Now That is Conviction

A people know, I follow a handful of investing gurus. I use the website Gurufocus.com which I find to be easy to use.  One of my favorites is Prem Watsa (keeping with yesterday's Canadian theme). I actually bought a good chunk of SD yesterday as I saw he has taken a ten percent stake in the company.

One of his "mistakes" has been RIMM. He has been buying them since 2010. I think it is fair to say he was early. However, I do admire his conviction, and in the end it may work out pretty well for him.

For 2010 and 2011 he bought 12.8 million shares at an average price of 38.15. Disaster right?  Lick your wounds, sulk away and live to fight another day.... Right? For most investors that would be the case.  But Watsa then bought in the first quarter of 2012 another 14 million shares (more than doubling his stake) at 15.05. S at that point, he had 26.8 million shares at 26.08 per share as he a aged down.

Of course RIMM continued to fall. What does he do?  He doubles down AGAIN!  That takes courage!  In the third quarter he bought 25 million MORE shares at an average price of 7.22. So know he has 51.8 million shares at an average cost of 16.98. And guess what?  Goldman Sachs today upgraded Research in Motion to. Buy with a sixteen dollar target price.

We have all seen stock positions that we like tumble. Sme of us even buy more shares on a drop. But it takes a great deal of conviction to double down twice after an eighty percent drop (from 38 to $7).  Tip of the hat to Mr. Prem Watsa for showing us how it is done.

Greetings Canadian Readers!

O Canada!

I have noticed the past few days that my readership has gone up.  I looked at my traffic sources, and a large chunk is coming from the Canadian Money Forum and from Corner of Berkshire & Fairfax.

To honor these new readers, I thpught I would do a special analysis of Canadian MFI stocks.As I type this, I have no idea how it will turn out.  I am a bit too lazy to do a ton of work, so I am using my standard routines; but will try to enhance the stock list with numerous Canadian stocks that are traded in some fashion in the US.  Many of them look pretty small, so I may weed them out at the "fini" (thought you would like that).

As I peruse the list (initially about 270 stocks); as expected there are a lot of mining companies.  Also a fair number of energy related companies.  As the MFI approach extracts financial comapnies; I am pulling them out as well.

I am waiting for the worksheet to grind.  I have owned a number of Canadian stocks myself, including BNS, SLF, TCK and currently NSU.  I have also owned some that have changed names or been bought, such as FDG and KHD. As a US investor; I find Canada to be an attractive investment.  Over time, I expect the Loonie to out-perform the dollar.  In addition; Canada is not going over any fiscal cliff that I am aware of and the banking sector seems much stronger.  And I trust Canada - I would not expect shenanigans there like I have seen in Chinese stocks for instance.

Here are the top 50. 

Ticker	Rank	Date	Stock Price	Market Cap	Earnings Yield	ROIC	Yahoo Yield	Country
NSU	1	11/28	4.27	854	73%	88%	2.4%	Canada
CALVF	2	11/28	0.10	50	106%	82%	0.0%	Canada
CRMMF	3	11/28	0.29	14	15%	205%	0.0%	Canada
TGA	4	11/28	10.31	780	19%	32%	0.0%	Canada
AZK	5	11/28	3.70	610	22%	47%	0.0%	Canada
AGU	6	11/28	100.08	15,813	13%	35%	0.7%	Canada
ACKBF	7	11/28	0.14	1	10%	126%	0.0%	Canada
TGD	8	11/28	3.26	471	12%	38%	0.0%	Canada
RIOAF	9	11/28	4.96	908	11%	51%	0.0%	Canada
TCX	10	11/28	1.41	68	9%	451%	0.0%	Canada
CLS	11	11/28	7.52	1,570	20%	22%	0.0%	Canada
MITL	12	11/28	2.65	142	12%	40%	0.0%	Canada
MGA	13	11/28	45.59	10,718	15%	23%	2.4%	Canada
LMLP	14	11/28	3.41	99	7%	2606%	0.0%	Canada
STADF	15	11/28	0.43	158	19%	22%	0.0%	Canada
NDZ	16	11/28	6.65	412	11%	29%	4.5%	Canada
SMTX	17	11/28	2.24	37	17%	17%	0.0%	Canada
GIB	18	11/28	23.29	6,228	8%	88%	0.0%	Canada
GTE	19	11/28	5.73	1,631	14%	18%	0.0%	Canada
TVIPF	20	11/28	0.02	11	80%	13%	0.0%	Canada
ABX	21	11/28	34.83	34,865	12%	17%	1.6%	Canada
POT	22	11/28	38.57	33,788	9%	28%	1.5%	Canada
IAG	23	11/28	12.03	4,534	13%	16%	2.1%	Canada
MLGAF	24	11/28	0.04	7	23%	10%	0.0%	Canada
SVM	25	11/28	5.66	968	9%	20%	1.8%	Canada
UFS	26	11/28	80.38	2,878	14%	11%	2.0%	Canada
SJR	27	11/28	21.49	9,520	9%	41%	4.5%	Canada
HBM	28	11/28	9.73	1,673	23%	12%	2.2%	Canada
CESDF	29	11/28	10.62	609	10%	33%	0.0%	Canada
OTEX	30	11/28	56.50	3,329	5%	222%	0.0%	Canada
STN	31	11/28	37.17	1,702	8%	44%	1.2%	Canada
KGC	32	11/28	10.34	11,845	10%	11%	1.6%	Canada
MEOH	33	11/28	30.17	2,832	9%	12%	2.4%	Canada
RCI	34	11/28	43.63	22,600	9%	32%	3.6%	Canada
BDRBF	35	11/28	3.39	5,878	6%	30%	0.0%	Canada
PTSRF	36	11/28	7.38	158	5%	430%	0.0%	Canada
IMO	37	11/28	43.31	36,874	11%	19%	1.1%	Canada
PAAS	38	11/28	18.88	2,875	11%	10%	0.9%	Canada
TCK	39	11/28	32.38	18,975	18%	16%	2.4%	Canada
THI	40	11/28	46.77	7,252	8%	39%	1.8%	Canada
COT	41	11/28	8.60	822	8%	14%	0.0%	Canada
PPP	42	11/28	6.67	623	10%	10%	0.0%	Canada
DSGX	43	11/28	8.67	554	4%	78%	0.0%	Canada
SWIR	44	11/28	7.81	240	6%	16%	0.0%	Canada
LULU	45	11/28	73.55	10,715	3%	117%	0.0%	Canada
BIN	46	11/28	19.47	2,244	7%	14%	2.8%	Canada
RFP	47	11/28	11.55	1,133	15%	6%	0.0%	Canada
COSWF	48	11/28	20.50	9,943	12%	17%	0.0%	Canada
BCE	49	11/28	42.34	32,805	8%	22%	5.1%	Canada
STKL	50	11/28	6.18	412	7%	11%	0.0%	Canada

Of course the bottom stocks on this are much worse than the top 50 in MFI website; as this is top 50 from a universe of 385 stocks.  I also had to make more manual adjustments than I expected.  Not sure if this was just timing related, but a lot of companies had updated balance sheets as of 9/30/12, but income statements only through 6/30/12.  This does happen occasionally; especially near filings of 10-Qs.  Just seemed more common than usual here.

As I look at the list; I am surprised not to see MIL; which is a derivative from the KHD I used to own.  Hmm, I took a look. They haven't made much money.

Anyway, happy reading - Canadians and non-Canadians.  Maybe another day I will try another country or region.  I did not see any companies that I obviously should invest in (besides the NSU I own).  but this can serve as a starting point for further digging. Bon Chance!