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

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MARKET OUTLOOK

The U.S. government has made moves that will dramatically increase income disparity and ultimately harm the economy. On top of that, their new tariffs will damage trade. The Canadian government has passed a wussy budget that doesn’t acknowledge that these are the good old days and adds mega-billions of dollars to the debt. While in the short-term these moves may provide a boost, when the business cycle turns south as it will, the trough will be deeper and a recovery more difficult. Stock markets should consequently experience a greater fall.

TOP PICKS

EXTENDICARE (EXE.TO) - $7.01

Extendicare is a tremendous demographic play on the aging population. It pays a fat dividend of $0.04 a month, which works out to better than five per cent. There appears to be significant capital appreciation potential. A double in the share price would not surprise.

SYPRIS SOLUTIONS (SYPR.OQ) - $1.36

This Louisville-based technology and electronics provider has seen annual revenues decline from $355 million in 2014 when it traded above $7, to less than $100 million. The two-year turnaround plan appears to be working, with the negative gross margin last year expected to turn positive to mid-teen numbers. Profitability could reappear in the latter part of this year after a string of losses. Insiders own about 47 per cent.

BLACK BOX (BBOX.O) - $3.60

Digital solutions provider Black Box is having major problems and could soon be in violation of financial covenants if remedies are not quickly deployed. The new CEO Joel Trammel is a top-notch individual to do a turnaround and twice has led takeovers of organizations. This is the definition of very high risk, very high reward. Five years ago the stock price was over $30.

 

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
EXE Y N N
SYPR Y N N
BBOX Y N N

 

PAST PICKS:  JUNE 8, 2017

 AEGON (AEG.N)

  • Then: $4.93
  • Now: $6.85
  • Return: 38.94%
  • Total return: 42.64%

FIRST US BANCSHARES (FUSB.O)

  • Then: $11.79
  • Now: $11.52
  • Return: -2.29%
  • Total return: -1.97%

PENN WEST PETROLEUM – NOW OBSIDIAN ENERGY (OBE.TO)

  • Then: $1.79
  • Now: $1.25
  • Return: -30.16%
  • Total return: -30.16%

Total return average: 3.50%

 

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
AEG Y N Y
FUSB Y N Y
OBE Y N Y

 

FUND PROFILE

President’s Portfolio Contra the Heard
Performance as of: Dec. 31, 2017.

  • 1 year return: 9.3%
  • 5 year annualized return: 22.5%
  • 15 year annualized return: 16.7%

*Not based on reinvested dividends and net of fees.

TOP 5 HOLDINGS AND WEIGHTINGS

  1. Bank of America: 11,2%
  2. First United: 11.0%
  3. ATS Automation: 9.4%
  4. GSE Systems: 8.9%
  5. BlackBerry: 7.0%

TWITTER: @BenjContra
WEBSITE: www.contratheheard.com
GLOBE AND MAIL COLUMN: The Contra Guys