Should we blame fundamental analysis or TMF analysts for this disaster?
Back in the May of 2010, in the "Wall Street's By List" article, one of the TMF analysts was having lots of fun "bashing" my SFI outperform pick.
Here is what he said:
"Meanwhile, CAPS All-Star dragonLZ cites a mysterious "three-ten method" as indicating that "SFI is a winner." I don't have a clue what a "three-ten" method might be. What I do know is that iStar lost more than $700 million last year, while rival Annaly Capital (NYSE: NLY ) earned nearly $1.9 billion. (Which of those numbers sounds better to you?)"
And not only that. In the same article he also suggested that Lionbridge (LIOX) might be a much better play citing LIOX's good fundamentals:
"From where this Fool sits, the stock also looks likely to generate good value for investors at today's price. The company turned a profit in its fiscal first quarter (reported Wednesday). In one fell swoop, Lionbridge crossed over into the black, and now sports trailing-12-month earnings of nearly $1.6 million...
...Put it all together, and what I believe we're looking at here is a company selling for less than 15 times free cash flow (and perhaps even less), while expected to grow at a 20% clip over the next half-decade. To me, Lionbridge sounds like the cat's meow."
Well, let's now take a look at how did these 3 stocks perform since May 7, 2010, when this article was published (3 stocks being SFI, the stock that was made-fun-of for its bad fundamentals + 2 stocks that the author of the article suggested as much better plays):
Basically, SFI's return sits at approximately 90%, while NLY's and LIOX's returns are approximately -3% and -40% respectively (S&P500's return during the same time was +40%).
Well, Fools, which numbers do you like better now? :)
At the time the article was written SFI was at $7.00, but when I picked it for my CAPS portfolio was lower yet at $5.71. So the return of my pick is currently at 110% vs. 44% for S&P500...