Thursday, November 29, 2012

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.

Wednesday, November 28, 2012

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!