Friday, January 08, 2010

Measuring Up: 2009 Performance

The year 2009 was tough in equity market terms. Many money managers were likely not looking forward to the year-end reckoning on performance. We do not manage assets for clients at Crystal Equity Research but we are mindful that investors make decisions on our recommendations.

Looking back from December 31, 2009, we saw some recovery in our stock picks from the 2007 to 2008 timeframe that remain under coverage. These are companies that performed well before the capital markets fell apart in September to November 2008. We like these operations and kept them under coverage because we believe they have “post-recession” futures. American Ecology Corp. (ECOL: Nasdaq), Darling International (DAR: NYSE) and eHealth, Inc. (EHTH: Nasdaq) have great prospects in our view even if the stocks are down compared to two years ago.

Then there are our most recent stock picks chosen in late 2008 and throughout 2009. This group makes us look like geniuses. Our two best are China Green Agriculture (CGA: NYSE) and RINO International (RINO: Nasdaq). However, we acknowledge that almost all boats rise with the tide. As 2009 unfolded, the tide came back in with a surge, so nearly anyone who chose strong companies can claim returns.

At the end of 2009 our Crystal Reports coverage group returned 30.1% excluding dividends during the five-year period January 2005 to December 2009. Our CER Reports and Focus Reports groups returned 5%, excluding dividends. These two groups have not been under coverage for a lengthy period of time and we have some stocks down dramatically in the short-term while others have climbed with even greater distinction. On an annualized basis the average return was 113.7% for the CER and Focus Reports stocks.

We also made some choices in our Small Cap SEARCH Newsletter. For the period July 2006 to December 2009, the group’s return was 5.9%, excluding dividends only considering prices on those two publication dates. Investors using our trading guide could have realized higher returns as some stocks reached our target prices well before the publication date of the next newsletter. On a price weighted basis the annual return was 43.8%.

We are holding a number of stocks in our SEARCH newsletter group that were picked before the market debacle in late 2008. As a consequence the stocks remaining in our SEARCH group are down by 4.1% from the price at the respective profile dates. We have been reluctant to realize these losses as we believe the thirteen stocks that remain in the group and are “under water,” are stocks supported by viable companies with the potential to withstand difficult economic times. Eventually we expect value to be restored to these stocks.

Visit the Home Page of the Crystal Equity Research web site to see our performance reports. Performance reports are updated each week for the Crystal Reports coverage universe and monthly for the Small Cap SEARCH Newsletter.


Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein. Currently, Crystal Equity Research has a Hold rating on ECOL shares and Buy ratings on EHTH, DAR, CGA and RINO shares. The CER and Focus Reports series are sponsored by the issuer or an agent.

No comments: