As a private money manager, I'm always open to new ideas, no matter where I find them. Recently, I found a great blogger who has helped me line my pockets and those of my investors. Todd Sullivan, 42, of Westborough, Mass., has no formal training, but he is a rigorous analyst whose posts are always illuminating. His chapter-and-verse analysis of mall operator General Growth Properties, which is in bankruptcy reorganization, has been characterized by both brilliance and common sense, a rare combination in the blogosphere.
The background. Sullivan started blogging three years ago, after selling a pool-installation company and a gym and deciding to focus on managing his money. I discovered him on the Web site Seeking Alpha, an excellent source of investment ideas. You can read his general musings at no charge at www.valueplays.net, but his stock picks cost $50 a month or $400 a year. Sullivan, who has 300 paid subscribers, says his portfolio gained 461% in 2009 and lost a relatively modest 18% in 2008.
Sullivan is a true deep-value investor. Since he began blogging, he has owned shares of McDonald's, Dow Chemical, Sears Holdings and a grab bag of small-company stocks. Recently, Sullivan's top picks -- the stocks with the biggest potential gains relative to their risks -- were General Growth (symbol GGP), Jamba Inc. (JMBA) and Dow Chemical (DOW). Dow is a play not only on a global economic recovery but also on the company's relatively little-known agribusiness, which Sullivan believes will be enormous in three or four years. Dow traded at $30 in mid March.
From just $107.88 $24.99 for Kiplinger Personal Finance
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Jamba, the most speculative pick, owns and franchises Jamba Juice stores. Sullivan thinks the stock, recently $2.04, could hit $3.50 by the end of 2011 as the company rolls out new hot beverages and take-home smoothie mixes for West Coast supermarkets.
Unable to refinance its debt because of the credit crisis, General Growth filed for Chapter 11 in April 2009. Sullivan began investing in the real estate investment trust at 49 cents a share and added to his position twice as the stock vaulted to $15 by mid March (the shares were $4 when I suggested them in my January column). Sullivan thinks the shares could double after General Growth emerges from bankruptcy in a plan led by Brookfield Asset Management. Or, he says, the company could be acquired for $18 to $22 a share by one of many potential buyers circling around.
Sullivan's mettle was tested in December when hedge-fund manager Eric Hovde issued a report saying General Growth's true value was between $0 and $5 per share. The stock promptly tanked. I thought Hovde's analysis was deeply flawed because he assumed that General Growth's properties were comparable in quality to those that another shopping-mall REIT had recently sold. They aren't. At any rate, Sullivan helped buttress my confidence in the stock. He showed that some of the figures Hovde used in valuing the company were misleading. He also noted that Hovde dismissed the most salient point of the case for General Growth: For potential buyers, it is a once-in-a-lifetime opportunity.
Update. There have been developments aplenty with my top stock picks for 2010, so a review is warranted (see 3 Faves for the Fearless). I still love General Growth, and it remains my largest holding. Ideally, I will continue to own the shares when the company emerges from bankruptcy.
I sold KVH Industries (KVHI) at about $12.50 because I was concerned about its earnings guidance. The stock, $11 when I recommended it, traded at $13 in mid March.My final pick, Medivation (MDVN), was a disaster. The stock lost two-thirds of its value on March 3 after the company announced that Dimebon, once thought to be a promising new drug for treating Alzheimer's, didn't work in a late-stage trial. I sold all of my shares.
Columnist Andrew Feinberg writes about the choices and challenges facing individual investors. Feinberg owns shares of General Growth Properties, Dow Chemical and Jamba Inc.
-
Fed's Rate Cuts Could Have Impacts You Might Not AnticipateUnderstanding how lower interest rates could impact your wallet can help you determine the right financial moves to make.
-
Past Performance Is Not Indicative of Your Adviser's ExpertiseMany people find a financial adviser by searching online or asking for referrals from friends or family. This can actually end up costing you big-time.
-
I'm want to give my 3 grandkids $5K each for Christmas.You're comfortably retired and want to give your grandkids a big Christmas check, but their parents are worried they might spend it all. We ask the pros for help.
-
Why This Hedge-Fund Manager Is Shutting Downinvesting Now I plan to invest a chunk of the family portfolio in index funds—oh, the horror!
-
Know When to Sell a Stockinvesting Don't let a stock's stumbles blind you to its long-term potential.
-
The Secret to Safely Investing in Biotech
investing Seth Klarman was prescient in recognizing that the genomics revolution would supercharge the biotech industry.
-
Profit from Following Activist Investors
investing When investors like Carl Icahn and Bill Ackman turn the heat on management, shareholders stand to benefit.
-
Doubling Down on a Falling Stock
stocks Buying more shares makes sense when nothing about a company has changed except the price of its stock.
-
Andrew Feinberg's 6 Stock Picks for 2015
investing Bank of America has made great progress in cutting costs and settling legal claims for shoddy mortgage securities.
-
Promising Bargains in Biotech Stocks
investing What I like about BioDelivery Sciences is not so much that there are many ways to win as that there are almost no ways to lose.
-
Time-Tested Advice for Long-Term Investorsinvesting Learn from the Kahns, ultra-patient (and successful) value investors who often hold stocks for 20 years.
