As 2011 winds down, we at InvestorPlace thought it would be a good idea to
reflect on our good and bad calls this past year. Its important that investment
writers and anyone else in the media making recommendations, predictions or
prognostications about investments keep themselves accountable, as investors
sometimes act upon our collective words of wisdom. Because Ive only been
contributing to InvestorPlace since the beginning of August, I think it makes
more sense to discuss my best and worst calls from that month, providing a
longer duration of time and a more accurately reflection of the quality or lack
thereof of my calls. Let me start with my most interesting call, Petrohawk
Energy , which no longer trades on the New York Stock Exchange after an Aug. 25
acquisition by BHP Billiton (NYSE: BHP ) for $15 billion. What makes it so
interesting is that I was merely recommending existing shareholders immediately
dump their stock, as a white knight wasnt coming to the rescue. Class-action
lawyers were simply revving up the billing machine at the expense of
shareholders. I made 17 sell recommendations in August and, on average, theyre
down 3% through late December, while the S&P 500 is slightly up. Here are a few
of my winners and losers: The biggest mover in either direction is Green
Mountain Coffee Roasters (NASDAQ: GMCR ), down 56%. I reasoned that the presence
of momentum investor Richard Driehaus atop its major shareholder list was an
indication its stock was overbought. My worst call is Rackspace Hosting (NYSE:
RAX ), up 28%. My opinion at the time was that RAX stock was trading at fair
value given the competition in cloud computing. However, I did point out the
existence of safer growth alternatives like Red Hat (NYSE: RHT ), which is up
17% in the same time frame. My second sell recommendation that came through in
August is Melco Crown Entertainment (NASDAQ: MPEL ), an operator of casinos in
Macau. With growth in China slowing, Macaus dependence on the mainland is going
to come back to haunt it both economically and politically. It seems Chinese
government officials are resorting to theft to cover gambling debts, and this
has led to greater casino oversight from Beijing. MPEL is down 22% since my
call. My second-worst sell recommendation is American Tower (NYSE: AMT ), the
largest owner of cell towers anywhere. Its stock is up 19% since the articles
appearance in August thanks to a number of acquisitions, including paying $500
million for 2,500 towers in Mexico. My biggest concern with American Tower is
its debt, and that hasnt changed. AMT can only grow by piling on the debt, and
that will come back to haunt it. Despite the move up, Im unrepentant.
Accountability at InvestorPlace.com From InvestorPlace Editor Jeff Reeves ,
whose own review of 2011s hits and misses can be found here : In the new year, I
hope to continue some regular disclosures from all our InvestorPlace columnists
as a way to show that we are giving recommendations in good faith and that we
are not afraid to own up to our mistakes. If you have any comments to share with
our writers or have ideas on how we can best achieve some form of transparency,
please send your thoughts to me at editor@investorplace.com . We are a site run
by investors, for investors, and we are in this together. It's very important
to me that all readers can trust our commentary so please don't hesitate to
drop us a line. As of this writing, Will Ashworth did not hold a position in any
of the aforementioned securities.
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