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03:46 EST Saturday, December 23, 2000
Jump to…Contra Guys Portfolio Performance | Review of U.S. Stock Picks
With the end of 2000 approaching, it's time to examine the stocks we mentioned through the year. To do so, we used globeinvestor.com's handy portfolio tool. We "bought" equal weights of each stock discussed when the articles went to press, and the application tracks the results.
Keep in mind that the returns in the Contra portfolio, where hard cash is plunked down, will differ from this pretend portfolio, because our positions were purchased earlier at different prices, sometimes lower, sometimes higher. Also remember that we are skeptical of performance that is measured in months rather than years. Short-term volatility tells little about the success or failure of an investment program.
Over all, our hypothetical Canadian portfolio is down 11.5 per cent, which lags the TSE 300 index which has sunk 9.1 per cent since Feb. 17, the inception date of our portfolio. Our best Canadian performer was Gulf Canada Resources Ltd. From the $5.10 mark when recommended last March, it zoomed near the $9 level in September. It has slackened with the softening in oil prices. This major producer is now a hold, but if cold weather induces another rally, we will be tempted to sell before an economic slowdown takes oil prices lower.
Last May, aviation service specialist Spar Aerospace Ltd. was our idea of a company that would prove resilient during difficult times. It has shown itself to be just that during this autumn's tech mayhem, with the stock up nearly 20 per cent. Spar also pays a handsome dividend of 19 cents a quarter.
Our coal picks, the trust units of Luscar Ltd. and Westshore Terminals,haven't done much since our recent column in October. We remain very bullish on coal, but this resource play is an area where a long-term horizon is a necessity.
In September we laid bare our sorry history with food processor High Liner Foods. We certainly made some mistakes with this one, and wondered aloud if it was finally time to cut it loose. Ultimately, we elected to hold. Kelman Technologies looks rough on paper, but that is a bit misleading. Like many thinly traded stocks, Kelman shows more volatility than is justified by its underlying business. And like all low-priced stocks, it doesn't take much of a shift to make a huge difference in percentage terms. The company remains a speculative buy for investors who can wait for the improved environment for oil and gas producers to trickle down to the smaller service players.
Our worst Canadian performer is Moore Corp. Ltd. Recently the market cheered news that Chancery Lane/GSC Investors LP of New York will raise $70.5-million (U.S.) for Moore in a convertible debenture that would give them about a 19.7-per-cent equity stake in the business forms company. In our next column, our U.S. picks will be reviewed.
Benj Gallander and Ben Stadelmann are co-editors of Contra the Heard Investment Letter. They can be reached at http://www.contratheheard.com or 416-410-4431. To track the progress of this portfolio, check out click here.
Acquisition Deal Dec. 21 Unrealized
date in 2000 close close gain/loss*
Gulf Canada Resources March 16 $5.10 $7.00 37.3%
Spar Aerospace May 11 7.15 8.10 13.3
Westshore Terminals Income Fund Oct. 12 4.15 3.90 -6.0
TSE 300 index Feb. 17 9,464 8,600 -9.1
Luscar Coal Income Fund Oct. 12 1.58 1.41 -10.8
High Liner Foods Sept. 28 4.50 3.50 22.2
Kelman Technologies March 16 0.52 0.30 -42.9
Moore Corp Feb. 17 7.90 3.95 -50.0
Total Canadian dollar stocks -11.5-*Does not include dividends
Source: http://www.globeinvestor.com
Jump to…Contra Guys Portfolio Performance | Review of U.S. Stock Picks
