It is time for readers questions.
This sexy dude called Marty contributed pathetic 🙂 amount of money to my beer funds but I will still answer very professionally to his questions.
I am a regular but I have not written anything (sorry!) Your investing style hooked me from the beginning and I never shared your article with anyone (sorry again! I have my reasons). Your unconventional way of investing in lesser known stocks made me worry if other people buy the stocks before I do. Love what you do for us and for that I put some money in your ‘BUY ME A BEER’ funds. That should be enough to buy a six pack of president choice genuine lager.
You are welcome.
1. How do you rebalance?
This is a wonderful question. I think I still struggle with it to be honest.
I have two groups of investments.
One- buy and hold.
Two- buy then sell when it is high.
An example of the first group would be- constellation software, MTY etc.
Second group would be- any turnaround stocks- CRH, Home Capital etc.
For example, I bought CRH when it was less than $2 and sold a half of position when it was $5.50 or so then it is currently I believe around $4? I think it is still cheap. The reason why I sold half was it ran up more than 100% so I just took off what I put in and let the rest run. It hasn’t done very well lately dropping from $5.50 to somewhere around $4 but I don’t really care as I got my more than 100% of return.
Another example I can give you is when Constellation was around $800-900 last winter. I sold a bunch of MTY and other stocks to give room for Constellation software. MTY at that time was all time high I believe. It just worked out.
Both stocks should be held for a long term. I consider them to be top business operators in Canada. So it was very easy for me to rebalance between them. One as 52 weeks low and the other was 52 weeks high. Both superb companies.
Many people say, trim as you go but I think it is entirely up to you. When things are high because of fundamentals are strong, then I would not trim at all but you still can and probably should.
If are you looking for more macro event driven rebalancing advice- I would send an email to Jason Vicario who runs a hedge funds in Vancouver. A great fella.
2. How many stocks do you own now?
About 20 stocks. It fluctuates between 15- 20
3. Can you share Top 10 stocks?
I am sure you know what they would be. The weight is 98% out of 114% (14% borrowed money).
4. Abrupt departure of CEO at Stella Jones? Is it a buying opportunity?
I existed out of that name maybe a year or 2 ago. The CEO has been around for years and well known for its frugalness. Look for an article published many years ago by I think Globe and Mail. He has done very well.
The main reason why I exited Stella Jones was its unpredictability. For me predictability is everything. It has been done very well for many years but last 4-5 years results are everywhere. Its revenue has been growing consistently though. Also I found their earnings and cash flow do not coincide. There are easy and simple business with much greater predictability. No reason for me to spend more time trying to figure out its next numbers. That being said, I think it is a very strong business overall if you can stomach short to medium terms volatility. It is a pretty defensive growth story with industry tailwinds.
5. Do you own Premium Brands Holding?
No, I don’t. Never spent much time reading the company. Revenue and net income growth seems impressive.
6. Master Penetrator talks about Knight Therapeutic. Do you have it in your portfolio? Why or why not?
Yeah? I don’t know whether he still owns Knight but I don’t. I never owned it. If I buy it then I would buy it for parking cash maybe? Or due to its crazy CEO who has an amazing track record?
That means nothing to me though. I need predictability. I am getting older and often cranky if I can’t estimate. I am somewhat data and fact junkie. I don’t buy because someone else like Penetrator buys. Although when I hear the word ‘Penetrator’ I am very tempted and intimidated at the same time.
Master Penetrator is an instinct driven investor unlike me who is much less animalistic 😊
7. Do you still own Couchetard?
No. Sold off when rebalancing my portfolio last winter. Too bad though, all I see is Circle K stores everywhere lately. Their growth seems very impressive and probably growth is in their DNA. Would they eventually buy 7/11 and own the entire planet? It is quite possible I think at this point.
Oh well, I will find a corner to cry off.
8. Boyd Group. I have seen many tweets from you. It’s gone parabolic.
Boyd is a beast. Boyd group reminds of myself as a complete failure every quarter. Just look at the chart.. I own some now. Very little but I wish I owned a full position.
That was a lot of questions that I answered for a six pack of president choice beer that probably is made of horse piss. Next time at least contribute enough to buy me a six pack of St Ambroise Oatmeal Stout or Muskoka Detour. 🙂
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