NEW YORK (TheStreet) -- As the end of 2012 approaches, it's time to reflect on the year, and more specifically, what worked and what didn't.
It's important to learn and acknowledge both your successes and failures, and most investors have their fair share of each. I try not to rest on the successes, knowing full well that sometimes these are the result of dumb luck. It's certainly much more gratifying when you have a winner that results from conclusions drawn from your own analysis.
As a value investor, I tend to be drawn to some ugly ducklings; names that the market has all but given up on. These can be hugely profitable if you are correct and downright ugly if you are not. Fortunately, some of these have been my biggest winners for 2012.
had a great year. This name, which was all but left for dead just a couple of years ago, is up 47% year to date. It's finally beginning to get some more attention, and the street is coming around to the notion that the company, which may never again be the powerhouse it once was, can still generate considerable free-cash flow. I recently closed my position (a year-end planning move) but will be looking for opportunities to re-establish a position in the future.
rebounded nicely in 2012, after a rough 2011. Shares are up about 70% year to date. I also closed this position recently; one that I'd established in 2009, when the company was in turmoil following a failed acquisition by Hexion. In the resulting lawsuit, Huntsman was awarded a huge settlement, which bolstered the debt-ridden balance sheet.
Madison Square Garden
has also had a nice year, with shares up 56%. This one has never been in the "ugly duckling" category, just an asset rich company that owns Madison Square Garden, the NY Knicks, and NY Rangers, among other things, that until recently has been relatively underfollowed. I recently took profits here, too.
At the smaller end of the spectrum, Florida agriculture and land name
is up about 90% year to date. I've been a proponent of having exposure to agricultural land, and Alico did not disappoint in 2012.
There are some losers, too. Shares of
, a leading provider of uranium to the nuclear power industry, are down 50% year to date. It appears as though the market does not believe that equity will survive. The company has had difficulty obtaining loan guarantees from the U.S. Department of Energy in order to bolster its American centrifuge project, which has been fraught with issues. It's hard to imagine this company failing, but as investors sometimes forget, companies go bankrupt all the time and survive, but common stock rarely does in those instances. I still have a position here.
was a disappointment as well, down about 8.5% year to date. I had high hopes for this one, and owned for several years, before finally throwing in the towel over the summer. My analysis told me that there was great value in the real estate, and with some cost-cutting, and a major successful advertising campaign such as the ones that have rescued this company in the past, Wendy's could be very successful. Instead, the company has treaded water, and made few inroads into re-establishing itself with the consumer. Even value investors lose their patience ultimately, and that's what happened here.
If I write a column similar to this one at the end of next year, I have little doubt that current net/net (company trading below net current asset value)
will be part of it; what remains to be seen is whether it will be a winner or a loser. At this point, this ugly duckling has been a loser given my $3 and change average cost. Much of the investment world has given up on it at this point, which seems to be reflected in the current price.
We'll see if this "cigar butt" has a puff or two left.
It could be next year's big lesson for me. That lesson will either be:
- "Ignore the crowds, be a contrarian and buy when others are selling", or
- "Stay away from value traps, businesses in highly competitive industries whose best days are behind them."
At the time of publication the author held long positions in ALCO, USU, RSH.
This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.