Benj Gallander, president of Contra The Heard Investment Letter
Focus: Contrarian investing

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MARKET OUTLOOK

My previous prediction of increasing market volatility has come to pass. I’m also sticking with what I wrote in August: "I expect the stock market to have a minimum 20 per cent plunge and likely much more before the end of 2020. It could easily commence before the end of 2018." As an aside, if the Italian government triples the 2019 budget deficit as they have outlined, it could prove to be a ticking time bomb both within and beyond their border.

TOP PICKS

OBSIDIAN ENERGY (OBE.TO)
Bought in 2017 at $1.48.

It appears that Obsidian is turning the corner. Certainly insiders both in conversations with me and via their huge purchases are positive about the future. While there’s still some slogging to do to complete the turnaround, this outfit has takeover written all over it. If it happens, it will likely occur at a chubby premium.

REITMANS (RETa.TO)
Bought in 2016 at $3.81.

Reitmans has not done as well as hoped when purchased. Fortunately, the meagre capital appreciation has been mitigated by the dividend, which at $0.05 quarterly has boosted the return based on the purchase price by better than 5 per cent annually. The company has increased same store sales, has a crystal clean balance sheet and is profitable.

INNODATA (INOD.O)
Bought in 2015 at $2.21.

Innodata's management has stated that they’re looking at divesting assets and some shareholders have suggested selling the company. The stock price has jumped 50 per cent over the past three months, perhaps telegraphing that something is in the works.

 

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
OBE Y N Y
RETa Y N Y
INOD Y N Y

 

PAST PICKS: NOV. 3, 2017

QUARTERHILL (QTRH.TO)

  • Then: $2.48
  • Now: $1.56
  • Return: -37%
  • Total return: -35%

CATHEDRAL ENERGY (CET.TO)

  • Then: $1.69
  • Now: $0.74
  • Return: -56%
  • Total return: -56%

ALACER GOLD (ASR.TO)

  • Then: $2.02
  • Now: $2.25
  • Return: 11%
  • Total return: 11%

Total return average: -27%

 

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
QTRH Y N Y
CET Y N Y
ASR Y N Y

 

FUND PROFILE

President’s Portfolio Contra the Heard

  • 1-year return: 9.7%
  • 5-year annualized return: 22.5%
  • 15-year annualized return: 16.7%

Not based on reinvested dividends and net of fees.

TOP HOLDINGS AND WEIGHTINGS

  1. Bank of America: 13.4%
  2. GSE Systems: 10.4%
  3. First United Corp: 10.2%
  4. First U.S. Bancshares: 6.9%
  5. Blackberry: 6.1%
  6. Aegon: 5.5%

 

COMPANY TWITTER: @ContratheHeard
PERSONAL TWITTER: @BenjContra
WEBSITE: www.contratheheard.com