BEATING THE MARKET\Stock pick winner's now savvy.

Byline: Dawn Yoshitake Daily News Staff Writer

Alan Unell is a changed man.

No longer content with just mutual funds, Unell is now an avid player in individual stocks. Where did he find his new-found investment courage?

A stock-picking contest.

Unell, a La Crescenta resident and software engineer, is the winner of the Daily News' first stock-picking contest. The seven-month contest ended Dec. 31 and Unell's mock portfolio posted a 50.6 percent gain. During the same period, Standard & Poor's 500 Index rose 15.5 percent.

"The contest has made me a lot more confident," Unell said. "I was mostly a mutual fund investor with very few stocks. Now I've become an equity investor and do a lot of the research myself."

Unell was one of five area residents who participated in the contest. The participants used a $100,000 mock portfolio of locally based public companies and were allowed to realign their portfolio halfway through the contest.

While four contestants beat the S&P 500, one stock picker lost 6.5 percent.

Unell, who managed to post a 34.2 percent return during the first half of the contest without a single stock loss, was not as lucky during the second half. His second-half gain was about a third the size of the first and included five losers among his 17-stock portfolio. But among Unell's big hits was Calabasas-based THQ Inc., an interactive software producer, which rose 162.2 percent during the seven-month period.

"I was heavily invested in biotech, health and local insurance companies and was fairly certain that they'd do well," Unell said.

College student Lisa Mandelsohn, a novice, ranked second with a 39 percent return - receiving a sizable boost during the second half of the contest. Helping to drive her five-stock portfolio was a 95 percent gain in California Amplifier, which she added during her realignment because of its growth potential.

"I definitely plan to be a future investor. But I haven't purchased any stocks for myself because I haven't accrued any finances. I'm still trying to put myself through college," said Mandelsohn, a student at the University of California, San Diego.

Benjamin Kuo, a Thousand Oaks resident and electrical engineer, generated a 34 percent return on a nine-stock portfolio.

"I should have been more conservative, because the tech stocks were overpriced," Kuo said. "I got hit with Micom and Tekelec in the second half. They dropped pretty bad."

He learned the importance of diversifying his knowledge beyond high-tech.

"If you only know one industry and the stocks in that industry are overpriced, it's difficult to pick a stock in a different industry using the same basis," Kuo said. "In tech stocks, you tend to look at products and rapidly growing markets. But with banks or insurance companies, it's market share."

Jean Wagstaff, a retired Palmdale resident, posted a 25.5 percent return during the seven months. And her three-stock portfolio posted no losers during the second half.

"I felt these three stocks were sure winners. Disney has continued to do well and I expected Amgen to go much higher with its new use for its drugs," said Wagstaff, who also selected Rockwell International Corp.

John Donovan, a Sherman Oaks resident and painter, posted a 6.5 percent loss with his three-stock portfolio.

Donovan said it was "kind of a shame" that he didn't stick with J.B. Oxford Holdings Inc. "It went up 200 percent," he said of the stock he unloaded at the halfway point. "I also wished I had diversified my stocks a little more and played it more conservatively. But, instead, I was aggressive and played to win."

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Photo (1--color) Alan Unell (2--color) Lisa Mandelsohn (3--color) Benjamin Kuo (4--color) Jean Wagstaff (5--color) John Donovan Chart THE WINNER IS