Monday, December 29, 2008

Best Performing Stock of 2008

I used to, and will one day return, to posting the best performing stocks of the week - but the wicked volatility and "student body left" trading of the past 4 months has made it a moot point. Everything must either be bought or sold, as stocks are either deemed "good" or "bad" that hour, day, or month. The herd piles in, or piles out - regardless of sector, style, fundamentals. It's been a market of asset allocation not individual stocks much of the back half of the year. I like to look for relative strength and ride sector/company trends for the longer term - this market is not for that sort of investor. This has been for many months a run and gun daytrader environment; not a place for theme investors.

With that said, I am always curious to see what stocks held up over the long run... folks, no matter what happens (short of 8%+ rally here in the next 3 days) we are projecting the worst year in the markets at least since the early 1930s and perhaps longer than that. So if you are still alive and kicking congrats. The best tuition for the stock market is... the stock market. Textbooks won't help you - living breathing and being in the market is the only way to learn. (or reading super shrewd bloggers) ;) To say this year was a learning experience for all involved is an understatement. But that's what makes the market every fascinating - always new things to learn.

To that end, I am presenting to you 52 stocks that returned at least 15% in 2008. That is quite a pathetic total, but as I said above - we just came off the worst year in (hopefully) all of our lifetimes. What has been even more amazing has been the compare and contrast of the "half years" of 2008 - I ran a similar list in May [May 26: Best Performing Stocks Year to Date] There were 122 stocks that had gained at least 25% with a market capitalization of $2 Billion or more. After a quick scan of THAT list, I don't think a single one ended the year +15% - it was very heavily tilted to commodities which is where I, along with apparently 90% of the hedge fund community, was hiding for the first 6 months of 2008. Frankly that list on May 26th, was the list to short in the 2nd half of the year.

I had to bring down the minimum market capitalization to $750 million just to find 52 names who gained 15% - much of that is so many stocks have lost so much of their market cap; and so many of our US listed companies had negative years. I don't have the data in front of me but there was some staggering analysis on how many stocks in America lost 50%+ in 2008; a massive percentage of all listed shares. This will be a year to be discussed for generations, and I expect 2009 to be quite an interesting one as well.

The criteria for this list are
  • Market capitalization $750 Million+
  • Average trading volume 100K+
  • Stock price $10+
  • Return of 15%+
What strikes so different about this year versus the carnage of 2000-2002 is back then there were at least places to hide out. Even in the equity market.... not to mention bonds. This time around - once we got past mid year all safe havens, regardless of asset class were demolished (excluding US Treasuries).

The top of the list is dominated by the one place I felt relatively "safe" (it's all relative) in latter 2008: healthcare - we own a few of the big winners but certainly did not catch all of those huge moves. But we love relative strength and these are the type of charts we want to hang out in with our larger exposures. In green are the names we own, and in purple are names we once owned or have discussed in the blog. Frankly, outside of Panera Bread (PNRA), Genentech (DNA), Amgen (AMGN), H&R Block (HRB) and Walmart (WMT) I don't see many names the casual individual stock market investor would know about or recognize.

On my own "doh!" list is both Thoratec (THOR) and Allegiant Travel (ALGT) - the former was a major holding of ours that we sold out of after a product scare [Oct 26: Closing Thoratec First Thing Tomorrow] and the stock has simply raced up and up; we've been waiting for a pullback the past three weeks to get back in - but it never comes. The latter is a small airline that is insanely profitable (even at oil $140!) and should be much more so with oil anywhere near these levels; despite a consumer recession. I've been stalking this name for many months - since the upper $20s in fact, but have been unable to pull the trigger thinking surely oil will reverse at some point and all airline stocks will be trashed (they have been the anti oil trade) - it is now nearing $50.

Quality Systems (QSII) is a "down low" Obama play - I've owned this name in the past, basically they do electronic medical records which is part of Obamamania - so it's really no different then jumping head first into infrastructure stocks based on what President Elect Midas will do. Frankly, this one has been off my radar for many years and when I though of "thesis" stocks in medical records I ran to look at Cerner (CERN) which has done little since Obama was elected. Correct thesis, wrong horse - I should of thought of QSII.

Outside of that, no large scale themes outside of "trade down" retailers - i.e. dollar stores and Ross; and re-education (adult education) stocks which have been a big theme late in the year as the unemployed ranks rise. I shall continue to focus on healthcare in 2009, especially the niche high growth names I focus on regardless of sector - and names that generate large amounts of revenue from the US government. These are the revenue streams I have the most amount of confidence in not being threatened. Outside of that, I do expect hedge funds and institutions to run up "early cycle" stocks in various iterations throughout 2009 on repeated "false starts" of the coming (ahem) recovery in 6 months. So we'll be there too, taking advantage of Kool Aid.

Symbol Company Name % Price
EBS Emergent BioSolutions Inc 382.0
SQNM Sequenom Inc 108.4
VRX Valeant Pharmaceuticals Int'l 84.4
ALO Alpharma Inc 77.9
THOR Thoratec Corp 73.7
RGLD Royal Gold Inc 59.9
DLTR Dollar Tree Inc 59.2
VPHM ViroPharma Inc 52.6
ALGT Allegiant Travel Co 45.0
CFFN Capitol Federal Financial 44.3
GTIV Gentiva Health Services Inc 41.8
RNT Aaron Rents Inc 41.0
DSCP Datascope Corp 40.8
FFIN First Financial Bankshares Inc 40.1
CMP Compass Minerals International Inc 39.6
MYGN Myriad Genetics Inc 39.4
FBP First BanCorp (Puerto Rico) 38.6
QSII Quality Systems Inc 38.2
PNRA Panera Bread Co 37.7
ORH Odyssey Re Holdings Corp 37.0
SQM Sociedad Quimica y Minera de Chile 32.2
FDO Family Dollar Stores Inc 30.7
LG Laclede Group Inc 29.3
UST UST Inc 27.5
RKT Rock-Tenn Co 26.1
CRK Comstock Resources Inc 25.1
FNFG First Niagara Financial Group Inc 24.3
VRTX Vertex Pharmaceuticals Inc 23.7
HRB H&R Block Inc 23.1
INT World Fuel Services Corp 23.0
DNA Genentech Inc 22.5
LMNX Luminex Corp 22.0
AMGN Amgen Inc 21.1
CWT California Water Service Group 20.8
STBA S&T Bancorp Inc 19.7
SF Stifel Financial Corp 18.8
EMS Emergency Medical Services Corp 18.7
OCR Omnicare Inc 17.8
STRA Strayer Education Inc 17.8
ROH Rohm and Haas Co 17.7
FNF Fidelity National Financial Inc 16.4
EW Edwards Lifesciences Corp 16.1
PNY Piedmont Natural Gas Inc 16.1
MANT ManTech International Corp 16.1
CBST Cubist Pharmaceuticals Inc 16.1
UMBF UMB Financial Corp 16.0
WMT Wal-Mart Stores Inc 15.9
ROST Ross Stores Inc 15.7
GOLD Randgold Resources ADR 15.6
DCM NTT DoComo Sponsored ADR 15.4
BNCL Beneficial Mutual Bancorp Inc 15.4
NFS Nationwide Financial Services Inc 15.3

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