Performance of the 2006 picks

In this game performance is everything, if you cannot beat the market then why bother? Invest in a index fund, go home and sleep peacefully! But stockpickers inherently believe that markets are inefficient and greater than market returns can be achieved by picking stock using any number of philosophies, that is the heart of any debate between active versus passive investing. So how did we do, on the stocks we picked last year. Without further ado

We did extremely well with Sherwin Williams (NYSE : SHW) and Bausch (NYSE : BOL) both classic short term distress situations up 58% and 17% respectively. Plum Creek Timber (NYSE : PCL) was a nice winner too up 18% with a juicy 4% dividend.

On a time weighted average , to account for the in and outs and well as timing issues we came out a 17.5% in returns assuming equal weights. Lets hope for a even better 2007.

Fedex and Caterpillar were the two laggards although CAT was recommended only in Nov 2006. Although I beleive longer term (5 years +) both are keepers. My usual term for stock holdings is forever.

Top picks for 2007

Here we go with my top picks for the year and the reasons for them

Cummins Inc (NYSE : CMI) - Maker of generators and engines, low p/e around 8, cheap compared to its peers like Caterpillar. This is a gem that is trading cheap, do not get turned off by the high stock price. Price $116.75

Fedex (NYSE : FDX) - See my previous post, its trading cheaper to UPS and a great company. Price $108.86

Conoco Phillips (NYSE : COP) - Cheapest of all the oil giants, has a p/e of 6, hated by the market because of all the acquisitions and belief that they paid too much for Burlington Resources. Price $63.83

Taiwan ETF (NYSE : EWT) - Cheapest of all Asian markets, an indirect play on China. Worldclass companies like Hon Hai and TSMC. Price $14.46

Omega Healthcare Inc (NYSE : OHI) - This is a REIT that specializes in owning and financing of elder care facilities. They had some accounting issues last year but seem to have come out of it bruised but in good shape. Price $17.53

Limited Brands Inc (NYSE : LTD) - With brands like Victoria Secret, Bath and Body Works and others this company has built a strong economic moat (Warren Buffet's term). Limited trades at a p/e of 15, gives a decent dividend of 2.2%. Price $28.62

Cheers for a great 2007 - more to follow.
(Disclosure : I own OHI and plan to own all of the above, probably average into all of these during the next few months)