Fabrice Taylor is a chartered financial analyst.
ftaylor@globeandmail.com
The Vox portfolio, if you can call it that, has performed quite well in the past few months. Our picks – and by “our” I mean myself and the countless anonymous people I lean on for ideas and advice – have done pretty well.
For performance reasons, we’re looking at the months from the beginning of October, 2008, the last time we did a scorecard, to the end of July, 2009.
We started getting bullish on stocks in general last October, and that wasn’t a bad idea. We stressed blue chips in early October, and they’ve done well since. They always lead in a recovery. Some of them tested or bested lows in March, and were cheaper then, but we don’t aim to pick the bottom. That’s impossible. We thought, and smarter people told us, that big stable companies were cheap on a historical basis and it appears they were.
Another theme that we embraced in October was infrastructure, based in part on stimulus spending but also valuation. In particular, we looked at Aecon Group, Genivar Income Fund and Churchill Corp. All have done very well. Churchill doubled, Aecon is up 63 per cent and Genivar did fine also, up 31 per cent (all figures assume reinvestment of dividends in the stock).
But not all blue chips did well. The jury is still out on Kraft. It’s flat, but Molson is up 8 per cent – not bad, but that’s in U.S. dollars.
A call on preferred shares wasn’t bad in early November. Falling interest rates and generally improving common equity prices have served them well, especially the preferred shares of big stable companies we recommended with the help of Desjardins Securities.
I thought the selloff in real estate was overdone last fall, and recommended Mainstreet Equity and Brookfield Properties. Mainstreet is up 18 per cent and Brookfield is flat.
Now for a couple of stinker calls, or at least apparent stinkers. I said stay clear of Bank of Montreal late last November because the yield was almost 10 per cent and the market is pretty efficient on big names. The stock is up so much I’m embarrassed to say (okay, it’s up 63 per cent). I also said Teck Resources was dangerous at $11 and it more than quadrupled.
It’s possible, though, that the market was pricing these properly. Yes, they provided good returns but at what was presumably a very big risk, particularly with Teck, whose risks were easy to understand. BMO, like any bank, is, in my opinion, impossible to understand. That said, I own bank stocks through an ETF and CIBC directly, and the latter did very well after I recommended it. Dumb luck at play somewhere.
“Buy oil” was a good call last December. Oil stocks are up a lot since then. Using Canadian Oil Sands Trust as a guide – the stock I chose – you’re up 34 per cent , and in my opinion it’s a long-term holding. I think it will get taken out by some international concern looking for safe reserves, of which Canadian has decades worth. I own the stock myself.
Avoiding Gildan was great advice – if you find extremely large gains repulsive. The stock is up more than 50 per cent. I still wouldn’t own it, but who cares. I was wrong.
Avoiding Yellow Pages Income Fund was better. The units are down, although with distributions the investment is up a little.
Osisko Mining was not a “sell”; it was a “buy” for anyone wanting to make a 47-per-cent gain. But I redeemed myself on Wesdome Gold Mines, up nearly 80 per cent. It’s buying back stock and paying dividends. When Osisko does that, I’ll be a fan.
Citigroup may have been “still sick” in March, when I said its earnings report was a crock. But if going up 100 per cent in price is sick, I’d like the bank to breathe in my face.
But I made up for that on a call to buy Ford stock in late April. So far it’s up 60 per cent. Who’d have thought that?
Staying with cars, shorting ZENN, the Canadian concern that hopes to make electric cars, didn’t pay, but it didn’t cost much. It’s still a short; there’s too much stronger competition and management’s vision isn’t clear enough.
All in all, the picks were not bad. The bold call today: Being long is probably better than being short over all. We’ll see if that’s smart in six months.
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