Maybe a Pine Tree

Ahknaten - Me versus Them - Who will win the Strategy Lab?

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I thought it would be a fun exercise to critique some of the stocks chosen by those in the Strategy Lab Open, and provide a bit more insight as to why I chose the stocks that I chose. I'm certainly not trying to be arrogant or cocky by doing this, I'm just having a bit of fun. I like stocks that demonstrate a variety of stories. If the stock has a value story (low PE, price/book), a quant story (low F-Score), a quality story (low accruals), a momentum story (earnings momentum), a smart money story (low short interest, insider buying), and a growth story (some growth), then I probably like the stock. As such, I think the stock could appeal to a wide range of funds, and hopefully that will drive the stock price up. For now, I'm not going to bother you with creating 'stories' for the stocks I like, as those are the basic stats I look at. Now, for fun, I'm going to follow that methodology and pick apart the Strategy Lab portfolios.

Here are my predictions as to who I think will win the competition.

1st - High IQ
2nd - Guru Investor
3rd - All Star Team
4th - CAPS Commando
5th - The Amateur
6th - Dog Pound

A few thoughts on each contestant and the stocks I like/dislike:

6th place
Robert Walberg -- Dog Pound
Best stock: GOOG
Worst stock: BWLD

The stocks chosen for this portfolio have a strong tilt towards the discretionary 'hot stocks', and many of them have insider selling, high short interest, and a high price/book. Although I dislike GOOG (short it), out of the stocks listed, I liked it the most. BWLD (along with BUD) is one of those 'hot' stocks that students love to ask me about. No offense, but the portfolio is composed of a lot of 'story stocks', that I could talk to the average Joe about and increase blog hits, but my bet is that this portfolio will stay in the dog pound. LVS is one of the stocks in my torpedo list at Earnings Torpedo. Sorry, you get 6th place.

5th place
Vad Yazvinski -- The Amateur
Best stock: CEL
Worst stock: HYTM (but, he's shorting it, so I'm happy)

The stocks chosen for this diversified portfolio follow a creative blend of ETFs, shorting and thought-provoking articles. The portfolio is short on Mortgage Finance and Homebuilding, and long on Oil & Gas Drilling and Israeli wireless companies. Vad, you're a nice guy and I'm happy you won the last competition, but I'm going to bet 5th place for you. I'm sorry. If I hadn't taken into account some of the shorts you chose, then I would have given you 3rd place. My concern lies with some of the shorts, as there are some with a low PE, low price/book, low price/cash flow, positive growth, and insider buying and low short interest. Take a closer look at those -- I haven't, and perhaps you're right, but that's where my concern lies. It is nice to see that you're shorting LNG, LEV and WAVE -- I have listed those at Earnings Torpedo as well. I'll give you 5th place.

4th place
Russell Carpenter -- CAPS Commando
Best stock: CVD
Worst stock: LUFK

This portfolio is following a strategy of picking ETFs, and it's rather boring if you ask me. Good grief, I feel like Simon Cowell. It would be nice to see a bit more stock picking, but instead I feel like your portfolio is pretty much an index fund, boring. This portfolio is most likely to coast along with the market. Watch the insider selling on LUFK, in the past two years they have been pretty good at timing their sales. I'll give you 4th place.

3rd place
Ken Kam -- All Star Team
Best stock: VLO
Worst stock: GROW

Mr. Ken Kam, although I disagree a few times with your stock ideas (my opposition to AAPL is well noted), I admire that you choose stocks based on a variety of strategies. So although I might not like something, it doesn't mean I'm right, and you can certainly tap into that talented pool of individuals who specialize in what they do. As such, my respect for Marketocracy (and MOFQX) has grown. That being said, I need to be a bit critical and you might be surprised that AAPL is not the least favorite of the stocks you chose, but that distinction would apply to GROW. I'd recommend shorting that stock and picking up an insurance company instead. There is one positive bit of news to GROW -- recently some insiders bought it at under $16. So perhaps you might be right? As for VLO, I like it. Buy VLO, short GROW. I'll give you 3rd place.

2nd place
John Reese -- Guru Investor
Best stock: E
Worst stock: BEZ

If any portfolio in this list follows my passion for quant work and challenges me the most, it's this one. The stocks chosen for John's portfolio follow a variety of known quant styles. It's fun stuff and it's nice to see this portfolio in the competition. Out of all the competitors, I think this one is my hardest competitor; both of us are up about 7-8%. Perhaps quant investing is back in style? I find it most fascinating that one of the stocks chosen in his portfolio is Factset (FDS). FDS an excellent company that provides awesome quant tools and this sort of portfolio is rather easy to compile using Factset. Its possible FDS came out in one of his screens, but I would wonder if there was any bias in choosing it for a stock pick? As for the other stocks, I'm concerned with the overweighting on highly shorted discretionary stocks. That move might hurt you? I'll give you 2nd place (I'll take 1st).

1st place
Kelley Wright -- High IQ
Best stock: NKE
Worst stock: SBCF

Congrats Kelley. This diversified portfolio seems to choose stocks that have a low PE, price/book, price cash flow and short interest, with some growth that can help the stocks avoid a 'value trap'. It has also stayed away from some of the 'story', 'hot' stocks that I complain about. I wish it would have some telecom and energy stocks, and some foreign companies, but overall it's a nice portfolio. Kick out SBCF and choose another insurance company, pick an international wireless company for international exposure and throw in some energy stock to help lower your risk. Watch the insider selling on NKE. Congrats Kelley, I'll give you 1st place.

Short the dog pound, go long on High IQ and use CAPS Commando as the index.
Best of luck to all, and I hope I've entertained you a bit.
Amateur, keep it up with the shorting.
Guru Investor, the game is on, and I'll borrow your title after this is over.

Please note, in the spirit of competition, it's somewhat fun to be a bit critical of one another and kid around -- I'm really not trying to be a jerk.