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

MARKET OUTLOOK

After a couple years of markets pursuing an upward, relatively calm path, volatility is again a major watchword. While many prognosticators have clear crystal balls (often foolhardy ones), ours is very cloudy. The strategy from here remains being particularly picky when choosing stocks, buying less and receiving a dividend will help us get some returns in the upcoming choppy waters. On the sell side, we're happy to dump when stock prices on our companies seem plump. With markets this high, government debts continuing upwards and interest rates already very low leaving two major tools out of government’s toolboxes for fighting a recession, appreciating that the market risk has increased while reward has diminished is important.

And don’t get me started on the stupidity of negative interest rates…

TOP PICKS

Benj Gallander's Top Picks

Benj Gallander of Contra The Heard shares his top picks: Quarterhill, First US Bankcshares and cash.

QUARTERHILL (QTRH.TO)
Bought at $1.98 in 2016.

Quarterhill appears to be turning the corner. Revenues jumped this past quarter to $42.3 million from $20.4 million one year ago. Cash swelled to $88 million from $67.3 million. Profit would have been better than $6 million except for the $10.6 million special charge due to the earn-out on Viziya acquisition. The company will receive from $10 million to $140 million from a lawsuit with Apple, which should be settled next year if not before. We are happy to collect the dividend, which is around 3 per cent. Initial sell target: $4.84.

FIRST US BANCSHARES (FUSB.N)
Bought at $8.32 in 2015.

FUSB is the only bank chosen by us that has not moved up significantly. This small Alabama based operator has recovered after taking a big hit in the recession. What has not turned around is the divided, currently paying two pennies a quarter. Back in the day it was $0.27 a quarter. We expect it to be pushed back upwards, which should positively increase the stock price. Initial sell target: $23.44.

CASH

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
QTRH Y N Y
FUSB Y N Y

 

PAST PICKS: AUG. 2, 2018

Benj Gallander's Past Picks

Benj Gallander of Contra The Heard reviews his past picks: Alacer Gold, GMP Capital and Quarterhill.

ALACER GOLD (ASR.TO)

  • Then: $2.64
  • Now: $5.70
  • Return: 116%
  • Total return: 116%

GMP CAPITAL (GMP.TO)

  • Then: $2.83
  • Now: $2.62
  • Return: -7%
  • Total return: -1%

QUARTERHILL (QTRH.TO)

  • Then: $1.78
  • Now: $1.79
  • Return: 1%
  • Total return: 4%

Total return average: 40%

 

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

 

FUND PROFILE

Contra the Heard President’s Portfolio
Performance as of: August 15, 2019

  • 1 year: 1% fund, -0.8% index
  • 10 years: 21.3% fund, 4.8% index

INDEX: Returns are based on net of fees and annualized.

TOP HOLDINGS

  1. Bank of America: 13.1%
  2. First United: 9.5%
  3. GSE Systems: 8.7%
  4. First US Bancshares: 6.4%
  5. Alacer Gold: 6.3%

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