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Monday, July 26, 2010

How my boss started a fire: the Summer Investor Challenge

Would you give an intern control of $1000? This internship is getting serious.

David Neubert, my boss at Kapitall, is putting real cash on the line for Kapitall's Summer Investor team. He's seeded a Kapitall portfolio with $1000 allocated to each of the Summer Investors. We make buying recommendations and the highest performing intern gets an undivided hour with David over lunch (his treat) and valueable bragging rights. There's some fine print too, to make sure we keep it all fair and legal.

In a sense, I'm new to investing. I once followed certain mutual funds quite closely but as I mentioned in my first Kapitall post, have lately left investing to my better half. It's time to take more responsibility. For this challenge I confined my initial research to within Kapitall to demonstrate how comprehensive the site is. According to the Kapitall Investor DNA quiz, I have a Passive Investor profile.

Here are the buy recommendations I made to David:

1) Kimberly-Clark (KMB), maker of the funny new denim Huggies diapers (YouTube video approaching 1M views). We buy Kimberly-Clark consumer staple products regularly and often, no matter what the economy is doing. Kimberly-Clark has a price of profit (POP) of 13, a high ClimateCounts green rating, and a market cap of $26.1B. I'm impressed that they're measuring their impact on global warming and their profits are less expensive than similar corporations.

2) Luxottica (LUX), maker of most of the world's sunglasses, upscale and otherwise. Are designer sunglasses worth their markup if comparable models are sold cheaply at LensCrafters? Consumers think so; Luxottica reported 2Q profits higher than the year ago quarter, crediting both their non-premium and luxury brands. I simply love that my $10 shades are protecting my eyes just as well as models 20 times that price. Luxottica does not have a ClimateCounts green rating or POP in Kapitall, so I'm letting my rookie status shine by betting on them. After all, it's summer and my family is using, losing, and buying sunglasses. I assume many other consumers are doing the same. Is this naive? Keep reading to find out.

3) Pfizer (PFE), pharmeceutical giant. Turns out that Pfizer is going to pay a dividend on August 4, delivering a quick reward if David takes my buy recommendation. Pfizer has a high ClimateCounts green rating, a POP of 7, and a market cap of $119.5B. This company is influential and has taken steps to manage its environmental impact. Its low POP means profits are relatively inexpensive. This looks like one to hold.

I considered the following brands and am witholding my recommendation for now:

1) Taleo (TLEO) provides talent recruitment services. I noticed that many of Seattle's most recognizable companies manage their job boards on Taleo software. Given the persistently high unemployment rate in the US, I realized that Taleo must be getting fairly high exposure for the few postings available. The company's POP is an outlier at 51 among other software companies. I have more to understand about Taleo before investing in it.

2) Trina Solar (TSL), a Chinese solar energy pioneer, landed in my practice portfolio when I first created a Kapitall user ID. It's performed beautifully, but there's some information missing from its Kapitall profile. I need to do additional research outside Kapitall to understand it well enough to buy it with (David's) real money.

Disclaimer: At the time of this writing, I do not own any of the securities mentioned above. I have informally advised David Neubert on these companies and after consideration, he has purchased the stocks for his personal account. My opinions are not necessarily shared by Kapitall, and they are not in any way to be considered investment advice.

2 comments:

  1. Hi Jenny! I'm also doing the 31dbbb Challenge with the SITS community on BlogFrog, so I thought I'd stop by and give you a little comment love!

    I know very little about investing. I haven't really taken the time to learn much about it because honestly, I don't have anything to invest right now. Well, maybe that's wrong. I do have my time, and I guess what I'm investing in right now is blogging, and taking the time to get to know other bloggers. Maybe I should not take such a narrow view when it comes to investing!

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  2. wow! how exciting. this sounds like a fun project. i'm excited to hear how you do! good luck on the challenge. crossing my fingers, hoping you win.

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