bear market hit bottom just a week before I lost my job with AT&T in October of 2002. The bull market began just as I became a full time investor ! It was good riddance to my old job which was ever changing in recent years and had lost its earlier strong appeal.

In late 2002 I moved into a small one bedroom apartment to cut costs and eagerly set out to restructure and diversify my stock portfolio. I liked the idea of being my own boss and the upturn in the market gave me confidence that I could overcome the debacle of 2002, my only truly terrible year of investment returns. That began the most successful five year period in my investment history. Being full time and having the internet to do stock research greatly enhanced my opportunity for success. I could read the SEC filings online, see press releases as they were issued and keep track of my stocks throughout the day. Most importantly, I enjoyed it very much and had the time to put in at least 50 hours a week doing stock research. Furthermore the three year bear market had created an abundance of bargains especially among the small and microcap stocks. There was lots of “low hanging fruit” as Lentinman has called it. It was easy ‘pickings’ and my portfolio valuation rebounded steadily.

In 2004 I ran into a guy named Bobwins on the YAHOO message board for PLCC …. I was very impressed by his posts and followed him to Raging Bull where I gradually spent more and more time ….. for the first time ever I tried investing in OTCBB stocks, and quickly found some winning ideas on the message board, particularly those recommended by Hweb2.

PSL8 Contest

PSL8 began in mid January during a challenging period in the market and I chose my stocks accordingly with a few more defensive plays. Luck, both good and bad, is always an important player in these contests and this time around I was the beneficiary of more of former than the latter. OFI gross margins rebounded more quickly than I anticipated and a director made a takeover bid for the company. SUOT announced they were moving from the OTC bulletin board to the Nasdaq. I discovered GUPR and thought it might be a homerun, but it turned out to be a strikeout instead. I refer you to my “Nsom Challenge” post for the rationale behind my original six picks, OFI, HURC CKGT, SUOT (now SUTR), SIF and TBYH. As usual, I made good use of our 4 allotted trades and held 10 stocks in all during the contest. Typically I’ll do a double down in the later stage of the contest if I want to be aggressive, but in this case I had a roughly 20% lead for the last few weeks so played it conservatively instead, even freezing 3 stocks ahead of the earnings rather than risk a disappointment. That served me well in the case of GUPR, but cost me a bit in the case of MALL.

My 6 stock portfolio finished up 40% with a valuation of $8429 …. The gain of $2429 is approximately attributable as follows –

  OFI  +$939   held throughout  
  MALL +$581   trade from SIF the last few weeks  
  SUTR +$386   held throughout  
  HURC +$238   held throughout  
  ASFI +$190   trade from CKGT the last few weeks  
  CKGT +$97    traded late into ASFI  
  TBYH +$35    traded early into GUPR  
  KRSL +$6     trade from GUPR the last few weeks  
  GUPR +$0     trade from TBYH early  
  SIF  -$43    traded late into MALL

INVESTMENT STYLE

My own stock portfolio currently has about 120 stocks, which is clearly excessive, but reflects the fact that I follow a lot of stocks and am not averse to holding some very small positions, albeit those are somewhat (if not greatly) ignored, hence missed trading opportunities and superficial research. Of course the VMC board provides lots of useful ideas and due diligence that one can rely on which is a great help. I like to be diversified across most sectors of the market and employ many strategies. Just one initiative in recent weeks and months has been to accumulate some of the beaten down cyclicals like LAD, ABG, TEX, SVLF, HURC and ATRM as well as financials like ASFI, ADVNB and MFI with a long term rebound in mind. My top holding is currently EBIX, a 6% position, many shares of which I have already held for over a year. My top 10 holdings in aggregate currently represent about 35% of my portfolio whereas the smallest 20 holdings combined are only worth about 3%. Arguably I should do some pruning since my smallest holdings really have very little impact on my overall returns and should probably just be in watch lists.

My focus is on the fundamentals with emphasis on low PE microcap and small cap stocks, preferably showing significant growth. The amount of due diligence I put into a stock depends partly on its position size. If it’s just a fraction of 1% then my dd is often superficial and I’ll rely partly on the proven skills of our many fine posters. If I’m scaling into a larger position then I’ll increasingly do more dd. I always skim the recent SEC filings and check the chart to get a feeling for how a particular stock trades and what the current trend is. For my larger holdings I will sometimes have a ‘core’ position as well as a ‘trading’ position depending on the volatility and liquidity of the particular stock. Normally I use GTC orders to capture short term trading gains as the stock rises and falls, updating them regularly as they trigger. SUTR and MALL are good examples of stocks that I have traded partially in and out of frequently in recent months while maintaining a core position (although I recently sold out of my last shares of MALL thanks to the significant rise in price). Approximately 17% of my portfolio is currently in OTCBB stocks. My holding periods for stocks varies greatly. On rare occasions I’ve even flipped shares within minutes of buying on a price surge but generally I’ll hold a position for a few months and sometimes many years. Increasingly I find that most of my taxable gains represent short term capital gains, whereas years ago virtually all my gains were long term since I would offset short term gains with losses particularly at year end.

I also frequently trade stock options and commodity futures as well as go short stocks, but in aggregate these positions generally represent less than 10% of my total portfolio. Typically in the case of stock options, my positions are short, both covered and uncovered, to capture high option premiums. However I’ll sometimes go long call options, particularly LEAPs, to gain leverage in a stock.

The VMC board is by far the finest I have ever come across on the internet and has significantly contributed to my success in recent years. The expertise and due diligence of so many of our contributors is unrivaled in my experience. I look forward to continued successful investing and trading together in the years ahead. I wish our entire group success.

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PSL1 CHAMPION'S BOARD SUMMARY: http://www.investorshub.com/boards/read_msg.asp?message_id=11054704
PSL2 CHAMPION'S BOARD SUMMARY: http://www.investorshub.com/boards/read_msg.asp?message_id=13102250
PSL3 CHAMPION'S BOARD SUMMARY: http://www.investorshub.com/boards/read_msg.asp?message_id=15707449
PSL4 CHAMPION'S BOARD SUMMARY: http://www.investorshub.com/boards/read_msg.asp?message_id=19222015
PSL5 CHAMPION'S BOARD SUMMARY: http://investorshub.advfn.com/boards/read_msg.asp?message_id=22596832
PSL6 CHAMPION'S BOARD SUMMARY: http://investorshub.advfn.com/boards/read_msg.asp?message_id=25347294
PSL7 CHAMPION'S BOARD SUMMARY: http://investorshub.advfn.com/boards/read_msg.asp?message_id=28826790


NEXT UP: PICK SIX LOTTO 9 http://investorshub.advfn.com/boards/board.asp?board_id=11462






Bull markets may rise along a "wall of worry"; bear markets fall along a "slope of hope." -- John Markman, July 24, 2008