May 22, 2018
Benj Gallander's Top Picks: May 22, 2018
Benj Gallander, president of Contra The Heard Investment Letter
Focus: Contrarian investing
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MARKET OUTLOOK
The summer stock doldrums are beginning. Though I don’t believe in the mantra “sell in May and go away,” this is often a wise time to take tax losses instead of waiting until the end of the year. If a person wants, they can always buy the positions back after 30 days once the losses have been crystallized. At this time of year, I also tend to avoid buying stocks.
TOP PICKS
Note: Last time I went all-Canadian. This time I went all-American, with stocks outside of the Contra portfolio as it’s already weighted to the American side.
BLACK BOX CORP (BBOX.O)
Bought at $3.60 in 2017.
Digital technology solutions enterprise Black Box is attempting a turnaround under relatively new CEO Joel Trammell. Trammell has an excellent track record and two other organizations that he helmed were taken over. That could eventually happen here, but first there’s much work to be done to get this former high-flyer that once traded at almost $80 away from its flirtation with Chapter 11.
FRED’S, INC. (FRED.O)
Bought at $1.36 in 2018.
This is another beaten-down corporation with an interim CEO who’s concentrating on paring back debt. The recent sale of the specialty pharmaceutical unit could be a harbinger of a sale of the rest of the enterprise. The book value is better than triple the trading price. The company is bleeding red ink and has the potential to be a 10-bagger... or go bust. It’s definitely not for the faint of heart.
SYPRIS SOLUTIONS (SYPR.OQ)
Bought at $1.56 in 2017.
This electronics and technology provider is hoping to get back into the black this year. The company has almost no debt, insiders are well vested owning 47 per cent and revenue and gross margin are both improving. The company has taken the axe to expenses. Back in the day, the corporation traded above $40.
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| BBOX | Y | N | N |
| FRED | Y | N | N |
| SYPR | Y | N | N |
PAST PICKS: JUNE 8, 2017
AEGON (AEG.N)
- Then: $4.93
- Now: $6.75
- Return: 37%
- Total return: 44%
FIRST US BANCSHARES (FUSB.O)
- Then: $11.79
- Now: $11.14
- Return: -5%
- Total return: -5%
OBSIDIAN ENERGY (OBE.TO)
- Then: $1.79
- Now: $1.55
- Return: -13%
- Total return: -13%
Total return average: 9%
| 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
- 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 5 HOLDINGS AND WEIGHTINGS
- Bank of America: 11.3%
- ATS Automation: 10.9%
- First United Corp: 8.9%
- GSE Systems: 8.7%
- BlackBerry: 6.0%
COMPANY TWITTER: @ContratheHeard
PERSONAL TWITTER: @BenjContra
WEBSITE: ww.contratheheard.com
