Interview with the winner of the 2020 Stockopedia Challenge - John Wagner +633%
When we launched the inaugural Stockopedia Stock Picking Challenge at the start of 2020, there were very few clues about the trouble that lay ahead. Without doubt, the social and economic impact of Covid will be felt for a long time yet. But in the stock market, the collapse in prices last March gave way to a steady recovery. Amid the trauma of the past year, it was still possible to make solid returns from shares - and many investors did.
The Stock Picking Challenge is our annual invitation to investors everywhere to come up with their five Top Stock Picks for the year ahead. At stake is the prestige of outperforming thousands of the smartest stock-pickers around, and the chance to win some impressive prizes too.
In 2020 we had more than 2,100 entries and the overall winning selection - with a return of 632.7% - only emerged in the final few days of the year. More on those winning picks shortly...
A year of turmoil...
It wasn’t long after launching last year’s challenge that Covid-related problems began to blow up. The human misery was shocking and the economic consequences were disturbing. In terms of shares, the sudden and severe wave of fear caused markets to plunge.
After a benign start, suddenly all bets were off when it came to company earnings and valuations. It was instantly impossible to predict what would happen in the near term, let alone weeks or even months out.
But even in the early phases of the virus, some trends were starting to emerge. An interesting one was the rise of small-cap biotech and pharma stocks that were playing a role in Covid testing and related fields. After seemingly years of being maligned, some of these speculative stocks were suddenly delivering spectacular gains - and some still are.
In fact it was biotech shares that helped take the first quarter win for Stockopedia user Rich the Newbie, with a 161.8% gain. All the more impressive is that Rich’s stock selection was still in contention right up until the close of the year. He finished in a creditable 8th place with a return of 521.0%.
Indeed, a few of the top ten best performers overall were very consistent right through the year - including Shai C (an impressive second with 572.3%) and Steve Byrne (SeaRd (who took the third quarter win and eventually finished up 569.9%)). In the event, there was very little to choose between the top 10.
A late winner with a cleantech theme...
Despite the surging gains in some speculative stocks, you didn’t need to weigh your positions in small-caps to do well in the Challenge last year. Mixing it up with the best performers were portfolios packed with US tech giants. No surprise that shares like Tesla, in particular, did a lot of heavy lifting in a number of the selections in 2020.
And that was perhaps prescient. Because it was cleantech / greentech industries that ultimately paid off for the winning stock selection. There was a clear theme in the portfolio of companies put together by Stockopedia user John Wagner (Morris1602). After a quiet first half, his picks did better in the second six months but the performance really took off in the final couple of weeks.
Here were his top five picks...
To get a view on why John chose these shares for his Top Picks, we had a chat with him to find out:
John, tell us little bit about you and your approach to investing:
Overall I’ve tended to be cautious as an investor, but that may not be obvious from my portfolio which is heavily weighted towards what Stockopedia classify as ‘Junk’ stocks.
My first investments go back to the mid 80’s and the time of the ‘Big Bang’ when there was little choice but to rely on the press and broker advice – neither of which were satisfactory. Financial reports dropped through the letterbox if you owned the shares. Information was rarely timely or indeed complete. Now I resort to varied sources – but not social media. Apart from patience and not overreacting to bad news there is no single strategy I adhere to.
In the case of my Challenge choices the reasoning is that there’ll be unquestioning demand for the technology – already manifest in what is happening in their markets now.
What has surprised me most is how the hydrogen economy has, until 2020, passed the investment community by. I believe that it is by far and away the most promising solution that can save us from ourselves – at the current rate, existence for us will be very uncomfortable indeed before the end of the century. It is the duty of every one of us to address the issues now.
Hence it is the underlying theme in four of my choices. On the London market we have Ceres Power (CWR), ITM Power (ITM), Powerhouse Energy (PHE) and AFC Energy (AFC) which have, dare I say, ‘oven ready’, leading edge solutions which can be deployed and integrated ultimately to form a vital part of the energy backbone of our economy in the UK.
We need hydrogen and ITM has the technology to generate it. CWR has compelling technology and a good (licensing) business model. PHE has the technology to resolve one of the biggest problems of our time – unrecyclable plastics. AFC is a fuel cell company with technology which has the potential to replace stationary diesel power units.
In all cases they have leading edge products which have been developed over 15-20 years and, as validation of that, they are attracting much tangible interest from many major international engineering companies.
KAPE was the wildcard and a nod to my interest in IT where I spent much of my career. There is an increasing need for good cybersecurity and I reasoned that Kape was in a good position to capitalise on this.
You’ve entered the Stock Picking Competition again for 2021. What can we read into your picks for this year?
I retain my conviction in the hydrogen economy, as well as the increasing efficiency of solar PV and wind power - but with the foibles of the weather to consider, load balancing will become increasingly important. For this reason, alongside ITM, PHE and AFC from last year, I’ve also included Invinity Energy Systems (IES) which produces redox flow batteries - a high capacity solution with a 25 year life that can be simultaneously charged and discharged and, unlike lithium batteries, is not a fire risk or end-of-life problem. The key material is vanadium which can be later fully recovered. In my view this also makes Bushveld Minerals (BMN), one of the few sources of vanadium, potentially attractive. My last pick is EQTEC (EQT), which operates a process similar to PHE and has a promising order book.
A new Challenge for 2021...
The Stockopedia Stock Picking Challenge is back for 2021 and this year we have 3,284 entries vying for top positions and prizes through the year. You can keep track of progress here: https://www.stockopedia.com/challenge/2021/
Congratulations to John and hopefully we’ll all have less challenging conditions to contend with in the year ahead!
Disclaimer
This is not financial advice. Our content is intended to be used and must be used for information and education purposes only. Please read our disclaimer and terms and conditions to understand our obligations.
32 comments
Hi all
If I may, I think the winner (John) most likely knew the companies a little more, with research etc. At least that's how it read.
The styles referred to are scoring, categorising tools, working on averages essentially - clearly a little more complicated but you get the point.
A company scoring well can be hit by something unexpected and decline in sp and vice versa.
The beauty of stockopedia is the ground work saved by using the ranks, styles etc.
High risk, high reward.
I've read this piece with interest but I'll still buy my div paying (with good cover), high quality stocks, for above average return YoY thank you. Every now and then you get a GAW or SLP and that will do nicely.
Take care All
i have just started can i ask why that many stock picks that winners are using are not high on quality value momentum and stock rank for example some have low RSI values also
im confused now on how to pick stocks as i was thinking that your indicators were good
How do the winners pick their stocks and how do i use your platform to get high flyers? The 2 stocks below had massive gains
(for example AFC securities --- Quality 11 Value 11 momentum 81 stock rank 21)
PHE Powerhouse energy ---- Quality 18 Value11 Momentum74 StockRank™21
Although my recent purchase of SFIX has risen and you have a 97% momentum however it has a low value of 11?
Should momentum be best indicator?
How can i combine these techniques to get high flyers ?
Also should i only be in these short term?
some people seem to look at fundamentals in the news
lifestyle changes online or Save the planet technologies or even go vegetarian
hydrogen energy carbon emissions
Is there a fundamental indicator ?? news indicator? +++
I don't think the competition turned out the way Stockopedia expected.
You have to note that many of the entries were by non Stockopedia members, anyone could do it, you don't need to subscribe to Stockopedia. As you can see from the top 10, only 3 were subscribers.
Subscribers have a sniggle next to their name.
You can screen High Flyers: https://www.stockopedia.com/sc...
You can adapt it to your needs.
To win you need to be in the right sectors and some luck.
Apologies for being provocative, but let me try putting it another way: How about I pick various 5 stock combinations in 2000 different ways, by throwing darts at stocks. You then write an article on my best combination, ignoring the other 1999 selections. You call me a genius, interview me, and write up the drivers of my best 5 stock combination. In fact, this proves nothing.
the real question is how did the median stockpicker do? Did they beat the naps? Could Ed or Ben answer that? Thanks guys!
Well here are the results: https://www.stockopedia.com/challenge/2020/leaderboard/
Looks like the average will be around 20%.
Although an impressive return, I would argue that the result is highly skewed by just one stock (with a 1743% return). Looking through most of the top ten results from 2020, they all have just one stock that has a super high return.
For me the most impressive performance was from Raymond Hyam's picks who came in at no.9. He averaged 466% return, but the range of his five picks was from 204% to 743% return.
I think it wild be worth an interview with him??
But it that not often the case, 1 share out of 5? Looking at NAPs over the years it is often just 3 or 4 out of 20 that produce the gains, the others more or less cancel each other out. Last year 3 shares had over 100% gain for an overall 28% gain.
The winner did have more than one large gain, +5%, +385%, +404% +626% and 1,742%.
To pick 4 shares out of 5 that gained over 380% each is incredible.
Excellent. I am holding most of those stocks.
Interesting to see you're a Stockopedia subscriber John, yet (very successfully) invest in red flag companies e.g. your recent pick, IES, isn't profitable and ranks poorly.
Wondering...what value do you get from Stockopedia?
As you rightly imply I didn't use Stokopedia to select IES. I've had a long standing interest in this company. It's been slow to get off the starting blocks. It started out as Redt Energy and merged with its Canadian counterpart, Avalon, to become Invinity Energy Systems - which has so far proved beneficial. The issue of the day is climate change and I reasoned that on a medium term view companies with good technical solutions will get noticed. The broader picture as well as company news flow was most help. Tens of billions have been committed specifically to the hydrogen economy not just by our European neighbours but also by other technically advanced nations in the belief that this problem needs to be tackled at source. Prevention is better than cure - I'm all for planting trees but if HS3 appears they might be bulldozed & send us back to square one. My picks both last year and this are focused on the hydrogen economy, largely for these reasons. The scale of commitment to the hydrogen economy is apparent in the following link.
https://www.rechargenews.com/transition
Regarding what I get from Stockopedia - I invest in over forty stocks, most of which lend themselves to scrutiny using this valuable tool.
Is this 633% in profit on the account or 633% in price movement which is not clear from the article?
If it is profit, then I'd question the risk management behind these approaches and the sustainability and longevity of the approach.
To see such large moves in such a short period of time requires risking large. The chances are leveraged accounts are being used, either spread betting or CFDs.
This combination of risking large and leverage will eventually blow up in your face.
The goal is to make as much money as possible as safely as possible between now and retirement. These high-risk over-leveraged approaches are not the way to do it and how you play straight into the hands of your broker.
I'd be more interested to know how many people blew accounts while a handful of people got lucky enough to make it into the top 10 all for the sake of a competition.
The smarter approach is to always risk small and to compound into winning positions over the length of a trend. This way your downside is capped and your upside is uncapped and you have an approach that you will stick to around the demands of your busy lifestyle.
These are just 5 shares, picked at start of the year, there is no leverage, spread betting or CFDs.
633% is the gain.
The results are here: https://www.stockopedia.com/challenge/2020/leaderboard/
Looking at the results there were 2153 entries, over half returned 17.4% or more which is not bad last year.
Over a 1,000 returned 20%+.
The bottom 10% lost 17.8% or more.
Thanks for sharing.
2153 trades taken over the year. Very few people have the time or lifestyle to be glued to a computer screen all day. With people furloughed/working from home during the lockdown, possibly, but generally not a sustainable approach.
2020 was a year when there were strong bullish moves across the board based on the recovery from CV19 so a high chance anyone could pick any stock and make money.
Looking at these stocks, there is no consistency in how they have been picked so chances are there was quite a lot of luck involved which is what you need if the focus is to win a competition.
If this was some fun then fair play but this same style over 2 or 3 years will just lead to losses as these are large gains on small moves. No risk management involved.
Each to their own. People need something to believe in that will help them achieve quick gains. The reality is that for every one person that makes it, plenty fall very short of the mark.
Slow and steady always wins the day and very handsomely too with compounding.
As Bil Gates said, people overestimate what they can do in 1 year and underestimate what they can do in 10.
Why don't you read the articles before posting?
It is NOT 2153 trades during the year. It is 2153 different persons entering the competition. The trades are all done at the end of 2019, so no need to be glued to a screen, just buy and leave for 1 year.
The trades are all held for 1 year.
I agree to win you need to have some luck. It will be interesting to see how the winner of 2020 gets on this year, I doubt he will win it again.
Is it to win a competition so is not the same as investing for longer term timeframe, my selections are not typical of my portfolio although I do hold them.
It was the way you worded it. My bad.
I skimmed over the article if I am honest but spent more time looking at the charts.
Looking at the charts, plenty of luck involved.
Thanks for the replies though.
And I agree. Will be interesting to see where the winner comes this year.
Ed - Your website and the systemic approach are great. Given the systematic ethos of stockopedia and the naps:
1. I would like to know not the top performance (which out of 1000s of entries will by definition be very good) of all your pickers but rather what was the AVERAGE (mean but especially median) performance of all the entries. Then compare to the Naps system. Can someone in your team look at that?
2. How much value you think there is in "quality" and "value"? The picker above notably chose shares with terrible stockranks, which were identified by stockopedia as "momentum traps". Does this undermine the website and your more balanced naps philosophy? I find it interesting that these poor stockrank shares have done better than high stockrank shares (even if you look for high stockrank shares with high momentum scores). If simple momentum traps outperform stockrank super stocks, will people turn away from stockopedia? If you looked at the performance of all momentum traps, how do they do? And what about all high momentum shares, irrespective of quality and value? Scope for some fascinating analysis...
3. I found the article interesting- it did seem to contradict your narrative against story stocks though.... interested in your reflections.
Stockopedia is just a number crunching tool using past results to find trends, so it will have its limitations, naturally. What the winner has done is focus on demand in the future and that lies with the renewable sector. There actually aren't that many stocks in it and i feel very dumb for not doing the same.
Very close to mine.
Just out of curiosity what did John Wagner select in the new competition for 2021?
He does say at the end of the article his 2021 picks "For this reason, alongside ITM, PHE and AFC from last year, I’ve also included Invinity Energy Systems (IES) and EQT"
I would like to know, however, in what he actually invested in 2020 (and what his actual overall % gain was)...
So what is the average % movement in the 2020 picks? Be good to hear a bit more , rather than just the top10 which is unrealistic for many. What were the stocks that did the worst?
What about the worst performer (wooden spoon award) to make us mere mortals feel a little better about our own performance :)
The worst one was -80.9%.
The wooden spoon award should come with a year free subscription to Stockopedia!
Haha - I like that idea!
Ed - sorry to be off topic but are there any webinars planned on Stockopedia? I for one am pretty sure I use about 5% of the capabilities of Stockopedia so would be keen to learn more if there were. Thanks
I thoroughly enjoyed reading that analysis of some of the hydrogen fuel based companies. PHE sounds extremely interesting as a stock and what a fantastic business idea if it truly works. The top picks by John almost highlight the trend that companies that are investing in the future of the world are now the one's gaining momentum...and we sure need it.
If anyone has read the Green Deal and Third Industrial Revolution by Mr. Rifkin the investing community would take note that it's time to divest from stranded fossil fuel driven assets into the Green Smart Economy. I agree that hydrogen fuel tech is one way forward but there needs to be emphasis on the other renewables such as solar and wind. I wonder if this year and moving forward we will see greater momentum from green energy firms who begin to deliver their products and services to the market affordably. There is a lot of criticism on here about the over valuation of Tesla and in part it is true at the moment. However, a lot of people are failing to see that Tesla is not just an automotive firm. It is a technology company that is also moving forward rapidly in the energy sector and that has the potential to reap the benefits of a US economy that will likely shift to renewables under the Biden administration.
It’s true that there needs to be great emphasis on solar and wind but in the context of the hydrogen economy we’re looking at the other side of the same coin here for the reason that we need low cost energy to generate hydrogen. Interestingly ITM have just announced that they are about to investigate a combined electrolyser and wind turbine system. This could open the possibility of refuelling FCEV ships offshore. On affordability, new tech products are rarely instantly affordable – those bricks that masqueraded as mobile phones in the early 1990’s cost an arm and a leg. Not a great analogy perhaps because the imperative here is not desirability but necessity and the initial driver will be industry spurred on by regulation which will be guided by an increasingly hostile climate.
Great analysis in this article, I'm interested in your perspective on the rare earths sector, especially with the dominance of China.
Well done john. I am holding ITM after top slicing some profits earlier, as with KR1 top sliced today. It onlt takes 2 or 3 good shares to make a big difference to your portfolio.
Sadley not holding PHE but DQ ( about 65% held by institutions), has also done well for me.