In early November, we posted an article entitled Is Air Canada’s Stock Ready for Takeoff? Turns out the answer was an emphatic yes as the shares surged soon after by about 37 per cent on the back of news vaccines were coming. The airline’s stock consolidated those gains and recently the shares have been jumping again largely on the concept that customers will flock back to air travel once the majority of people have been vaccinated against COVID-19. Here are the reasons TD Securities believes Air Canada’s transformative change post-financial crisis has left it flush with cash and poised to thrive post-pandemic.
A company eliminating a special dividend and contemplating cutting the regular dividend must be in trouble. But in the case of Constellation Software, it’s part of a bold plan by the perennially high-growth company to go after larger acquisitions, absorb slightly lower returns on investors’ capital, but also free up cash to invest back into the business instead of it going to shareholders. Chris Mayer, Founder & Portfolio Manager of Woodlock House Family Capital, and a shareholders of Constellation’s stock, loves this counterintuitive move by the company and explains why.
We’re always on the lookout for CEOs who may engage in the odd flight of hyperbole. But our gut tells us that the founder and CEO of Adcore is the real deal. Put on our radar by Jason Donville and Jesse Gamble, who own the stock at Donville Kent Asset Management, and see strong repeatable growth ahead, Omri Brill’s passion for his baby shines through. He started this digital advertising company 15 years ago, went public in 2019, just received conditional approval to graduate to the TSX, and Adcore is just now being discovered by investors, which have sent the stock higher by more than 470 per cent in the last few months. Brill outlines what makes Adcore different and why the best is yet to come.
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As we gear up for our conversation with Chris Mayer, we avail ourselves of some of his recent writing. The Co-Founder and Portfolio Manager of Woodlock House Family Capital started as a corporate banker, wrote an investment newsletter for about 15 years, and is the author of several books, including 100-Baggers: Stocks That Return 100-1 and How to Find Them. Mayer has likely read almost every investment book ever written, famous and obscure, and is a believer that what came before can be an excellent teacher for current investors. To that end, here are some deeply earned thoughts from successful investors about the Crash of 1929.
The more an investor knows about a company, the better they’re able to understand the business model, growth prospects, competitive position and culture. That’s why Dave Barr has done a deep dive on every company he’s invested in. That process includes getting to know and trust management, talking to employees, talking to competitors, and picking up on any kind of water cooler tidbits or scuttlebutt that will help his decision-making. Knowing who, how, when and at what price another company may make a bid to buy the firm are also factors that make up Barr’s three key investment strategies.
There was a time when there were just a few investable technology companies on the TSX. Fast forward to today and investors have their choice of more than 20 technology companies with viable, well-capitalized business models. Jason Donville, president & CEO of Donville Kent Asset Management, and Jesse Gamble, Senior VP & Portfolio Manager, have had a front row seat to this exciting transformation, which has its roots going back about 20 years. They take you through that journey and offer up four of their highest conviction tech stock ideas, and why they have lots of runway for growth.
How can an investor assess the true value of a technology company that has strong revenue growth but modest profit? The Rule of 40 can help. This formula is often used to value software companies and increasingly technology companies in general. Jason Donville, President & CEO, Donville Kent Asset Management, and Jesse Gamble, Senior VP & Portfolio Manager, crunch the numbers of some tech companies in Canada and the US and present their findings in this excerpt from their ROE Reporter newsletter.
My favourite guests when I hosted the Market Call shows on BNN stood out because they thought differently. Jason Donville was one of them. The President & CEO of Donville Kent Asset Management takes concentrated positions in companies and has a laser-like focus on return on equity, or ROE. Nothing less than 20 per cent will do. That strategy works. Since inception in 2008, the DKAM Capital Ideas Fund LP has returned 17.64 per cent annually, net of fees. Donville and his team produce the quarterly ROE Reporter newsletter. Here, Donville and his Senior VP & Portfolio Manager, Jesse Gamble, explain why fast-growing technology companies can appear to not be profitable – and why that’s okay.
In a previous post we listed five innovation platforms that are transforming the global economy, and 14 technologies within those platforms that investors should get exposure to, according to Cathie Wood, founder, CEO and CIO of ARK Invest, the very hot investment management company and ETF issuer. In this conversation, John O’Connell and I examine the importance of investment exposure to technology, how to find the right companies, and how to avoid the sectors and firms that are being disrupted and being made slowly irrelevant, whether they know it or not.
Legendary investors Jeremy Grantham and Howard Marks clearly did some deep thinking over the holidays. They’ve both released lengthy essays on the state of the current stock market and how and where to find value. Grantham, Co-Founder and Long-Term Investment Strategist at GMO, says the bull market has matured into a “fully-fledged epic bubble.” And Marks, Co-Founder and Co-Chairman of Oaktree Capital Management, examines the meaning of value investing after talks with his son Andrew, also a professional investor, who favours long-term investments in technology growth companies. For educational purposes only, we present links to the thoughts and ideas of these two investing giants.
Imagine putting, say, 10 stocks that you’ve researched and feel comfortable with into a virtual coffee can for 10 years. What would happen? Some of the stocks would likely have modest gains, some would flame out, and at least one or more would return 100-fold. That scenario is based on research going back decades by the late Thomas Phelps into so-called 100-baggers. Chris Mayer, co-founder and Portfolio Manager at Woodlock House Family Capital, picked up Phelps’ mantle and authored 100-Baggers: Stocks That Return 100-to-1 And How to Find Them. It’s one of Dave Barr’s favourite books. Here are some of the lessons learned from 100-Baggers from the President, CEO and Portfolio Manager of PenderFund Capital Management.
Legendary Wall Street investing titan Leon Cooperman thinks there’s “too much bullishness” in the stock market and that, “Everyone’s on the same side of the boat – I think you have to worry about that.” He also told Forbes he believes, “Now is the time to be conservative – just look at Tesla stock, Bitcoin, options trading volumes and the frenzy in IPO activity – these are all signs of speculative excess.” Having said all of that, Cooperman has five favourite current investments. One of them is this Canadian resource stock. Who knew?
“I liked the shaver so much, I bought the company.” So said late entrepreneur Victor Kiam in a famous commercial for Remington. Dave Barr uses a variation of that thinking to buy the stocks of companies he really likes. The President, CEO and Portfolio Manager at PenderFund Capital Management, who has a background in private equity, is a firm believer in getting to know a prospective investment’s management team very well before he pulls the trigger and buys the stock. Barr presents three fast-growing Canadian technology companies, whose executives he’s known for years, which makes him a long-term investor in their businesses.
These four Canadian companies with a global presence and double digit upside are plucked from a list of 30 Top Global Ideas for 2021 from the RBC Capital Markets equity research team. They are domiciled in Canadian investors’ backyards yet are immersed and create growth opportunities in many parts of the world. One of them, which could gain nearly 30 per cent in the next year, does 85 per cent of its business outside of its home country. Find out what the growth catalysts are for these four names.
Ed Yardeni is bullish on the stock market. He believes the S&P 500 can hit 4,800 by the end of 2022, about a 25 per cent gain from its current level. But the President of Yardeni Research is increasingly concerned the broad index could get there much sooner as a result of the “Mother of All Melt-Ups”, which would be followed by a painful meltdown. Here are three reasons why accompanied by some illustrative charts.
Dave Barr’s ability to uncover high quality companies with accelerating growth at an inflection point in their trajectory is impressive. The President, CEO and Portfolio Manager at PenderFund Capital Management led his Small Cap Opportunities Fund to a nearly 50 per cent gain last year and it’s returned, since inception in 2009, 18 per cent annually. The fund won coveted Lipper Fund Awards three years in a row and was rated A+ eight years in a row by Funddata. Find out how Barr finds fast-growing companies at a reasonable price that can accumulate big gains over many years.
How is it that more and more big name investors such as Leon Cooperman and Jeremy Grantham are warning of a speculative bubble in the stock market while, at the same time, most strategists are confidently calling for further gains this year? These conflicting sentiments will be resolved at some point but what are investors supposed to do now? John O’Connell and I examine whether any correction, large or otherwise, should be bought, what to buy, whether the rally in “garbage stocks” is running out of steam, and whether investors can continue to look through the damage wrought by the pandemic and the slow vaccine rollout to brighter days.
Most stocks are losers. Think about that. For all of the bits and bytes used, ink spilled, and exhaustive research, most equity investments wind up losing money. Where’s the money made? In the long-term, big-time, 100-fold winners. That is, if you’ve got the know how to find them in the first place, and the patience to ride out big drawdowns, stagnation and uncertainty. If you believe in the company, and hold through thick and thin, chances are you can make yourself lots of money. That’s a loose translation of this article by Chris Mayer, co-founder and Portfolio Manager of Woodlock House Family Capital, and author of the investment book, 100-Baggers.
Add Mike O’Rourke, chief market strategist of JonesTrading, to the growing chorus of people warning of a market bubble. Jeremy Grantham is another one. He calls the market action an “epic” bubble. The co-founder and chief investment strategist of Grantham, Mayo, Van Otterloo & Co., spotted the dot-com and housing market bubbles early. Find out why O’Rourke believes we’ve reached a tipping point for investor enthusiasm. And then have a look at a chart which shows Bitcoin dwarfing any bubble going back 40 years.
Looking for access to an electric and/or autonomous vehicle investment but don’t want a lot of risk? There are worse investments than Magna international. The auto parts manufacturer just expanded its partnership with Fisker to develop an Advanced Driver Assistance System (ADAS) for the company’s Ocean SUV, which is expected to launch late next year. And if Apple ever decides to pull the trigger and actually produce a car, Magna is a likely candidate to be tapped to build it, according to Bloomberg Opinion columnist, Chris Bryant. Here’s why.
The positive consensus among stock market forecasters for this year is disturbingly uniform. It makes one think whether too many people are on one side of the boat and whether being on the other side might be wise. But the macro picture remains compelling so perhaps the consensus will be correct. Enrique Abeyta certainly thinks so. The editor of Empire Elite Trader and former hedge fund manager picked a lot of winners last year. He says he’s never in his career seen global synchronized growth like the current environment. Here are four reasons that’s positive for stocks.
So, you’re gung-ho to revamp your portfolio for 2021. Great. Now, stop. No investor should put a dime into the stock market before they have a plan and go through four important preparatory steps. The following advice comes from Austin Root, director of research at Stansberry Research. Root is formerly of Blackstone Group, Soros (as in George) Fund Management, and the highly successful hedge fund, North Oak Capital, which had a strategic investment from Tiger Management, run by legendary investor Julian Roberston.
We’re in heaven. Previously, we were only peripherally aware of Cathie Wood, founder, CEO & CIO of ARK Invest. But in our daily travels around the investment landscape, we honed in on what ARK Invest is all about. Namely, a focus on disruptive innovation, the companies at the forefront of that, and the spectacular returns ARK has achieved for its investors. Its ARK Innovation ETF, for example, had returned 115 per cent year-to-date, as of September 30, and more than 30 per cent annually since inception. Here is a recent article by Wood, which can serve as a manifesto of sorts and a call to action for investors for at least the next 10 years.