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| Irwin Michael, B.Com, MBA of ABC Funds |
|---|
| c/o I.A. Michael Investment Counsel Ltd. |
| 8 King Street East, Suite 700 |
| Toronto ON |
| M5C 1B5 |
| 416-365-9696 |
| Irwin Michael, B.Com, MBA's website |
| Toll Free: 1-888-OPEN-ABC |
| Fax: 416-365-9705 |
| iamich@abcfunds.com |
| DON'T BUY | Aecon Group Inc | ARE-T | 11.410 | Construction/production business. They were penalized on the fixed rate contract for Firebag 3, which cost them a lot of money. Good management. Recently sold his stocks but owns their debentures. Prefers Flint Energy Services (FES-T). This one trades at 1.4X Book and pays a $.20 dividend and is trying to get back on the green side on their balance sheet, but suspects the easy money has been made. | 2012-01-13 | ||
| DON'T BUY | ATS Automation | ATA-T | 6.390 | Sold his holdings in early 2011. Good company and good management. The biggest problem was their solar panel division in France. Until they rectify this, he wouldn't buy. | 2012-01-13 | ||
| Comment | Flint Energy Services Ltd | FES-T | 13.250 | Fundamentally very cheap. On the right track. Revenues are probably through $2 billion. Have been remarkably conservative in terms of their outlook. Expecting will declare an initial dividend over the next 6-12 months and would be surprised if they buyback stocks. Trading roughly at BV. Likes this sector. | 2012-01-13 | ||
| TOP PICK | Martinrea | MRE-T | 7.610 | Profitable. Good management. The average car on the road today is 10.2 years old so there has been a lot of pent-up demand for autos and hopefully with a better economy and better psychology, there will be a lot of positive news for automobile companies. In January 2011 they acquired a German auto parts manufacturer for about $.18 on the dollar. Could see it easily trading in the double digits. | 2012-01-13 | ||
| PAST TOP PICK | Savanna Energy Services | SVY-T | 7.000 | (A Top Pick Feb 18/11. Down 22.69%. (See commentary at beginning.)) Oil service business and he likes it a lot. | 2012-01-13 | ||
| TOP PICK | Com Dev International Ltd. | CDV-T | 2.060 | Trading below NAV and tangible Book. Had a lot of problems with 5 government contracts. They have the Exact Earth division where they have the software that goes on a satellite and is able to cross the Earth several times a day, which will be increasing. This division should break even this year. | 2012-01-13 | ||
| Comment | A Comment -- General Comments From an Expert | A Commentary | 0.020 | Markets. 2011 was extremely difficult for value investors because there was a real tug-of-war between the forces of fear versus fundamental value. As a consequence, fear overtook the value. Fundamentals on the micro side were actually quite good. 70% of companies came out with greater earnings in Q3 than most people predicted. For 2012, he expects the micro earnings to come through. Rates are still low and will be low for possibly another 2 years so cost of capital is fairly low and he expects acquisitions and takeovers making it a better year. | 2012-01-13 | ||
| Comment | Essential Energy Services Ltd. | ESN-T | 2.100 | Likes this company a lot. Management walks the talk. Very cheap and is trading below tangible book. Recently acquired Technicoil. Trading under 10X earnings. Likes the sector. Wouldn't be surprised to see this being a takeover candidate sometime over the next 12 to 18 months. | 2012-01-13 | ||
| DON'T BUY | Air Canada (B) | AC.B-T | 1.060 | High-risk/high reward. As a value player he does not favour the stock. Probably trading with a negative book value. Prefers Western Jet (WJA-T), which has earned money for the last 26 consecutive quarters, pays a dividend and is sitting on $1.3 billion in cash. | 2012-01-13 | ||
| Comment | Twin Butte Energy | TBE-T | 2.460 | Just bought it recently at about $2.10. Merging with Emerge (EME-T). He has a lot of time for management. Will be paying a dividend of 1.5 cents a month so at current prices it will be yielding about 7%. | 2012-01-13 | ||
| BUY on WEAKNESS | Ithaca Energy Inc. | IAE-T | 2.150 | North Sea drilling. Canadian company, virtually name only. While their NAV is well through $3, they've had a number of delays. Particularly they’re waiting on a ship coming out of Dubai that has to pass through Straits of Hormuz. The longer this takes, they lose $.05 a share of cash flow from the new Athena. On the positive side, they’re producing at the rate of 5000 barrels a day. Athena will get them up to about 10,000. Would buy this one under $2 and sell it close to $2.75-$3. | 2012-01-13 | ||
| PAST TOP PICK | Genworth MI Canada Inc. | MIC-T | 22.560 | (A Top Pick Feb 18/11. Down 12.27%. (See commentary at beginning.)) Still like this one a lot. Did a special dividend and increased their dividend. Trading a good $5 below BV. | 2012-01-13 | ||
| PAST TOP PICK | Emerge Oil & Gas Inc. | EME-T (Dead) | 1.430 | (A Top Pick Feb 18/11. Down 63.23%. (See commentary at beginning.)) Merging with Twin Butte (TBE-T). See today's comments under TBE-T. | 2012-01-13 | ||
| TOP PICK | Strad Energy Services | SDY-T | 4.350 | Oil services company. Provides services and rental equipment. Good management. Very cheap at slightly above BV. Expect they will earn at least $.50 this year and more next year. With oil at $100, a lot of the service companies will do quite well. Just sold one of their low-margin businesses. Expect their margins to be 25% plus. | 2012-01-13 | ||
| HOLD | Geodrill LTD | GEO-T | 2.230 | Contract drilling in West Africa. Management is very motivated and owns over 40% of the company and under promises and over delivers. Biggest problem is not having enough rigs. This is a long-term hold. | 2012-01-13 | ||
| HOLD | Aecon Group Inc | ARE-T | 8.090 | In the penalty box. Stumbled on a fixed price contract and lost money. With any kind of an up tick in infrastructure, they should do well. If you own, he would be tempted to hold on. | 2011-09-09 | ||
| TOP PICK | Bennet Environmental | BEV-T | 2.060 | Debt-free and trading below book and breakup value. No debt and sitting on $61 million of cash ($1.60 per share). Have a solar remediation facility in Quebec, which is waiting for several tenders. Have about 16,000 tons of soil to be remediated and will start up operations when they get to 20,000. Looking to make an accretive acquisition. | 2011-09-09 | ||
| PAST TOP PICK | Cogeco Cable | CCA-T | 45.650 | (A Top Pick Oct 1/10. Up 27.23%.) | 2011-09-09 | ||
| PAST TOP PICK | Flint Energy Services Ltd | FES-T | 10.740 | (A Top Pick Oct 1/10. Down 28.05%.) Sold a large portion of his holdings at $18.50. Believes it is a $20 stock. Likes this company a lot. On the right track and making acquisitions. | 2011-09-09 | ||
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| Comment | Rona Inc | RON-T | 9.730 | This is a true contrarian stock. Every one hates the retailers. Stumbled for the last 4-5 quarters. CFO resigned. Stock price is below BV but also below tangible book. Eventually that market is going to improve. You will have to be patient for the bottom line to set in. | 2011-09-09 | ||
| TOP PICK | Westaim Corp | WED-T | 0.500 | Nonstandard automobile and motorcycle insurance. Debt-free and trading below book and breakup value. BV is $0.61. Have excess capital of $100 million. Have just put in place a $30 million buyback. | 2011-09-09 | ||
| HOLD | Canam Group Inc. | CAM-T | 4.330 | Lost money in BC Place where they had a fixed price contract. Also, infrastructure spending has slowed down. Had a loss last quarter and they passed the dividend for the time being. Selling $50 million plus of assets, which are not germane to their business so there are no financial problems. | 2011-09-09 | ||
| DON'T BUY | A Comment -- General Comments From an Expert | A Commentary | 0.020 | Are Canadian banks good value at these levels? He is a bargain hunter and doesn't think the banks are particularly cheap. Trading anywhere from 1.5-2 times BV. Sees better things in the market place. | 2011-09-09 | ||
| HOLD | Daylight Energy Ltd | DAY-T (Dead) | 7.130 | Oil is up or down $2-$3 each day and a lot of the oil companies, including oil/gas service companies, are not doing so well. Good management. Good dividend. | 2011-09-09 | ||
| HOLD | Essential Energy Services Ltd. | ESN-T | 1.780 | Trading well below book. Good management. Likes the company. | 2011-09-09 | ||
| PAST TOP PICK | Energold Drilling Corp. | EGD-X | 4.200 | (A Top Pick Oct 1/10. Up 22%.) | 2011-09-09 | ||
| Comment | Fortress Paper | FTP-T | 28.880 | Specialty paper. A lot of good things are happening. Company is looking to do another pulp deal. Switzerland printing is a little soft right now. Doing extra ordinary well on their wallpaper in Germany. Should be in production shortly on their dissolving pulp business. Good management. | 2011-09-09 | ||
| BUY | International Tower Hill Mines Ltd | ITH-X | 7.740 | Had an unsuccessful hole in the North Sea. Good management. Will be getting good cash flow with a number of their wells coming on. Buy under $2 and Sell closer to $3. Very volatile. Could be a takeover candidate. Higher risk because of drilling. (Pricing is on Brent crude.) | 2011-09-09 | ||
| BUY | Genworth MI Canada Inc. | MIC-T | 21.130 | Mortgage insurance. Extraordinarily cheap. 4.75% dividend. Genworth (GNW-N) out of the US controls 57% of the company. Trades at 10X earnings, well below book. Investors are concerned that the problems in the US will infect the Canadian operations. He has a lot of faith in management. | 2011-09-09 | ||
| TOP PICK | Flexsteel Industries | FLXS-Q | 14.820 | Debt-free and trading below BV and breakup value. 8th largest furniture manufacturer in the US. Operate out of Dubuque but also manufacture and distribute out of China, Thailand, Vietnam and Mexico. No debt and sitting on about $2.75 a share in cash. BV is $19.50 and its working capital is $15 a share. | 2011-09-09 | ||
| BUY | Aecon Group Inc | ARE-T | 8.450 | Construction. Was in a fixed price contract with Suncor (SU-T) on a firebag contract but had major overruns creating a loss in the quarter. Likes the management. Yield of about 2.5%. | 2011-07-08 | ||
| TOP PICK | Bennet Environmental | BEV-T | 2.220 | Soil remediation using a heat process. Classic value play. No debt and $1.75 per share in cash. When they are not in operation, there is no revenue but once they get going, which should be soon, they free cash flow like crazy. | 2011-07-08 | ||
| BUY | Rona Inc | RON-T | 11.930 | Trading below Book Value of around $14.90. Tangible BV is probably $2 or so lower. Lost money because of poor sales on gardening so analysts turned negative. Fundamentally cheap. Great contrarian play. | 2011-07-08 | ||
| PAST TOP PICK | Westjet Airlines | WJA-T | 14.780 | (A Top Pick Aug 13/10. Up 25.28%.) Took some money off the table when it went through $15 but still has half his position. | 2011-07-08 | ||
| TOP PICK | Savanna Energy Services | SVY-T | 9.200 | Oil/gas services. Have over 160 rigs and just made a couple of acquisitions. Operate in Canada, US, Mexico and are moving into Australia. | 2011-07-08 | ||
| BUY | Canam Group Inc. | CAM-T | 6.670 | Construction and various services. Does a lot of work with major arenas. Believes in the company. Good balance sheet. More than 60%-70% of its business is done in the US. Dividend of about 2.25%. Anywhere under $7 is fundamentally cheap. Book value of around $7.90. | 2011-07-08 | ||
| Comment | Reitmans (Canada) Ltd. (A) | RET.A-T | 16.390 | Very well run. No debt and sitting on a very attractive investment portfolio. Not particularly cheap at over 2X book value and 13 or 14 tines PE. | 2011-07-08 | ||
| Comment | A Comment -- General Comments From an Expert | A Commentary | 0.020 | Value investing. Entails a lot of things, discipline, patience and focus. Right now, there is incredible volatility and a lot of irrationality and emotion in the marketplace. The least path of resistance is to Sell. He looks at discount to book value and tangible book as well as P/E and cash flow multiples. Also look for hidden assets. Goodwill is worth zero. | 2011-07-08 | ||
| BUY | Daylight Energy Ltd | DAY-T (Dead) | 9.340 | Likes this company. Well-established. An up-and-coming potential senior E&P company. Yield of about 6.4%. | 2011-07-08 | ||
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| BUY | Essential Energy Services Ltd. | ESN-T | 2.200 | Services to oil/gas companies. Likes the management. Trading below book value. Very disciplined and no debt. Expect they will do relatively well as long as oil hangs in where it is and does better. | 2011-07-08 | ||
| BUY | Fortress Paper | FTP-T | 38.180 | Involved in 3 different segments. 1) Printing passports and currency out of Switzerland. 2) Wallpaper facility in Dresden Germany. 3) Pulp mill in Quebec and in the process of producing dissolving pulp giving an alternative to cotton. 50%-60% of potential production of pulp has been sold forward to Chinese. Should go considerably higher. | 2011-07-08 | ||
| HOLD | Ithaca Energy Inc. | IAE-T | 2.320 | Recently had an unsuccessful well in the North Sea, which are very expensive. Will probably be producing between 4,500 5,000 barrels by year-end. NAV might be as high as $3.50 but is very volatile. If you own, consider selling as it approaches $3. | 2011-07-08 | ||
| PAST TOP PICK | Genworth MI Canada Inc. | MIC-T | 24.640 | (A Top Pick Aug 13/10. Down 10%.) Currently trading at Book. Increase or dividend twice. Over capitalized. Still likes. | 2011-07-08 | ||
| TOP PICK | Equitable Group | ETC-T | 30.500 | (A Top Pick Aug 13/10. Up 40.81%.) Trust company in 1st mortgages. Book Value of about $26 and will earn $4-$4.10 this year and could be $4.75 in 2012. Very well run. | 2011-07-08 | ||
| PAST TOP PICK | Cogeco Cable | CCA-T | 45.060 | (A Top Pick Oct 1/10. Up 24.67%) Sold his holdings in January. | 2011-04-27 | ||
| TOP PICK | Flint Energy Services Ltd | FES-T | 16.200 | (A Top Pick Oct 1/10. Up 6.31%) (3 Top picks are in the energy services sector, a lagging indicator of oil/gas.) Over 50% is oil sands servicing. Do a lot of utility servicing and trucking. Could be a takeover candidate. | 2011-04-27 | ||
| BUY | Rona Inc | RON-T | 13.750 | Market cap of about $5 billion and does about $1.8 billion in sales. Very levered to the economy and real estate. Can do quite well in a better real estate market and renovations and gardening. There is a chance that they could be bought at some point by one of the majors. | 2011-04-27 | ||
| TOP PICK | Savanna Energy Services | SVY-T | 10.460 | (3 Top picks are in the energy services sector.) BV of $9.90. Have 166 rigs, of which 40 to 50 were idle giving them potential operating leverage on the way up. Now supplying rigs to Australia at higher margins. Just acquired Performance Energy and got 17 rigs. | 2011-04-27 | ||
| HOLD | Canam Group Inc. | CAM-T | 8.130 | Book Value a little over $9. Excellent disciplined management. Very levered to the US economy with bridge building and the joist market. Stepped on a rake when they underbid on BC Place so ended up with a $34 million loss, which is very uncharacteristic of them. Still likes what he sees and a good stock to hold over the next 6 to 12 months. About a 2% dividend. | 2011-04-27 | ||
| BUY on WEAKNESS | Daylight Energy Ltd | DAY-T (Dead) | 11.060 | Has the potential of becoming one of the premier E&P large cap companies. In cardium gas as well. Yields about 5.5%. Interesting one to hold. Would buy in the low $10’s. | 2011-04-27 | ||
| BUY | Essential Energy Services Ltd. | ESN-T | 2.120 | Services for the oil industry. Have a takeover merger opportunity, which will help. Good balance sheet. BV around $2.28. | 2011-04-27 | ||
| PAST TOP PICK | Energold Drilling Corp. | EGD-X | 4.480 | (A Top Pick Oct 1/10. Up 23.43%.) Global mine driller with about 103 rigs and going to 130. Drills for a lot of juniors who have been cashed up. Further afield, the better margins because of higher risks. Has $28-$30 million in cash. Hidden asset with control of almost 7 million shares in Impact Silver (IPT-X). Would like to see this sold as they are drillers, not a silver company. A lot of potential torque as the higher gold goes, they’ll get greater market share. | 2011-04-27 | ||
| BUY | Fortress Paper | FTP-T | 44.100 | Peaked at around $62 in the spring. Moving into dissolving pulp (for making rayon) and did an excellent acquisition and now looking at another one. Their costs are around $600 a ton dissolving pulp is running anywhere from $2500 to $3000. Lawsuit against them out of China. Down the road could be split into 2 or 3 companies with the pulp side on its own, which would add value. | 2011-04-27 | ||
| BUY | Ithaca Energy Inc. | IAE-T | 2.440 | North Sea oil. Debt free. Produce about 4,500 barrels a day. Another play, Athena, will be producing about 5,000 later on. Attractive. | 2011-04-27 | ||
| BUY | Equitable Group | ETC-T | 28.750 | Mortgage and Trust company that supplies mortgages. BV of approximately $24.5-$25 million and expect they’ll earn as high as $3.25 and as high as $3.50. Excellent management. Ripe as an acquisition or can continue as an independent. | 2011-04-27 | ||
| BUY | Eacom Timber | ETR-X | 0.445 | Lumber. Raised money on Bay Street at $0.50 and were able to buy some timber assets out east. They are all set up for the next cycle. Very sensitive to lumber prices. The quicker the housing market turns, the better it is. Likes it at this point. | 2011-04-27 | ||
| TOP PICK | Strad Energy Services | SDY-T | 5.030 | (3 Top picks are in the energy services sector, a lagging indicator of oil/gas.) Supply a lot of equipment and manufacturing to the service side. Cheap. Has a lot of potential torque. Virtually debt free. | 2011-04-27 | ||
| BUY | Aecon Group Inc | ARE-T | 9.250 | Took over a Suncor (SU-T) project of $200 million and ended up losing about $52 million. Thinks they have learned. President resigned. At $9 and lower it is back in value territory. Doesn’t see the 2% dividend at risk. | 2011-02-18 | ||
| HOLD | ATS Automation | ATA-T | 6.780 | Good company but one of its divisions, Photoaut (?) out of France is hurting so they are stuck. Likes management. Not expensive. Will be a work in progress. | 2011-02-18 | ||
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| Comment | Rona Inc | RON-T | 15.270 | Well managed. When the economy starts to move, they will do well. | 2011-02-18 | ||
| PAST TOP PICK | Westjet Airlines | WJA-T | 15.070 | (A Top Pick Aug 13/10. Up 26.67%.) Easy money has been made. | 2011-02-18 | ||
| TOP PICK | Savanna Energy Services | SVY-T | 8.990 | Drilling services with over 100 rigs. About 40 of them are hybrid rigs which are being converted to working rigs with some of them going to Australia where rates are double Canadian rates. Drilling has been a laggard so this company has fallen between the cracks. Very cheap BV of $8.92. | 2011-02-18 | ||
| BUY | Canam Group Inc. | CAM-T | 8.010 | Excellent management. Stock recently popped after disappointing earnings but going forward margins will be picking up. If you believe in the US economy, they will do quite well. | 2011-02-18 | ||
| Comment | A Comment -- General Comments From an Expert | A Commentary | 0.020 | Has to dig a little deeper in the current market to find value stocks. Gold, Real Estate and Commodities have all moved and he thinks it’s finally time for common stocks. Expecting this rally will continue in a saw tooth like fashion. Depending on what news comes out, Corporate, Political or Economic; there will be sell offs, which will look like a big decline. Finds that a lot of stocks are not terribly expensive but you have to look at individual companies piece by piece. | 2011-02-18 | ||
| Comment | A Comment -- General Comments From an Expert | A Commentary | 0.020 | Canadian Banks. Doesn’t own them as they are Value plays, not Deep Value plays. Trading at 2.5X book. Prefers other non-bank financials. However, there is a lot of cash sitting on the sidelines and, as a consequence, they are a “go to” destination for a lot of cash. | 2011-02-18 | ||
| BUY | Energold Drilling Corp. | EGD-X | 4.420 | Good crew of experienced in mine drilling. Do a lot outside the country, particularly frontier drilling. With a lot of the gold companies having raised money, they are doing a lot of drilling. Further they go a field, margins tend to increase. Virtually operating flat out. Recently did a successful issue and are all set up for mergers and takeovers. | 2011-02-18 | ||
| Comment | Fortress Paper | FTP-T | 62.890 | Very capable, innovative owner. Started as printing in Switzerland and wallpaper in Germany and went into pulp and paper when they acquired a mill from Fraser Paper. Transforming it from NBHK pulp to dissolving pulp, which is used to make rayon, a substitute for cotton. Market expects they will acquire more pulp mills. | 2011-02-18 | ||
| TOP PICK | Genworth MI Canada Inc. | MIC-T | 26.800 | (A Top Pick Aug 13/10. Up 9.09%.) Trading at about 8 or 9 times PE. Have bought back stock and increased the dividend. Thinks Canadian real estate is fairly stable and expects an up tick. Almost 4% dividend. | 2011-02-18 | ||
| TOP PICK | Emerge Oil & Gas Inc. | EME-T (Dead) | 3.890 | A Value and Growth stock. Disappointed investors by being a little too aggressive on their go forward numbers. Cheap Mostly heavy oil but just did a farm in of 30,000 acres dirt cheap in Alberta which will get them into light oil. Well run. | 2011-02-18 | ||
| PAST TOP PICK | Equitable Group | ETC-T | 29.890 | (A Top Pick Aug 13/10. Up 38.06%.) Easy money has been made. | 2011-02-18 | ||
| HOLD | Tricon Capital Group | TCN-T | 5.000 | Real estate manager in Canada and US. Still have to prove themselves so it’s a work in progress. Trading below its issue price. Earnings will be coming out shortly. He is optimistic. | 2011-02-18 | ||
| WAIT | Aecon Group Inc | ARE-T | 12.060 | No longer dirt-cheap. Growing their top line and bought into Churchill. Well run. While they pick up a lot of top-line he would like to see more bottom-line growth. Well positioned for the economy while it turns around. | 2010-10-01 | ||
| TOP PICK | Cogeco Cable | CCA-T | 36.510 | 2nd largest cable operator in Ontario/Quebec corridor with some have facilities in Portugal. Comparing EV/EBITDA multiples to Rogers (RCI.B-T) they are almost 2 points lower and 10 to 15 points lower in penetration giving it a lot more potential. 1.5% dividend. | 2010-10-01 | ||
| TOP PICK | Flint Energy Services Ltd | FES-T | 15.220 | Utility maintenance and drilling maintenance in the oil sands. Not widely followed. Excellent management. A lot of cash. Expect them to declare a dividend in the next 12 months. | 2010-10-01 | ||
| BUY | Westjet Airlines | WJA-T | 12.030 | Hasn’t really moved. Young fleet of 91 planes with about 4.5 years average age, all 737's. Well managed. Southwest Air has bought Air Tran, which is positive for the industry as he expects much more consolidation. Fundamentally cheap. | 2010-10-01 | ||
| WATCH | Com Dev International Ltd. | CDV-T | 2.200 | Satellites. New Operating Officer who seems very capable. Just sold a portion of their satellite division to a Spanish satellite military company giving them $50 million in cash. Likes it but have to prove themselves since they lost money by mis-pricing contracts. | 2010-10-01 | ||
| PAST TOP PICK | Canam Group Inc. | CAM-T | 7.840 | (A Top Pick May 21/10. Down 4.36%.) Still likes. | 2010-10-01 | ||
| PAST TOP PICK | Daylight Energy Ltd | DAY-T (Dead) | 10.050 | (A Top Pick May 21/10. Up 4.19%.) Still likes. | 2010-10-01 | ||
| BUY | Pengrowth Energy | PGF-T | 11.390 | About 50/50 oil and gas. Well run. $.84 dividend and expect they will keep this after they convert because they have enough tax pools to last them several years. | 2010-10-01 | ||
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| TOP PICK | Energold Drilling Corp. | EGD-X | 3.500 | Contract mine driller with 70% being gold. Because of so many gold financing over the last while, they will have a lot of work to do. Debt-free. Has a lot of potential torque as gold mining picks up. Not widely followed and fundamentally very cheap. | 2010-10-01 | ||
| Comment | Fortress Paper | FTP-T | 39.200 | Printing facility in Switzerland, which produces euro dollar, Swiss franc and passports. 2nd facility in Germany producing wallpaper. Purchased bankrupt pulp/paper mill and shifting production from MBHP pulp to dissolving pulp for manufacturing rayon, a cotton substitute. No longer a deep value play. Sold at quarter of his holdings. Still likes. | 2010-10-01 | ||
| BUY | Ithaca Energy Inc. | IAE-T | 2.070 | Disappointed the company did a financing it $1.70. An excellent balance sheet and didn't need the money but have pre-funded all of their major developments for the next year or two. Good management. | 2010-10-01 | ||
| PAST TOP PICK | Genworth MI Canada Inc. | MIC-T | 25.840 | (A Top Pick May 21/10. Up 2.47%.) Still likes. | 2010-10-01 | ||
| BUY | Equitable Group | ETC-T | 21.180 | Issues non-standard mortgages primarily in the single family financing. Expect them to earn $3 a share this year. Trading around $21 and will probably have a BV of about $26 by year-end. Well run. Suspect there will be dividend increases of $.60-$.80 this year. | 2010-10-01 | ||
| BUY | Westaim Corp | WED-T | 0.550 | Acquired JEVCO, a high-risk automobiles/casualty insurance company. Trading at Book Value, good balance sheet, excellent management and a strong board. Pretty cheap here. | 2010-08-13 | ||
| TOP PICK | Westjet Airlines | WJA-T | 12.050 | Fundamentally cheap. Sitting on cash and cash equivalents of $1.1 billion. 91 planes of 1 set of aircraft making it easier to run. Good management. Will benefit from a strong Cdn$. 29% of its costs are fuel, which is quite low now. | 2010-08-13 | ||
| PAST TOP PICK | Canam Group Inc. | CAM-T | 7.350 | (A Top Pick May 21/10. Down 7.64%.) Still likes. Well managed. All set up for the next cycle. | 2010-08-13 | ||
| Comment | A Comment -- General Comments From an Expert | A Commentary | 0.020 | Identifying Value companies. Looks for companies with 1) low price earnings multiples 2) low cash flow multiples 3) discount to book or NAV 4) tax loss carry forwards 5) assets. | 2010-08-13 | ||
| PAST TOP PICK | Daylight Energy Ltd | DAY-T (Dead) | 8.990 | (A Top Pick May 21/10. Down 6.74%.) Excellent management and good balance sheet. $.60 dividend. Should have some interesting news out of the Cardium play. Trading below NAV. Thinks it will become one of the premier E & P companies in Canada. | 2010-08-13 | ||
| HOLD | Polaris Minerals Corp. | PLS-T | 1.380 | Aggregate company in Vancouver with a massive quarry with probably enough capacity for 100 years. Unfortunately their main market is California, which is in a recession. Debt-free at the moment but is in the “show me” situation. | 2010-08-13 | ||
| HOLD | Fortress Paper | FTP-T | 28.600 | Had bought this as a “deep value play” at around $8 because of some hidden assets. No longer a “deep value play” but is now a “growth momentum” play. The big factor is their acquisition of the Thurso pulp mill, which will probably be a big winner for them in the future. Market is discounting them going into pulp. | 2010-08-13 | ||
| TOP PICK | Genworth MI Canada Inc. | MIC-T | 25.050 | (A Top Pick May 21/10. Down 6.74%.) No debt and sitting on $5.5 billion of assets when they went public last year. Parent Genworth (GNW-N) owns 57%. Debt-free until they borrowed $275 million to trade debt/equity ratio. Instituted a share buyback in the next few weeks and will buy back 325 million shares between $24-$28, which will be accretive. | 2010-08-13 | ||
| BUY | PetroMagdalena Energy | PMD-X | 0.435 | A play in Colombia. Lots of land and good prospects but missed on a production outlook so have been penalized. Talisman (TLM-T) just bought Colombian assets from British Petroleum (BP-N) that has created interest in the area again. Could be a $.50-$.60 stock. | 2010-08-13 | ||
| BUY | High Liner Foods | HLF-T | 11.990 | Excellent company based in Halifax with primary products of shrimp and salmon. Recent earnings were fairly good. In the short run, prices and costs have kicked up a little bit but they do have inventory. | 2010-08-13 | ||
| TOP PICK | Equitable Group | ETC-T | 21.300 | Mortgage lender with about $3.2 billion mortgages on the books, mainly single-family homes. Trades at .9X book. BV of $23.38 in stock is trading at around $21. Yield of about 2%. Expected to earn about $3.15 this year and paying out less than 12% of their earnings. Good move well into the $30's. | 2010-08-13 | ||
| BUY | Maxim Power | MXG-T | 3.590 | Buys power plants and operate them globally. Has a replacement value of at least $5-$6. Affected by the price of electricity in Alberta, which have been falling. Management has a significant stake in the company. Could be a takeover candidate. | 2010-05-21 | ||
| BUY | Westaim Corp | WED-T | 0.630 | Had no business and wound it down. Had tax laws carry-forwards, debt-free. Acquired JEVCO Insurance in March, which was Kingsway Financial (KFS-T) best asset. $.57 book value and will be earning money. Work in progress because they haven't had their 1st quarter as yet. | 2010-05-21 | ||
| BUY | Westjet Airlines | WJA-T | 12.390 | Perhaps the youngest airline fleet in North America at 4.5 years. Operate one aircraft, 737 making it easier to maintain. Likes the new management. If they can make money now in the worst times, what is going to happen when things improve? Thinks they're set up for the next cycle. | 2010-05-21 | ||
| TOP PICK | Canam Group Inc. | CAM-T | 8.000 | Quebec-based steel fabricator. BV of around $9. Pristine balance sheet, virtually debt-free. 2.1% dividend. Just made a major acquisition of a US structural steel fabricator, which will increase their EBITDA by as much as $50 million. 70% of their business is in the US. Own a US bridge refurbishing company. | 2010-05-21 | ||
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| TOP PICK | Daylight Energy Ltd | DAY-T (Dead) | 9.740 | Just converted from a trust and reduced the dividend to $.05 (about 6.5%). Had been gassy with about 25% oil but are about 50/50 now. 2 very important acquisitions, Highpine and West Energy. Very focused with plenty of room on their balance sheet. About $1.3 billion of tax loss carry forwards. | 2010-05-21 |