“In our view RIM does not need to deliver the best selling smartphone in order to deliver an upside EPS surprise. And we believe there is enough demand for the new product for it to have a successful launch and year.”
This doesn’t help me a whole lot. I participated in The Globe and Mail’s My One and Only stock-picking contest over a year ago.
Participants were asked at the end of 2011 to choose one North American-listed stock, income trust, American depositary receipt or exchange-traded fund for 2012. The returns will be tallied at the end of the year in Canadian dollars to determine the winner.
However, a contrarian bet on beleaguered RIM hasn’t yet produced results for Malvin Spooner, president of Sienna Capital Management Inc…. The stock has suffered a 46.8-per-cent haircut.
OUCH! Actually I gave them two picks . Research in Motion was one, and PerkinElmer the other. Unfortunately the journalist who called me completely missed the PerkinElmer pick (didn’t scroll down my email far enough) – unfortunate because the PKI outperformed the market, climbing from from $19 to $30 (+58%) over the course of the year.
But alas it was Research in Motion that was published as my “one and only” stock pick and it went the other way over the course of 2012. My reasoning was sound – the company had loads of cash and a fortune in patents, 80 million subscribers and a new product on the way. What I missed was that the new product launch would be delayed again inspiring the short-sellers (the walking dead of finance) to hammer the stock relentlessly.
Picking just one stock is a portfolio manager’s nightmare. I can assure you I’ve had many torpedo stocks over the years: sometimes it’s just bad timing and other times it’s just a bad idea. Generally the good picks outnumber the bad ones if one has any skill at all.
But thank goodness investing isn’t a contest. In real life, decisions must be made every day. Yes RIM was a disaster on paper for most of 2012 but a thinking person would either have bailed or taken advantage of the very cheap stock price. One exceptional investment advisor, Mr. Bill Howe at Raymond James did the right thing during the summer months by taking advantage of the depressed share price. Here is his recent note to me:
You managing money yet? If so, please let me know where. Thanks for telling me in June 2012 that RIM was the most hated stock and you couldn’t find an analyst that had a buy.
Bill and I have always agreed that ‘usually’ the best time to buy a stock is when no analyst would dare recommend it. For most of July the stock was around $7.00 per share and universally despised. Now that the the stock is trading above $17 analysts are beginning to recommend it.
When the the Globe & Mail contest began (end of 2011), RIM was trading in the neighborhood of $15.00. Oh the shame I felt watching it plummet to half that price. But timing is everything and despite the rebound towards the end of 2012 it didn’t get much higher than $12.00.
The one lesson learned over the course of a lifetime is there will be shame, but if you’re patient there can be salvation. Now that RIM is above $15 again, I feel I’ve been delivered from disaster.