The Best and the Rest
02/24/2006 12:00 am EST
By monitoring some 60,000 virtual portfolios via hisMarketocracy Web site, Ken Kam is able to isolate the "best" stock pickers from the "rest". HisStock Alert service then highlights selected stocks being bought by the best, while being sold by the rest.
"Founded in the late 1950s by two men and $100, Computer Sciences (CSC NYSE) was one of the first computer companies. Now, CSC is a global giant with 78,000 employees in 80 countries worldwide and $15 billion in revenue. With a focus on assisting the US Federal Government, the company provides IT outsourcing, consulting, and systems integration services, and other professional services worldwide. The company enjoys significant free cash flow, solid balance sheet, and is viewed to be a buyout candidate.
"The Best Investors have been active in acquiring the shares of CSC. The Best increased their holdings by 61% over the past month before the Company reported solid operating numbers and brilliant free cash flow. The company has a solid balance sheet, solid business model, and fantastic free cash flow that causes some to think on Wall Street that Computer Sciences is an attractive takeover candidate.
"Founded in 1975, American Physicians Capital (ACAP NASDAQ) is a regional provider of medical professional liability insurance focused primarily in the Midwest markets through American Physicians Assurance Corporation and its other subsidiaries. The stock is trading near a 52-week high with a market cap of $420 million. Standard and Poor's has issued a debt rating of BBB-/positive for its insurance subsidiary. The company has a large and active stock buyback program.
"The Best Investors have had a steady position in ACAP for several years. The company was forced to change the way they did business three years ago. That new focus on quality and prudent risk management has allowed the stock to appreciate by over 200% after falling in 2003. Now, The Best continue to add to their position by increasing their holdings by 22% over the past week even as the company nears a 52-week high. ACAP management seems to agree with Our Best Investors as the company continues with their sizable and active stock buyback program.
"Technology Research (TRCI NASDAQ) is a micro-cap company that designs, manufactures, and markets portable electrical safety products that save lives, protect people against serious injury from electrical shock, and prevent electrical fires in the home and workplace. The company also supplies power monitoring and control equipment to the US military. TRCI has a very small market cap of $47 million, but appears to be enjoying accelerated growth and has a decent balance sheet.
"The Best Investors started accumulating TRCI in October of last year by increasing their position by 100% when the stock was at $3.50. Over the next several months, the stock rose steadily to $4.50. Even after a gain of 30% in only several months, The Best still saw opportunity in this micro-cap company by increasing their holdings another 200%. That foresight and risk taking was eventually rewarded as the stock has skyrocketed into the $8s. The Best continue to hold their sizable position, but we emphasize that this is a speculative idea.
"Sepracor (SEPR NASDAQ) is a research based pharmaceutical company that has recently become very profitable with sleeping aid, Lunesta. That drug is a recent launch that is enjoying rapid growth in a growing and sizable market. The company has another well selling drug, several out licensing agreements in the allergy arena, but has a very limited pipeline. It is likely this company will be bought out by a larger pharmaceutical company in the future.
"The Best Investors haven’t been active in the shares of SEPR until recently when they increased their holdings by 200% in the fourth quarter of 2005. Since then, the stock is up 15% as Sepracor announced a sizable profit and success with their sleeping drug, Lunesta. The company’s limited pipeline, past difficulties, and fantastic growth of Lunesta in a blockbuster category might lead it to being sold out to a larger pharmaceutical company.
"Martin Marietta Materials (MLM NYSE) is the second largest producer of crushed stone, sand, and gravel in the United States that is used to build roads, sidewalks, and foundations. The company also produces magnesium-based chemical products and fiber reinforced polymers used in the construction of bridge decks, specialty truck trailers, and railcar components. The company has a sizable p/e of 20 for a low growth industry, but it also has a very small short position of 1.5% of float.
"The Best Investors have increased their position in MLM by 45% over the past month and the stock has appreciated by 15% to a new 52-week high. The company is enjoying the benefits of new home construction, the congressional transportation bill, and hurricane rebuilding. The company has a sizable valuation, but would be a low risk bet on continued pricing power and economic expansion."