Review of 2012 Themes & Forecast

With 2012 in the books, let’s revisit last year’s predictions (click here for 2012 Themes & Forecast) and let’s see how the predictions matched up to what actually happened. Let’s start with a review of last year’s M&A stocks and see how they did.

2012 M&A Picks with Performance Data
Closing Price Last Trade or Price Percentage of
Acquired 1/6/2012 1/4/2013 Change
InterDigital IDCC No 42.07 44.12 4.87%
InterNAP INAP No 5.74 7.05 22.82%
Netflix NFLX No 86.1 95.98 11.48%
RIM RIMM No 15.34 11.95 -22.10%
Nokia NOK No 5.24 4.16 -20.61%
Sprint^ S Yes 2.19 5.92 170.32%
Riverbed RVBD No 25.77 21.14 -17.97%
ZIX ZIXI No 2.96 2.9 -2.03%
Tekelec* TKLC Yes 10.95 11
Average Gain 18.35%
* – Accidentally listed from the prior year as they had already agreed to be acquired
^ – Still trades but majority stake taken by Softbank

Highlights of 2012 – On the Money

  • M&A cooled a little but some very interesting deals got done. Your money would have done well in these stocks. Overall, if you held every stock absent Tekelec, your return on equal dollar positions in the other stocks would have netted you a return of over 18% for the year, beating the DOW and S&P 500 handily. Tekelec (which was removed from the portfolio in January 2012 as the merger was finalized) should have been omitted because it was a holdover recommendation from 2011, already in the stages of acquisition.
  • Sprint was a huge winner, nearly tripling in price on the purchase by Softbank.
  • Netflix could have booked very big gains if you sold early in the year (which would have really juiced your performance as it reached a rapid high of $129 in early February). If you are still holding, keep in mind Icahn joined this party in the fall.
  • Dot Com valuations finally got caught in the hype for many firms. Facebook, Groupon, Zynga, Pandora all saw their shares drop precipitously before rebounding slightly.
  • Microsoft shipped Windows 8 and sales have been lackluster at best for their desktop upgrade.
  • Online education gained major recognition in the media and from new users being introduced to the medium.
  • M2M gained major momentum and appears ready to catch fire. Networks of sensors with direct M2M connections now underpin connected health care and consumer-ready automotive telematics. Verizon is so hyped on this space they went out and purchased Hughes Telematics to grab a share of this pie.

Lowlights of 2012 – Early Though Still Possible

  • M&A never happened for RIM, Nokia or Riverbed. Their stocks were down quite a bit on the year before rallying. I am not a huge RIM fan, but surprised that it still hasn’t been acquired by someone.
  • Apple did not release the killer iTV product but more on that in a moment.
  • Microsoft tablets have done much poorer than expected. I believe this has to do with Microsoft deciding to leave their channel out of the mix thus leaving behind their most critical asset in competing against Apple. Is it too late to correct?
  • Mobile payments have continued to advance but no thanks to Near Field Communications (NFC) which have failed to get enough chips deployed to have any serious impact.

What could happen next year? Check out 2013 Tech Themes & Forecast.

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