Can higher primates beat high finance?
Academics have argued for decades that paying experts for stock tips is a waste of money. Don’t tell that to people who donated $5,000 apiece to hear hedge-fund millionaires and billionaires give their best moneymaking ideas at Monday’s annual Sohn Investment Conference. Pronouncements at the long-running charitable event move markets. When Greenlight Capital’s David Einhorn said he was short Assured Guaranty , the company’s shares tumbled in after-hours trading.
But what makes this year different is that the Heard on the Street team is going toe-to-toe against the hedge-fund managers’ recommendations with some of our own. While investors such as Mr. Einhorn presumably have teams of researchers digging through securities filings, running analyses and conducting on-the-ground research, we have tapped a stock-picking methodology that is storied at The Wall Street Journal.
We used darts.
For 14 years, from 1988 to 2002 staffers at The Wall Street Journal threw darts at the paper’s stock listings in a contest that pitted them against investment professionals. The inspiration for the contest was Princeton University economics professor Burton Malkiel who in his 1973 book, “A Random Walk Down Wall Street,” wrote that “a blindfolded monkey throwing darts at a newspaper’s financial pages could select a portfolio that would do just as well as one carefully selected by the experts.” The darts, which also were thrown by journalists back then, performed admirably.
The Wall Street Journal doesn’t publish comprehensive stock tables any more, but sister-publication Barron’s does. We tacked them to the wall and threw 10 darts, with the first eight designated as longs and the last two designated as shorts.
Among the longs were payroll-services firm Paychex , Hawaiian bank holding company Central Pacific Financial and restaurant real-estate investment trust Four Corners Property Trust . The shorts were Brazilian financial technology company PagSeguro Digital and three-dimensional bioprinting company Organovo Holdings .
The Heard’s dart picks will vie with the 12 equity picks—nine longs and three shorts—generated at Sohn and the results will be tallied every three months until next year’s event.
The Sohn conference has become a global phenomenon that has raised $85 million for pediatric cancer research. It is a very worthy cause. The stock picks may not be as worthy. May the best simian win.
Write to Justin Lahart at justin.lahart@wsj.com