The Commissioner's SEC Football Stock Picks

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It looks as if stocks are enjoying a sustained rally in the public markets. Since January, the Dow Jones Industrial Average has climbed more than 2,000 points while the S&P 500 has experienced an appreciation of nearly 75%. Investors briefly headed for the exists in June, evidently responding to concerns that the Federal Reserve might be unwinding its policy of Quantitative Easing, but by Independence Day, they reversed course and have since been buying equities with gusto.

             The talking heads on CNBC, Fox Business Channel, Bloomberg and WSJ TV are offering non-stop advice to buy, hold, sell, go long, go short, and just go crazy. What they are missing, however, is any insight or analysis of how the most important sector of the economy is likely to perform over the next several months. Therefore, as a public service to readers of The Commissioners Blog, here is The Commissioner’s Picks and Pans for the stocks of the football schools in the Southeastern Conference.

            SEC East:

            1.         South Carolina [USCe]: The Fighting Chickens enter the fourth year of their four-year strategic plan with a product line calculated to capture market share from rival firms in their sector. Analysts are particularly enthusiastic about high-profile asset manager, Jadeveon Clowney, whose performance at the end of last fiscal year was literally head-snapping. . Concerns over depth of product lines and eccentricities in the C-Suite suggest caution for long-term value. Recommendation: BUY, but not in retirement accounts.

            2.         Georgia [DAWGS]: Perennial under-performer came within sight of having an opportunity to finish Best In Class last fiscal year. In spite of shareholder discontent with C-Suite three years ago, long-term investors have seen a substantial appreciation in value and strong dividend yield over the last two years. No company is immune from the business cycle, but the fundamentals are in place for DAWGS to out-perform sector competition. However, these shares may be trading at their peak. Recommendation: HOLD

            3.         Florida [SWMP]: Brash CEO, Will Muschamp, became media-darling when he threw verbal darts at The Ohio State University CEO Urban Meyer during July Analyst Conference in Birmingham. Gator brand still faces stiff competition within the Eastern sector, but should not be overlooked by investors looking for a value stock. Recommendation: STRONG BUY.

            4.         Tennessee [UT]: Former sector leader is still hoping to emerge from Chapter 11 restructuring necessitated by disastrous tenure of long-gone CEO Lane Kiffin. UT’s second restructuring plan has been approved, but so was the first one. Whether the new plan is any good, and whether C-Suite leadership can actually execute it, are questions that will not be answered until this time next year. Fundamental weakness of competition in the bottom half of the sector favors Vols, who failed to win a singled head-to-head competition with peers in 2012. Regional enthusiasm of core demographic, and positive results among highly subjective leading indicators suggest an up-tick in year-over-year performance. Recommendation: Wait-And-See if company announces IPO after first quarter.

            5.         Vanderbilt [DORES]: Investors are still giddy over historic earnings achieved in last two FY by CEO James Franklin. Business cycle, however, catches up with every company and only those with robust structural fundamentals are able to mitigate effects of a downturn. Upgrade in management and talent has been noteworthy, but current high share price is suggestive of a bubble. Recommendation: SELL 50% and hedge with diversified acquisition of shares in sector leaders.

            6.         Kentucky [KATS]: In seven company sector someone has to be last and Missouri [MIZZU] is most likely to fit that profile. Chronic absence of fundamentals does not justify even holding this stock. Recommendation: Wait until basketball season before investing.

            7.         Missouri [MIZZU]:   Tigers round out bottom half of East sector and add fuel to analysts who still criticize inclusion of this company into SEC exchange. Recommendation: Institutional investors holding legacy shares in fiduciary accounts should obtain written instructions from beneficiaries before continuing position in this stock.

            SEC West:

            1.         Alabama [TIDE]:      CEO Nick Saban is poised to take TIDE to unprecedented heights. Structural fundamentals and management team are Best In Class, as proven by results over five-year rolling average. Comparative ease in head-to-head matchups has Alabama on the straightest path to year-end dominance of any competitor. Although share price is high, PE is low. Long-term investors [decade or more] have seen percentage appreciation in triple digits while dividend performance puts TIDE at the top in total return. Recommendation: BUY and HOLD in fiduciary accounts.

            2.         LSU [LSU]:   Eccentric CEO Les Miles continues to benefit from extraordinary good fortune with sudden crash of sector-rival Texas A&M. Bengal Tigers now pose only substantial hurdle standing in the way of TIDE return to Atlanta. Recommendation: BUY, if for no other reason than to diversify portfolio.

            3.         Ole Miss [BLKBRS]: Aggressive recruitment of young talent has given former Rebels the potential to vault sector rivals and break into top tier. Ole Miss joins LSU as principal beneficiaries form burst of TAMU bubble. Recommendation: BUY.

            4.         Mississippi State [MSU]: Starkeville-based Bulldogs must avoid late-year earnings swoon in order to turn performance around from previous FY. Recommendation: HOLD pending second quarter earnings report.

            5.         Texas A&M [TAMU]: Compliance issues surrounding marquee asset manager, J. Manziel, has caused a bust of TAMU bubble. Share price is in free-fall along with autographed Manziel merchandise. Whether or not Manziel is available, quality of product on the field is likely to be damaged as a result of questionable decision-making. Recommendation: SELL before trading is suspended.

            6.         Auburn [BARN]: Departure of former CEO establishes very short shelf-life of Best-In-Class ranking when fundamentals are absent. Hotly anticipated CEO Gus Malzahn has energized core demographic and breathed life into previously moribund share price which reached historic lows at the end of last FY. Pressure will be on, however, as customer-base is famously quick to jump off the wagon if the mule stumbles. Recommendation: BUY; barring liquidation, there is no direction for this stock but up.

            7.         Arkansas [HAWGS]: Speaking of liquidation: Razorbacks enter the buying season in the second year of a receivership with no bright spot on the horizon. Trading in Arkansas shares was suspended following the self-inflicted crash of former CEO Bobby Petrino. Analysts do not anticipate a market for HAWGS shares at any time this fiscal year, not even in the  Pink Sheets.       

           
            Be advised: investing involves a high degree of risk. Past performance is not a guarantee of future earnings. No investments in college football teams are insured, and are subject to a complete loss of the principal amount invested. Consult your personal financial and tax advisers before making any investment decisions.