Chasing Value: Toxic Stock Update BAC, BP, C, GE, GS, RIG

Posted Aug 5th 2010 3:00PM by Sheldon Liber
Filed under: Competitive Strategy, General Electric (GE), Citigroup Inc. (C), Bank of America (BAC), Goldman Sachs Group (GS), BP p.l.c. ADS (BP), Bargain Stocks, Chasing Value™, S and P 500, Transocean Ltd. (RIG)

Buy on fear sell on greed is being put to the test today, as I post the first update to my ranting three weeks ago that the six most highly traded stocks receiving the most bad press would be a great contrarian investment. I went on further to claim that the punishment was exaggerated and that this group would easily out perform the over all market.

Normally, I would not post so soon but the market has done an about face (again) and I wanted to take a glance. The stocks I suggested buying were Bank of America (BAC), Citigroup (C), General Electric (GE), BP (BP), Goldman Sachs (GS) and Transocean (RIG).

Since that post BP has shut down its nightmarish Gulf of Mexico oil leak, and Goldman has settled with the SEC for the sum of $550 million admitting a lot of faults but no guilt. All of these stocks have been on the rise with the market, but have they beaten the market?

The following are the closing prices as of July 16, 2010 followed by yesterday's closing prices.

Bank of America: $13.98 moved up to $14.19, a gain of 1.5%
Citigroup: $3.90 grew to $4.14, a gain of 6.15%
General Electric: $14.55 extended to $16.48, gaining 13.26%
BP: $37.10 progressed to $39.39, a fearless gain of 6.17%
Goldman Sachs: $146.17 popped up to $156.41, adding 7%
Transocean: $52.08 climbed to $53.56, for a gain of 2.48%

The average gain for the group was 6.09%. During the same period the S&P 500 went from 1064.88 up to 1127.24 for a gain of 5.86%. The difference was 0.23% over the three weeks. Nothing to brag about in this time frame but I still maintain that a year from now the gap will be considerable in favor of the six picks.

The market is down in morning trading. However, RIG and BP are up. Last night RIG announced lower earnings, but beat the street and it is shining this morning.

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture and planning firm. He writes the columns Chasing Value and Serious Money. Disclosure: He owns shares and/or options in all of the stocks mentioned.

Tags: BAC, Bank of America, BP, C, ChasingValue, citigroup, featured, GE, general electric, Goldman Sachs, GS, RIG, transocean, value stocks