Big Winners, Big Losers
Revealing your big winners and big losers could help others avoid mistakes and find tips for finding and keeping good stocks. I thought I would start by sharing my big winners and losers and why I think I got those results. I am going to start with my big winner which is Under Armour (UA). (Sharing mistakes is painful so I am going to defer the pain a bit to the end of this post.)
I chose to study UA because I was looking for a small to midcap company for my portfolio. Under Armour fit that description and I had seen it recommended in an advisory newsletter. In my SSG analysis I purposely under estimated sales and earnings growth from that projected by Value Line and other analysts. I would rather be surprised on the upside. How much I decrease this projection depends on the company and other research. Even with the reduced projected growth UA had a BUY upside downside ratio.
What went right? Under Amour consistently beat my earnings and sales growth estimates. Re-evaluations with new SSGs mostly gave BUY signals. A few times the PE was out of line, above 70, so I did trim my holdings a bit at these times. This has been the best pick in a long time. It has been in my portfolio for just over 6 years. Overall gain on the current holdings is over 10x my cost basis. Total gain is a bit more as I had gains when I trimmed my position.
I think my biggest loser is a more recent pick, Textainer Group Holdings, TGH. Textainer is the largest lessor of cargo containers to shipping companies. Still it is a small cap stock. It first came to my notice via an advisory newsletter. (Not the Small Cap Informer.) Again, I did further study as I was looking for a small cap company.
What went wrong? I think my first problem was I should have used a lower estimated low price on my SSG. This company is more volatile and I do not think I took adequate steps to account for this. If I had I may not have purchased it in the first place. I also think I did not dig deep enough into variables that affect its business. I did find global trade is increasing on average 3% per year. Also more trade is shipped via containers. What I did not sufficiently factor into my original buy decision were the effects of interest rates and steel prices. Low interest rates make it more desirable for shipping companies to buy rather than lease containers. While it looked like rates were going to go up, they did not go up significantly. Currently it looks like they will not increase significantly for some time into the future. When containers reach the end of their useful life Textainer sells them either for steel scrap or other non-shipping purposes. The price of steel affects the price they receive for these containers. With low energy costs and slower economic growth steal prices may be depressed for a while longer. The final hit to my analysis was global trade actually decreasing slightly during the time after I purchased TGH. I finally did realize my original thesis for the growth of this company was incorrect or at least poorly timed. I sold my entire position. I lost just over 50% of my original cost. (Ouch!).
What would help me avoid this situation in the future? I did not try other evaluations such as Stockcentral and/or the Equity Research Service. I think some more opinions on quality and growth prospects may have tempered my original enthusiasm. At least they would have prompted me to dig a bit deeper into the business and how it fit into current conditions. I do this now.
So why don’t you help our community here and share your big winners and losers and your analysis of what went right or wrong? Ok, I know sharing mistakes is tough. That’s why I put my mistake last, but try. You can help others learn from them.

Russell Malley
StockCentral Community Leader