Mary Sue Williams is a new millionaire, but that doesn't mean she's ditching her restaurant job.
Williams, 46, was tapped by BusinessWeek last month as the likely champion in CNBC's million-dollar online stockpicking contest (see BusinessWeek.com, 6/20/07, "The Million-Dollar Waitress". Still, the July 13 knock on her front door by a CNBC reporter surprised the waitress from tiny St. Clairsville, Ohio, as she prepared to go to work at Undo's, an Italian restaurant overlooking Interstate 70 on the outskirts of town. Despite her newfound wealth, Williams says she took only one vacation day to celebrate. She'll be back at Undo's on Saturday night, waiting on the regulars. "I don't want to put the restaurant out," she says.
Williams has decidedly unexciting plans for her new riches: She and her husband, Mark, will pay some bills, build a nest egg, and stash as much as they can to help pay for their two daughters' education. But while Williams' spending plans may seem dull, her path to the cash was anything but.
More Than Luck
A California native, Williams has been a waitress for 20 years and was a welder before that. She's never bought or sold a real stock in her life. By favoring stocks of companies that were about to announce earnings, and by favoring companies whose products she knew, Williams bested countless financial professionals in a field of more than 375,000. "Part of this was luck," Williams told BusinessWeek in June. "A lot of it was a gut feeling, some eenie-meenie-minie-moe, and common sense."
To pick specific stocks, she used the Warren Buffett approach: Invest in what you know. "I was looking for companies that had something to do with my life," Williams says. That led to some of her most memorable picks, among them lubricant manufacturer WD-40 (WDFC) and Crocs (CROX), best known for its rubber sandals. With only a day left in the contest's final round in late May, Williams had netted a 17% return. Still, five other contestants stood between her and the $1 million grand prize.
She Played a Clean Game
Behind the scenes, an investigation into allegations of cheating in the scandal-plagued contest led CNBC, a division of General Electric (GE), to disqualify those ahead of Williams, clearing her path to first place. As BusinessWeek first reported in early June, some of her competitors exploited a flaw in CNBC's trading software to inflate their returns (see BusinessWeek.com, 6/7/07, "CNBC's Easy Money"). By keeping an Internet browser window open past the 4 p.m. close of the financial markets, contestants were able to make late trades and benefit from strong after-hours earnings announcements.
And at least one contestant was suspected of picking thinly traded stocks that would have been relatively easy to manipulate by buying and selling shares in the actual markets in which they trade. Joseph Dondero, a day trader, was also found to be the subject of regulatory inquiries by the National Association of Securities Dealers (see BusinessWeek.com, 6/14/07, "Is This CNBC's Million-Dollar Winner?").
CNBC declined to identify the disqualified contestants or the reasons behind each disqualification. But the five who ranked ahead of Williams in the last standings published on CNBC's Web site were Nancy Beaumont, of Walnut Creek, Calif.; Steven Lee, of Los Angeles; Serge Amelyan, of Mequon, Wis.; Stephen Luchko, of Swarthmore, Pa.; and Dondero, of Atlantic Highlands, N.J.
None returned calls July 13 seeking comment.
The cable channel retained former Securities & Exchange Commission enforcement chief and retired federal judge Stanley Sporkin to investigate possible stock manipulation, and computer consultants Symantec (SYMC) and Neohapsis to look into improper late trading (see BusinessWeek.com, 6/15/07, "CNBC Calls In a Judge"). Sporkin and Neohapsis declined to comment; Symantec did not return calls.
Names Not Cleared
Williams' sweet day was bitter for several other finalists who were not disqualified, many of whom say they would have preferred that CNBC simply repeat the final round of the contest rather than choose a winner by process of elimination. "I'm extremely happy for Mary Sue Williams and I wish her the best," says Greyson Masters of Winchester, Va., who finished in the middle of the pack. "But they didn't provide the competition they said they would." Masters sent a letter drafted by an attorney to CNBC President Mark Hoffman proposing the channel restage the finals (see BusinessWeek.com, 6/26/07, "How Should CNBC Resolve its Contest?").
Masters and other contestants also say they're disappointed CNBC didn't clear them of wrongdoing. "The thing that upsets me is that there were 20 people in the final round of this contest and the only one we know for sure didn't cheat was Mary Sue Williams," Masters says.
CNBC will learn from its experience with the Million Dollar Portfolio Challenge to improve a forthcoming online stockpicking contest, CNBC spokesman Kevin Goldman said after Williams was interviewed on the network. "We're planning to make some changes," he says.
Several finalists from the just-concluded contest say they're unlikely to play again. Jim Kraber, the market risk analyst who first alerted CNBC to suspicious trading by his fellow finalists, says he'll sit out future contests. He prefers to focus on long-term, carefully researched trades. Besides, he says, he doesn't have faith CNBC can run a clean contest. "They knew or at least should have known what was happening and they let it go on," Kraber says. "They should offer us apologies."