October 3rd, 2011 
Category: 
Earlier this year I was invited by fellow bloggers to a friendly stock picking competition where each blogger picks 4 stocks (or ETFs) they think will outperform in 2011. Well the Q3 results are out and they’re a disaster given what the oil and gas sector is going through since March.
| Rank | Site | YTD Return (%) |
| 1 | DividendGrowthInvestor | 3.39% |
| 2 | IntelligentSpeculator | 3.19% |
| 3 | MillionDollarJourney | -5.98% |
| 4 | MoneySmartBlog | -13.14% |
| 5 | WhereDoesAllMyMoneyGo | -18.12% |
| 6 | TheFinancialBlogger | -20.31% |
| 7 | MyTradersJournal | -35.82% |
| 8 | TheWildInvestor | -37.26% |
| 9 | BeatingTheIndex | -45.07% |
Stock Picks Review
Skywest Energy (TSXV:SKW)
YTD ROI = -59.42%
SkyWest Energy is the disappointment of the year in terms of sp performance. Is the share price reflecting trouble ahead or is this standard market fear? Whatever it is, we are sitting on or near the bottom and it will take a buyout to reverse this poor performance. As long as they continue to execute on their guidance of ~@2,100 boed exit rate, things will eventually turn around for the better.
Arcan Resources (TSXV:ARN)
YTD ROI = -21.83%
Even Arcan Resources is no longer loved by investors. It’s as if sitting on one of the most prolific oil plays in Alberta lost its charm. Arcan is still focused on execution and I expect it to be amongst the first to be rewarded when the market settles down.
Bowood Energy (TSXV:BWD)
YTD ROI = -55.00%
BWD has not released the results of its first horizontal well in the Alberta Bakken which is very disappointing. BWD lost its premium that was enjoyed earlier this year; they drilled their first well and have been completing it for the last 6 months. Maybe their lateral reached North Dakota so it takes time to frack it in stages. All in all, results have not been WoW in the Alberta Bakken, someone has to hit a sweet spot in order to shake valuations up.
Reliable Energy (TSXV:REL)
YTD ROI= -39.71%
REL hit +50% earlier this year and reversed course following record flooding and an extended spring breakup in its areas of operations. Their production got hit, they missed on their guidance and found gas instead of oil on their wild Montana acreage. What a disappointing outcome for a company that has attractive Bakken assets netting $50 per barrel in profit on $82 WTI oil.
What happens when investors are capitulating? Well everything gets sold and the juniors get hit the worst. So much for expecting better results in Q3, lesson learned to always bet on dysfunctional politics not fixing any of the outstanding important issues until the last possible minute following market meltdowns. First the US debt ceiling then Greece and this is where we end up. It could get worse as the fear propagating media might actually trigger a recession if we continue on this path, a recession that would have been probably avoided.
Since the market is forward looking, is it pricing in $50 or $60 or $70 per barrel of oil? If we avoid double dipping this year, oil prices should settle down in a comfortable range for producers. Remember that some OPEC countries use $100 Brent oil to fund social programs and balance budgets. They will not hesitate to cut their production in order to support oil prices. The other danger of low prices would be setting up an imbalance in supply and demand as several projects would be canned if oil prices remain subdued for an extended period of time.
Finally, it would take a miracle to avoid the last spot for 2011 and I am not betting on one. One lesson I learned with BWD for the next picking contest is to avoid exploration companies with a premium attached. I am mentally ready to be sitting in the same spot for Q4 as my optimism in 2011 has been spent following the turbulence we went through this year.
[...] BeatingTheIndex: -45.07% « « End of Month Summary – September 2011 – | – Comments (0) [...]
[...] Beating The Index -45.07% [...]
Fascinating results indeed!
more like sad results
[...] Beating The Index: -45.07% [...]
I really think the results more reflect the sector your in(and the overall market madness.
If the US debt,Greece debt,Japan’s nuclear meldown, etc. hadn’t occured over the last little while and oil climbed (which we all know it inevitably will) you’d have been alot highter on the list.
BTW- My 2 cents on BWD is they’re keeping it quiet because it’s a poistive development.
As the song goes “You may call me a dreamer, but Im not the only one”
You’re right WC, my sector got trashed royally. This year has been nothing but a string of black swan events. When will it end is my big question? Let’s get it over with with Europe already.
your theory on BWD is probable but Mr Market doesn’t seem to believe in it.
Do you think the US Wall Street protests are having a significant effect as well? Even if oil prices rise, share prices wont rise if investors are not confident in the market.
Half of me wants the protestor’s message to be heard by the bankers and politicians, half of me wants it to end quickly so that the market can recover.
It’s full fear frenzy out there, I can’t wait to get over this quickly as well. I don’t know what impact the protests have compared to a full market meltdown that is being expected.
Ouch. Glad it’s all for fun.
Then again, we love low stocks prices until we’re about age 70, don’t we?
unless 70 is the new 40 I beg to disagree
[...] Beating the Index [...]
Your sector took a beating, but I admire your level headed analysis and ability to move on and learn from your mistake. No one could have dreamed of the string of bad events we had. You’ll get ‘um next time! Santa clause rally or double dip?
you asked the million $ question Buck! at this point, I do not know…
I become very alarmed the day I stop seeing cars along the 407 outside my window. I was in Bangui once when that cars stop driving and were all lined up at the gas stations. It was eerily quiet. Until then, people still need energy.
It should be I will become alarmed.
You are right PWD, while I do not believe in the end of the world, it will take a long time before we recover from this fear environment.
Even if oil prices rise, share prices wont rise if investors are not confident in the market.I become very alarmed the day I stop seeing cars along the 407 outside my window.
We need stability before share prices rise! no doubt about that.
On a less depressing note Cannacord has a big presentation event planned October 12 and 13. Hyx, Vle, Pry, Onr, Pbn and others are presenting. Personally I’m very interested in hearing what the CEO’s have to say and how they are adjusting their plans, if at all. Im most interest in hearing how Hyperion is doing as its now getting insanely cheap. I’ve been destroyed on my initial position but could bring my average down considerably for not too much capital. Worth the risk? Presentation will tell me.
NLR
NLR2, HYX and PRY have 0 debt, I am not worried about them. I am worried about others who are actively using their LOC as they will be in danger if commodity prices collapse.
Hey Mich,
Do not worry, I think the AB/MT and SK Bakken plays will be fine. Their was a news article released yesterday by CPG in regards to the AB Bakken, with some positive comments from BWD.
http://www.calgaryherald.com/business/money/Alberta+Montana+Bakken+billion+barrels+potential+Wood+Mackenzie/5500902/story.html
Then sure enough they forgot to mention BNX.A, BNP Resources Inc as one of the area plays. I dont get it, they were the first AB Bakken play there and everyone has forgot about them?. $6 million dollar market cap stock and they encompass a entire light oil pool with 7.7 million barrels of original oil in place. Just goes to show that theres still lots of potential in the area from all the surrounding companies.
Hi Rick,
I saw the article yesterday and smiled when BWD hinted their well results are “as expected, which is good”.
Does that mean an IP rate around 250-300 boepd? Looking forward to more numbers from this play!
BNX might be ignored but looking at the chart it sure beat the heck out of some of the most followed oi land gas stock out there!
I suppose this is one more reason to consider “buy and hold” a failed strategy if you just ignore your positions for a year… until the next “review.” Sure, during bull markets it may work well… but it doesn’t protect investors enough. I know that’s not your style… just wanted to throw that in the mix in light of the results.
If you have a successful tech based system why bother with stocks? why not trade currencies? for technical analysis, forex had a lot of advantages over stocks such as 24 hr market.
[...] Million Dollar Journey provided his stock pick performance as part of a stock contest with other bloggers. His top picks were Visa, Royal Bank, Husky and Encana. Money Smarts Blog also did the same. And Preet Banerjee. Oh yes, and The Financial Blogger. Don’t forget Mich! [...]
[...] BeatingTheIndex: -44.08% Here are the quarterly closing prices for my four top ETF picks for 2011. A flat to down year is not the time to be invested in ultra ETFs and I paid the price, especially with EET. [...]