Having completed a six-month stint as a columnist who files every two weeks, I have taken a look back at the collection to see whether there are any appropriate updates. I am also mindful of an ROB editor who stated to me that readers enjoyed pundits "fessing up" to their mistakes.
Dedicated readers will already have noted that I have been very light on specific stock recommendations. In fact, Niko Resources Ltd. and Dundee Corp. are the only two stocks that I have specifically recommended. I advocated the purchase of income trusts and oil and gas securities, but no other single stock.
Although I did volunteer the names of some of our larger positions, there is no specific reason why I was so stingy on stock recommendations. The column has a very broad mandate, but most likely I was attempting to communicate with readers on a higher intellectual plain than just giving stock recommendations.
Who knows what I will elect to write about in the next six months? Let me return now to Niko and Dundee, both of which sell at roughly the same price as when I recommended them.
Niko actually declined in price for a while as there were some issues between the company and the government of Bangladesh. The issues have not been resolved, but the stock rebounded because of speculation in India that a takeover was imminent.
I don't have a clue about the validity of the takeover rumour, but I do continue to believe that Niko is an attractive stock in an oil and gas portfolio.
Dundee has continued to improve as a business. The mutual fund enterprise is domiciled in the 67-per-cent owned subsidiary Dundee Wealth Management. Dundee won a whole pile of awards at a recent industry dinner. Awards are not always on the same wavelength as real life success, but in this case they mesh.
Chief executive officer David Goodman deserves congratulations for building up Dundee's investment management arm and in capturing a healthy share of industry sales. Another subsidiary of Dundee, Dundee Securities, has been rejuvenated by bringing on board Kym Anthony, who has successfully run two brokerage firms -- TD Securities and National Bank Financial. Dundee has paid a healthy sum to acquire Mr. Anthony and presumably he is not there just to do something modest in nature.
Our firm has been sitting on about 9.2 per cent of Dundee class A shares for a while. Dundee has announced that it is going to buy back about 10 per cent of its shares via a Dutch auction, which will take us over 10 per cent and require us to file publicly with the Ontario Securities Commission, which we generally try to avoid for reasons of trading confidentiality. I am not going to reduce our holdings to avoid the filing, so we have bit the bullet and we are in the midst of buying more shares.
I like the mutual fund business. We own shares in CI Financial, AGF and Guardian Capital and we are imminently going to file that we own more than 10 per cent of Guardian class A shares.
On the topic of major mistakes, this would require more than a column. Even a magazine would not do justice and a book would probably just be adequate. Curiously enough, the bulk of the mistakes are not about stocks that we bought that we shouldn't have.
We have a rigorous process that watches stocks that go down very intensely. We sell very aggressively when there is any sign that our original assessment was wrong. The big mistakes that we have made were in selling stocks prematurely.
Probably the single dumbest cliché in investment jargon is "you can't go wrong taking a profit." When you look back at stocks that have climbed dramatically after you sold them it is always easy to figure out what went wrong with your analytical brainpower.
Cameco is an example of a stock that we bought and sold prematurely. I could say something like "how was I to know that the price of uranium was going to go through the roof?"
My answer (and remember this is almost a year later) is that if I didn't think uranium was going to go through the roof, why did I buy it in the first place? Unfortunately, I have many more stories than just Cameco.
I also have to advise you that when stocks go up a lot we often sell some so as to keep the portfolio weighting from rising too much. Reducing the weighting prematurely is not what is bothering me. It is the outright sale for no particularly strong reason.
You may have noticed that by now I am no longer addressing the faithful reader, but myself. You have hit upon one of the charms of the investment management business.
It is not quite like golf because in golf your skills do in fact fade as you get older. You may hope that tomorrow is another day, but the odds are up against you.
The Dec. 19 edition of Barron's contained a nice story about Irving Kahn of New York, who is still managing money at age 100 and apparently doing a fine job. He is my new hero.
Ira Gluskin is president and chief investment officer of Gluskin Sheff + Associates.
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