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

MARKET OUTLOOK

Markets are likely to remain quite volatile. Between the geopolitical climate and a tempestuous U.S. president, there are lots of wild cards. While markets could continue their recent uptrend, the major question is what governments can do to fight the upcoming recession with the limited ammunition they have left in their tool boxes.

TOP PICKS

GMP CAPITAL (GMP.TO)

Independent financial services have been decimated over the last several years. That means reduced competition for enterprises like GMP, which expanded into the marijuana and cybercurrency fields to accompany their dealings in mining and oil and gas. It’s also the largest independent wealth management company in Canada. The company implemented a dividend last year, which works out to about 4 per cent. A takeover is not out of the question. Initial sell target: $15.44

FIRST US BANCSHARES (FUSB.O)

First US Bancshares has grown with the takeover of The Peoples Bank. The expansion seems to be paying off as the earnings per share increased to $0.19 last quarter from $0.03 a year ago. The dividend is currently two pennies and increases are anticipated. Before the financial crisis, it was $0.27 a quarter. The capitalization ratios are excellent. Initial sell target: $23.44

CATHEDRAL ENERGY (CET.TO)

Cathedral has been increasing revenues and earned over $3 million last quarter. The balance sheet has nominal debt. The book value is about three times the stock price. Initial sell target: $6.84.

 

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
GMP Y N Y
FUSB Y N Y
CET Y N Y

 

PAST PICKS: JAN. 16, 2018

QUARTERHILL (QTRH.TO)

  • Then: $2.34
  • Now: $1.34
  • Return: -43%
  • Total return: -41%

AEGON (AEG.N)

  • Then: $6.81
  • Now: $5.22
  • Return: -23%
  • Total return: -19%

GMP CAPITAL (GMP.TO)

  • Then: $3.90
  • Now: $2.65
  • Return: -32%
  • Total return: -27%

Total return average: -29%

 

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

 

FUND PROFILE

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

  • Year-to-date: 11.8% fund, 11.4% index
  • 2018: -11.9% fund, -8.9% index
  • 10 years: 21.3% fund, 16.1% index

INDEX: TSX.
Returns are net of fees, distributions and annualized.

TOP 5 HOLDINGS AND WEIGHTING

  1. Bank of America: 13.4%
  2. GSE Systems: 9.9%
  3. First United Corp: 9.3%
  4. Stuart Olsen: 5.5%
  5. First US Bancshares: 5.2%

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