The New 'American Idol' of Stocks

The waitress did it: Mary Sue Williams collects the $1 million prize from CNBC's scandal-plagued stockpicking game

by Tim Catts

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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.