FOCUS: Market Neutral Investing

Market Outlook:

I believe a bear market in equities likely began in December.  The recent rally has been dominated by stocks that were poor performers over the past 2 years, as well as heavily shorted stocks.  These are the classic indicators of a bear market rally.  Therefore, we believe we will make more money in special situations and on the short side of our portfolio going forward. 

TOP PICKS:

Merus Labs (MSL.TO) 

Recently sold off on a poor quarterly result that was completely transitory.  Trades at 5.5x EBITDA and has a better balance sheet and growth profile than peers.  Acquisition pipeline remains strong and I expect the stock to do very well on another deal.  One year target is $3.50 but I can see $5.00 easily in 2 years.

Intertain Group (IT.TO)

Another special situation where the company has removed its prior management team and is undergoing a bid process for part or all of the company.  Our sum of the parts valuation is in the $18-$20 range which we believe could be reached rather quickly.

*Short* Stillwater Mining (SWC.N)

Stillwater is one of the previously mentioned underperformers that has spiked recently.  It mines palladium with what we believe is an upcoming auto inventory correction and its U.S. Dollar costs put it at a disadvantage to the large South African miners.  One year target is $5.00 U.S. which is roughly where it bottomed 6 weeks ago.

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Disclosure Personal Family Portfolio/Fund
MSL N N Y
IT N N Y
SWC N N Y

Past Picks: Mar. 25, 2015

The Score (SCR.V)

Recommended at: Now at: Change Total Return
$0.66 $0.29 -56.82% -56.82%

TeraGo (TGO.TO)

Recommended at: Now at: Change Total Return
$7.40 $4.60 -37.84% -37.84%

Canam Group (CAM.TO)

Recommended at: Now at: Change Total Return
$12.56 $12.87 +2.47% +3.75%

 

Total Return Average : -30.30%

Disclosure Personal Family Portfolio/Fund
SCR N N N
TGO N N N
CAM N N N