The One Stock to Hold All Year
03/11/2011 4:40 pm EST
Mark Skousen placed third out of 100, two years in a row, on AOL's annual stock-pickers list. So, what has he chosen this year, and why does he think it could win the whole thing this year? In an exclusive interview with MoneyShow.com, he explains.
It’s great to see you because you again are knocking it out the ballpark—another award from the AOL stock pickers list. The first time we talked, it was Freeport McMoRan. Last year it was Ford. What’s the big one this year?
You know? It’s always like, what have you done for me lately?
You’re only as good as your last trade.
I’ve won this contest four out of the last seven years, or at least come in the top three. For your viewers who don’t know what the contest is, 100 of us are selected and you pick one stock on January 1. You have to hold it the entire year, and you sell it—and whoever gets the best return wins the contest.
I came in third two years in a row with Freeport McMoRan and Ford Motor Company. This year, I think the banking sector is the sweet spot, in terms of turning around, and so I’ve chosen Flagstar Bancorp (NYSE: FBC).
Flagstar is based in Troy, Michigan, but it’s not really a Detroit story—it’s the whole Midwest, and they had a national mortgage market. In fact, I had a mortgage at one point on my home in New York through Flagstar. So, they’ve been around for a long time.
They were hit very heavily by the 2008 mortgage meltdown, and as a result their stock went from $140 a share down to the current price of around $1.75—and that’s with a lot of dilution on top of it, so they just barely escaped collapse.
But there’s a lot of heavy institutional buying. It’s selling for below book value, which is $2.28, so I think there’s a real possibility of turning around the company—it seems to get closer and closer.
As the bank comes closer and closer to profitability in the next couple of quarters, the stock could make a dramatic move, and I’m hoping that that will be enough to win that contest.
I hope. So this means that the mortgage mess is pretty much worked through?
We saw regional bank failures last year—an unbelievable number—and I think so far this year, maybe we’ve had 14 bank failures. So you don’t think that that’s going to affect them?
Well, they’re selling off their nonperforming assets. That’s what they just did—and they took a hit with that, and showed a loss as a result, so that seems to be further and further behind them. They seem to be getting their act together, and their earning power is increasing, and so there are a lot of indicators that show the stock moving back up.
So I think it’s really a big winner—and I hope that I can be back here next year, and say I came in third or whatever it might be to win that contest again.