Normally, if I said a business was underwater, investors would think the worst. Actually, in the summer Noble Corp (NE) was underwater -- and investors were not impressed. However, this was a great buying opportunity, and although the company is still underwater, it is also a market leader among my stock picks and the overall market -- even among oil industry players. With its fleet of 69 offshore drilling rigs, Noble stands tall.
Even before I included Noble among this years picks, I wrote in early September that the stock was cheap: "When you consider the Swiss-based company has 87% of its rigs located in international waters, plus contracts with Petroleo Brasileiro (PBR) raring to go, where is the fear coming from?"
Following are this year's picks, ordered by performance. Telefonica was the leader after the first review but has since fallen to fourth place, even though it outperformed the S&P 500 by 100%. The most volatile of the group has been Newcastle Investments, which was at break-even after one month, the top performer after two, and is now dead last. The starting prices are from December 31, 2010 and conclude March 31, 2011.
Noble Corp. (NE): from $35.77 was up to $45.62 for a market-beating 27.543% gain;
Chevron (CVX): from $91.25 moved up to $107.49 for a 17.80% gain;
EZCorp (EZPW): from $27.13 improved to $31.39 for a very nice 15.70% gain;
Telefonica (TEF): adjusted for a 3-for-1 split; from $22.806 jumped up to $25.22 for a 10.57% gain;
Raytheon (RTN): from $46.34 elevated up to $50.87 for a 9.78% gain;
General Electric (GE): from $18.29 sprang up to $20.05, adding a 9.62% gain;
Homeowners Choice (HCII): from $8.08 this little company was a little winner -- up to $8.18 for a 1.24% gain;
Bank of America (BAC): from $13.34 went nowhere at $13.33 for 0.00% gain;
Citigroup (C): from $4.73 dropped to $4.42 for a 6.55% loss;
Merck & Co. (MRK): from $36.04 dropped down to $33.01 for a sad 8.41% loss;
Newcastle Investments (NCT): from $6.70 slid to $6.04 for a disappointing 9.85% loss.
The average return for this year's picks after one quarter was 6.13% (67.44% /11). Adding the dividends paid by 8 of the 11 picks averaging a yield for the group of 0.628% (2.51% / 4) equates to a three-month real return of 6.76%.
Comparing my picks to the S&P 500, which started at 1,257.64 and moved up to 1,325.83, equates to a gain of 5.42% -- adding the average yield of 0.418% (1.67% / 4) for a total return to date of 5.84%.
So far 2011 is shaping up nicely, with my picks ahead of the S&P by 0.92% (17.42% better). Hopefully, this success will continue to play out in the long run -- especially as I invested in all of my picks. Many of these stocks still present opportunities, which you can learn more about if you check out Chasing Value on BloggingStocks.
Sheldon Liber is an architect and the CEO of Chasing Value Asset Management, Inc., a small private investment company. He writes the columns Chasing Value™ and Serious Money and is on twitter: ChasingValue. Disclosure: Mr. Liber owns shares and/or options in all of this year's stocks.