Chinese Net stock
helps Loo top
The Morgan Stanley executive
had an average gain of 157%
in 2003 as Sina soared 419%
The stock market came back in such a big way in 2003 that some investors must have been wondering if the technology bubble had reinflated.
Internet stocks -- some of them in China, no less -- were huge winners as the tech-heavy Nasdaq composite index soared 50 percent. Defense and health sectors-- so-called safe havens -- struggled to finish this year in the black.
Nearly everyone was a winner for the year. The only question was by how much.
For Morgan Stanley Executive Director Paul Loo, his bet on Chinese Internet stock Sina proved to be a breadwinner as he posted the best average return among local stock experts with a 157.4 percent average gain for his three selections in the Star-Bulletin's annual survey of best investment ideas. Sina was the best individual gainer with a whopping 419.2 percent return.
Hilo investment adviser Richard Coghlan of North Nineteen Forty Inc. selected all tech stocks and was second among all stock pickers with a gain of 78.4 percent.
In fact, five of the six local experts posted gains as the group had a 50.5 percent total return (including dividends) to match the Nasdaq's gain and easily beat the Standard & Poor's 500 index (26.4 percent) and the Dow Jones industrial average (25.3 percent).
Barry Hyman, vice president of Financial & Investment Management Group LTD. in Wailuku, Maui, was third with an average 42.3 percent gain. InvestMentoring financial consultant Michael Corcoran was fourth with a gain of 26.8 percent. And Richard Dole, chief executive officer of investment banking firm Dole Capital LLC, was fifth with a gain of 6.6 percent.
Only Dwight Melton, a National Association of Investors Corp. Aloha Hawaii Chapter director, fell upon hard times as his three picks fell an average of 8.5 percent.
"China continues to be a strong long-term play," Loo said. "Just the other week, the IPO (initial public offering) of China Life was a strong new offering."
Likewise, Coghlan has become a fan of China, as well as continuing to be a big believer in a technology rebound.
"I think technology will outpace the general market in 2004 in part due to the continued growth of the Internet, the need to upgrade IT systems and the emergence of China as an economic and technology consumer," Coghlan said. "I think China will present great investment opportunity in the coming years, but few investment choices are currently attractive due to recent stock valuation concerns."
On a share-weighted basis, Coghlan actually beat out Loo for the best return with a gain of 91.5 percent to Loo's 62.0 percent. The share-weighted formula assumes each expert bought 100 shares of each of their picks. Using that method, Corcoran was up 57.9 percent, Hyman ahead 45.5 percent and Dole up 3.0 percent. Melton was last with a loss of 13.9 percent.
Loo, saying that regulatory problems probably couldn't get much worse for financial services companies, picked up a 46.3 percent gain with Goldman Sachs. However, his selection of software giant Microsoft only returned 6.8 percent.
"I was enamored by the technology stocks and Microsoft was the grandfather of this category," Loo said. "I picked the right industry but should have probably picked Cisco, Intel, or smaller companies which made most of the run."
Coghlan, on the other hand, did pick Intel (up 106.6 percent) and Cisco Systems (up 85.0 percent), as well as financially troubled Sun Microsystems (up 43.7 percent).
"Like last year, Cisco is my best growth idea (for 2004) -- market dominance combined with a strong balance sheet, no debt and lots of cash," Coghlan said. "Cisco has the management, resources and an aggressive business plan to grow profits in the coming year."
Coghlan also likes Sun Microsystems again along with Annaly Mortgage, a New York-based real estate investment trust that has a current yield of about 10 percent.
Hyman, who is a strong believer in the Japan SmallCap Fund, run by Hawaii resident Curtis Freeze, was rewarded for his allegiance with a 57.7 percent gain.
"Prospect Japan invested in some great value stocks in Japan and once again beat most Japan indexes, as well as U.S. stock indexes," Hyman said.
Corcoran road the coattails of Internet auction company eBay with a 90.5 percent gain but was hurt by defense company Raytheon (up 0.3 percent) and pharmacy services firm Accredo Health (down 10.3 percent).
"eBay's business model suits today's very busy customers," Corcoran said. "As the consumer becomes more computer oriented, eBay's growth will continue."
Dole's best pick was a Hawaii company, Alexander & Baldwin. The parent of Matson Navigation gained 35.2 percent as the Hawaii economy improved.
Melton's lone winner was the Vanguard Ginnie Mae Fund, which rose just 2.1 percent.