Robinhood Gets Robbed in Heard’s Annual Stock-Picking Contest

Return on recommendations by Heard columnists

Robinhood Markets

Deliveroo

Pinterest

FormFactor

Ajinomoto

Advance Auto Parts

Steris

D.R. Horton

Warner Music

GameStop

Robert Half International

Airbnb

New Residential Investment

Coinbase Global

Royalty Pharma

Caterpillar

Future PLC

Mission Produce

Pool Corp.

QuantumScape

Freyr Battery

Herbalife Nutrition

Adyen

Air China

Victoria’s Secret

Trupanion

GrowGeneration

LOST MONEY

MADE MONEY

Note: Return on recommendations based on price change from the date of each pick through Dec. 17. Picks were made Aug. 9-26.

Source: FactSet

Return on recommendations by Heard columnists

Robinhood Markets

Deliveroo

Pinterest

FormFactor

Ajinomoto

Advance Auto Parts

Steris

D.R. Horton

Warner Music

GameStop

Robert Half International

Airbnb

New Residential Investment

Coinbase Global

Royalty Pharma

Caterpillar

Future PLC

Mission Produce

Pool Corp.

QuantumScape

Freyr Battery

Herbalife Nutrition

Adyen

Air China

Victoria’s Secret

Trupanion

GrowGeneration

LOST MONEY

MADE MONEY

Note: Return on recommendations based on price change from the date of each pick through Dec. 17. Picks were made Aug. 9-26.

Source: FactSet

Return on recommendations by Heard columnists

Robinhood Markets

Deliveroo

Pinterest

FormFactor

Ajinomoto

Advance Auto Parts

Steris

D.R. Horton

Warner Music

GameStop

Robert Half Intl.

Airbnb

New Residential Invest.

Coinbase Global

Royalty Pharma

Caterpillar

Future PLC

Mission Produce

Pool Corp.

QuantumScape

Freyr Battery

Herbalife Nutrition

Adyen

Air China

Victoria’s Secret

Trupanion

GrowGeneration

LOST MONEY

MADE MONEY

Note: Return on recommendations based on price change from the date of each pick through Dec. 17. Picks were made Aug. 9-26.

Source: FactSet

Return on recommendations by Heard columnists

Robinhood Markets

Deliveroo

Pinterest

FormFactor

Ajinomoto

Advance Auto Parts

Steris

D.R. Horton

Warner Music

GameStop

Robert Half International

Airbnb

New Residential Investment

Coinbase Global

MADE MONEY

Note: Return on recommendations based on price change from the date of each pick through Dec. 17. Picks were made Aug. 9-26.

Royalty Pharma

Caterpillar

Future PLC

Mission Produce

Pool Corp.

QuantumScape

Freyr Battery

Herbalife Nutrition

Adyen

Air China

Victoria’s Secret

Trupanion

GrowGeneration

LOST MONEY

Source: FactSet

Return on recommendations

by Heard columnists

Robinhood Markets

Deliveroo

Pinterest

FormFactor

Ajinomoto

Advance Auto Parts

Steris

D.R. Horton

Warner Music

GameStop

Robert Half International

Airbnb

New Residential Invest.

Coinbase Global

MADE MONEY

Note: Return on recommendations based on price change from the date of each pick through Dec. 17. Picks were made Aug. 9-26.

Royalty Pharma

Caterpillar

Future PLC

Mission Produce

Pool Corp.

QuantumScape

Freyr Battery

Herbalife Nutrition

Adyen

Air China

Victoria’s Secret

Trupanion

GrowGeneration

LOST MONEY

Source: FactSet

While retail punting is nothing new to the stock market, it occurred in such huge volumes this year that a few popular “meme” stocks like GameStop GME -1.21% and AMC AMC -0.56% were pushed to stratospheric valuations that professionals sneered at. But meme stock enthusiasts saw themselves as building a movement not unlike that of the mythological thief of Sherwood Forest—robbing rich Wall Street tycoons on behalf of ordinary, amateur investors. Short sellers, who make money betting against stocks, came to occupy a prominent place in the movement’s pantheon of villains.

Heard on the Street columnists have been largely skeptical of the market’s Reddit revolution, and it showed in many of our picks. One columnist even opted for a “sell” on GameStop itself. She scored a somewhat modest but still positive 4.8% return. The top three columnist picks were all sell recommendations on pandemic-era winners, including Pinterest and British food delivery company Deliveroo, which yielded returns of 36% and 41% respectively.

The single best columnist pick was Telis Demos’s sell rating on Robinhood, which had just gone public on July 29. Equity trading volumes had been falling since the big, Reddit-driven first quarter, Mr. Demos wrote, leaving Robinhood largely dependent on cryptocurrency trading for growth: Gag currency Dogecoin alone accounted for around a quarter of Robinhood’s revenue per user in the second quarter. Should that falter, Robinhood shares look pricey, he warned.

He was right. Robinhood shares fell 61% from when Mr. Demos made his pick to the end of the contest on Dec. 17. Many of our readers had the same idea: 109 of them picked Robinhood as a sell. But even more, 263, picked it as a buy and didn’t fare so well.

Still, the Reddit crowd wasn’t without some scalps in the contest. The fourth best reader pick overall, with a 172% return, was Avis Budget Group. CAR 3.24% True, car shortages have pushed up rental car prices and profitability this year, but Avis became a genuine meme stock, as day-traders at one point pushed it up from $37.30 at the end of last year to over $300 a share at one point in October. Out of some 15,000 reader picks, the single best one, scoring a 192% return, was for Aehr Test Systems, AEHR 7.34% which makes test equipment for the semiconductor industry.

Still, from at least one point of view Heard columnists’ relative pessimism won the day: The average return for Heard writers was negative 0.5% over the period, while the average reader pick lost 5.8%. Note, however, that the S&P 500 over the same period rose 4.2%, meaning in essence that investors would have been best off sitting out the entire meme wars and hugging the averages.

These results are yet another indication that plain old index funds, not online message boards, have been the biggest democratizing innovation in finance. The original Robin Hood himself might even approve of that.

Write to Aaron Back at [email protected]