Controlled Greed.com Portfolio Picks Average -8.72% Through Second Quarter of 2008

On average, my 22 current stock picks sank an average of 8.72% by the midpoint of the current year. That includes dividends and returns of capital to shareholders. Here’s how each of the holdings covered on Controlled Greed.com have performed in the first quarter.

ArmorGroup International PLC +147%
DirecTV Group +10.7%
Millea Holdings ADR +10.4%
Comcast Class A Special +5.9%
King Pharmaceuticals +5%
Superior Industries International -2.1%
Takefuji -4%
Foot Locker -6.8%
Fairfax Financial -11.3%
Liberty Media/Capital/Interactive -12.6%
Capital Southwest -13.1%
BCE -13.3%
Mueller Water Products Class A -14.9%
3i Group PLC -17.4%
Office Depot -21.4%
Whirlpool -24.4%
CBS Class B -26.6%
American Eagle Outfitters -33.4%
Aiful ADR -35.2%
USA Mobility -41%
Media General Class A -41.6%
General Motors -51.8%

Well, thank heavens for ArmorGroup International getting bought for cash by G4s PLC in Britain. Otherwise, with few exceptions, everything dropped. Some even approached free fall.

Reading the "Up and Down Wall Street" column in this week's Barron's points up the terrible stock picking so far this year of several great investors. Misery loves company, and on that basis I'm hanging out with some fine folks. Yet it won't make my brokerage statement fun reading in the intermediate term at least.

All that said, what happens in six months (or one year) is pretty meaningless. Moreover, several names with minus signs for the past three months are winners overall. But there’s no doubt that stocks like GM, Media General, the two Japanese consumer lenders and American Eagle Outfitters are punishing the portfolio.

We’re in Bear market territory. How long it lasts, no one knows.

Comments

[Alex]

Media General is really frustrating for me. The controlling family seems to be more focused on denying influence to outsiders than on healing the business.

We might have to withstand a few more years of CONVERGENCE while the valuation approaches that of LEE.

[NJ]

The average pick performance might have worked when the blog started, but over time it becomes meaningless. If you're running a portfolio state what the ENTIRE portfolio returns. Since you dont ever seem to sell your losers, your closed position performance is also somewhat skewed.

It is also valuable to know that the S&P was down 11.9% for the first six months and that since inception it's up ~10.6% (excl dividends) since
the blog started.

[John]

Alex: I join in your frustration with the MEG management. But the stock is dirt cheap, and in this environment it's hard to see any media/newspaper stock doing well because of reduced ad spending.

NJ: I don't know if it's meaningless, but I have been thinking of doing away with it and just reporting portfolio results. Part of my inspiration for this blog is the annual Barron's Roundtables, and that's why I started reporting how "the picks" do because that's how Barron's reports the results of Roundtable participants. But you're right, over time it may not be as valuable.

Regarding the Closed Positions menu, 3 of the 6 were taken over. I'm not quick on the trigger, and am not among those who automatically sell a stock when it goes down a certain percentage (not that you're suggesting I should be, but I get that from a lot of folks).

In short, the Closed Positions aren't skewed, they are what they are. We can be sure losses will appear in this menu over time.

[nk]

Some of those fallen stocks given unchanged assumptions and Margin of Safety since your buy date must be screaming buys now. Which ones are you most optimistic with? OD and AE are starting to look good to me.

[John]

nk: With the exception of the Japanese consumer lenders, MEG and one or two others, most of my current holdings would be buys if I started out today. I'll be posting more about this as time permits in the future.