Lenny Dykstra at Bat
April 14, 2008 - Individual Gurus
Readers requested a review of the performance of recommendations made by Lenny Dykstra in his articles at TheStreet.com. The publication has engaged Lenny Dykstra for three stints: 9/6/05-8/14/06, 2/7/07-11/7/07 and 3/25/08-present. In these articles, he generally recommends buying deep-in-the-money call options four to six months from expiration for specific “undervalued” stocks, with a good-until-canceled sell order targeting a modest gain of about 10%. He attempts to find stocks on the rebound to mitigate the risk of holding options that eventually expire. He employs this “going deep” options strategy for some leverage with minimal option time value erosion. Can Lenny Dykstra systematically find undervalued stocks? Does his options strategy work? Using the “Stat Book Scorecard” from his 11/28/07 article (covering the recommendations from his second stint) and associated daily return data (close-to-close) for the underlying stocks and the S&P 500 index, along with the “Return on Investment” calculations from his 11/9/07 article, we conclude that: Keep Reading