Wednesday, January 18, 2017

Results: 2016 Top Investment Picks

As we ring out the year 2016, its time to look back and evaluate some of our investment picks/decisions. At the end of 2015, I reached out to the investing community and asked them to pick one investment security as their top pick for the year 2016. Plenty of the said bloggers responded and I was happy to compile the list and track them over the year.  The original post from Jan 2016 can be found here — it is interesting to see what everyone was thinking back then and how the picks played out over the year.

Again, I would like to remind readers that this was meant to simply be a fun exercise and should not be considered investment advise. Please do your own research before investing in any securities.


Without further ado, here is the list and details of how the investment performed over the year. I have also included each investor’s original quote from a year ago to provide some context.

The Top 3

The top 3 performers from the picks were interestingly all pipeline stocks! Thanks to the rising oil prices through the year and added tailwind of Trump winning the US election — which was seen by investors as a oil-friendly environment, pipeline companies saw some amazing returns in 2016. The top 3 performers in 2016 were:

#1 Kinder Morgan Inc (KMI) by Angry Retail Banker
Angry Retail Banker nailed it with the Kinder Morgan pick. Congrats ARB! The company had just announced a 75% dividend cut and the stock was punished when this pick was made. As is illustrated by the performance of this pick, usually when companies announce a dividend cut, most of the bad news has been priced-in and investor sentiment is at a low following the news. So, investors shouldn’t be looking to sell, but rather buy at this particular stage of the cycle. Of course, the stock has also seen increased positive interest following a disclosure by Berkshire Hathaway’s position in Feb 2016.
“This is a stock that’s been beaten down, and you know what they say to do when there’s blood on the streets (you buy stocks, not call the police because we’re not talking about actual blood. It’s an expression). Kinder Morgan has solid assets in terms of its pipeline network, is a bet on natural gas (which I think will one day replace oil as our primary fuel source), and is only indirectly connected to oil prices. Richard Kinder is a major shareholder and, as such, is committed to paying and raising that dividend. And the 75% dividend cut, meanwhile, shows me that they take the health of the business seriously and will make the neccessary short term sacrifices to ensure a safe dividend for years to come (rather than an oversized one today). It’s near it’s 52 week low. This may be a once in a lifetime chance to pick up a solid, high quality business at a ridiculously great value while it’s facing short term issues.”

Total return: 42.25%


#2 Inter Pipeline Ltd (IPL.TO) by Dividend Digger & Tales From The Tape
Two investors, Dividend Digger and Tales From The Tape, picked Inter Pipeline Ltd for 2016. The rally in oil prices over the year bodes well for midstream players in the space and Inter Pipeline investors have relished in the returns seen so far. I am happy to say that this stock is also part of my portfolio, so happy to see this gain 🙂
Dividend Digger: “Very well priced for any dividend growth investor looking for value. Despite low oil prices, interpipeline still generates steady revenue through bulk liquid storage as they are one of the biggest independant tank storage business in Europe.”
Tales From The Tape: “Well run company – great dividend track record. Beaten down with the rest of the energy sector, good play on storage of oil and gas on top of transportation.”

Total return: 40.50%


#3 TransCanada Corp (TRP.TO) by Dividends In Hand
TransCanada Corp rounding up the top 3 performers from the Top Picks. The stock has seen stead increase over the year and investors remain bullish that the Trump administration will clear the way for the Keystone XL pipeline project.
“TransCanada’s stock was hit with the perfect storm of bad news in 2015: oil prices plummeted, President Obama vetoed the company’s Keystone XL pipeline, and the pipeline industry’s financing model came under fire forcing Kinder Morgan to slash their dividend. These negative factors have led to TransCanada trading at around a 19X P/E and with a dividend yield of 4.6%. With $12B of near-term, small scale growth projects scheduled, management expects to grow their dividend by 8% a year through 2017. The company’s A-/Stable and Baa1/Stable corporate credit ratings reflect their moderate leverage, adequate short-term liquidity, and stable nature of their cashflows.”

Total return: 38.97%


There you have it folks. The top 3 performers have all performed close to the 40% mark over 2016 and that very heartily beats the broad market. Congrats on the investors who picked the stock and made saw some spectacular returns over the year.

Rest of the Results

The full set of picks from all the investors are listed below. For a full screen view of  the spreadsheet, click here.

This article was written by Roadmap2Retire. If you enjoyed this article, please consider subscribing to my feed at Roadmap2Retire.com/feed

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