Friday, February 12, 2010

The Kirk Report

The Kirk Report


Heartbreakers

Posted: 12 Feb 2010 10:22 AM PST

Heartbreakers
Earlier this week I asked members to submit the name of the stock that they thought would be the largest heartbreaker between this year's Valentine's Day and the next.

As typical with prior years, I received fewer responses in this poll than any other I do throughout the year. My guess it has something to do with the fact that this is the only time of the year I ask for names of stocks that members think will go down and lose money for their shareholders.

If that doesn't say something about the general tendency for people to only think in terms of what is going to go up, I don't know what will. In fact, in casual conversations I have with others (especially those who don't know what I do for a living) I enjoy asking people to tell me their favorite short sell idea. More often than not I receive a blank stare while those same people are always more than happy to share the name of a stock they think is going to be the next Google! When the market comes up in conversation with friends and relatives, try doing the same thing as I do and see what happens!

For this year, 42 "heartbreaker" stocks were submitted. They are Apple (AAPL), Accelrys (ACCL), Agnico-Eagle Mines Ltd (AEM), AIG (AIG), Amag Pharmaceuticals (AMAG), Amazon.com (AMZN), Aeropostale (ARO), Boeing (BA), Baidu (BIDU), Coeur D'alene Mines (CDE), Concur Technologies (CNQR), Capital One (COF), Cree (CREE), Dex One (DEXO), New Oriental Edu And Tech (EDU), Green Mountain Coffee Roasters (GMCR), Google (GOOG), Garmin (GRMN), Goldman Sachs (GS), Hsbc Holdings (HBC), Internet Gold-Golden (IGLD), Isramco (ISRL), JPMorgan Chase (JPM), Kimco Realty (KIM), China Life (LFC), Elong (LONG), Medivation (MDVN), OncoGenex Pharmaceuticals (OGXI), Overstock.com (OSTK), Pfizer (PFE), Pinnacle Airlines (PNCL), Radian Group (RDN), Research In Motion (RIMM), Solarfun Power (SOLF), SunPower (SPWRA), Terex (TEX), Tenet Healthcare (THC), Toyota(TM), Trina Solar (TSL), Vertex Pharmaceuticals (VRTX), W Holding Company (WHI) & Wynn Resorts (WYNN).

However, please note there were 6 stocks that received more than one vote: both Apple (AAPL) and Baidu (BIDU) received 4 votes, AIG (AIG) received 3 votes, and Green Mountain Coffee Roasters (GMCR), Medivation (MDVN), & Toyota (TM) received 2 votes each. I also removed three stocks submitted that were trading under $5 per share (Sirius Xm Radio (SIRI), Zale (ZLC) & Western Refining (WNR)) from the entire list.

A couple of points here. First, it is interesting to see Toyota in this list primarily because of any company has already broken the hearts of many customers and shareholders. From a contrarian standpoint, it will be interesting to see how the company does over the coming year and whether members are correct that this will continue to be a major heartbreak. Second, also interesting to see both Baidu & Apple on this year's list again. Both of these stocks also were in last year's heartbreaker list and certainly didn't cause much heartbreak as they were both up quite a lot since last year's Valentine's Day. Perhaps this is the year, or not. We'll find out!

As always, I'll create two watchlists from this year's survey - one watchlist of the stocks receiving more than one vote (which in the past tends to outperform, or in this case, hopefully underperform) and one watchlist containing the entire list. In a year from now we'll take a look at how all of these perform and I will award a nice prize to those who submitted the worst performer.

Good luck to the members who submitted their favorite heartbreak stock this year!

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