jeudi 21 juin 2018

The effect of a split

There’s been a 3 for 1 split for Dollarama yesterday. And the stock was up 3,3% without any reason (the S&P was up 0,17%).

If you have a minimum of notions in investing, you know that a split has absolutely no plus-value. You now have more shares but the split dilutes the earnings among a bigger number of shares.

So, why did the stock went up?

With the stock market, we can’t be absolutely sure about what everybody thinks. But I have two theories that are highly possible:

1- Some people think that the stock is much cheaper now. Some websites haven’t adjusted yet so people may believe that the PE ratio is now very low. 

2- Some people believe that many investors are stupid and will buy the stock for the reason above. So they buy the stock now.

I don’t remember a time when a split had a negative effect on some stock. It doesn’t always have a positive effect but it’s usually either positive or neutral. 

And the more positive it is, the most we should be worried about the intelligence of investors.

vendredi 8 juin 2018


I'm currently in China, the last great communist country on earth.

What am I doing there? I don't know.

- I've never been interested by any country in Asia, except maybe Mongolia and Turkey;
- I don't like when there's too many people in a specific place and I'm now in the most populated country on earth;
- Google and Facebook aren't allowed in that country, probably to preserve the soul of Chinese people. So, you have to install a VPN (something that makes like you’re in another country to allow you to access Google).
- To go in China, you need a Visa. You need to tell them exactly where you're gonna sleep on each night of your trip. Absolutely no place for improvisation.
- There's so much pollution that some people wear masks;
- They take their shit in turkish toilets, which is basically a hole in which you take a dump. You have to aim well.
- Many people sniff their snot really loud and spit. That’s absolutely disgusting.
- On our first day, three people tried to screw us for our money with various tactics. At the moment you read these lines, I may have lost my money and passport.
- They don't speak English that much;
- Y parlent pas pantoute français.

The positive point is that that travel is gonna push back the frontiers of what's an easy trip for me. It's not India and it's not Iran or Irak, but it's pretty far from our superior western civilization.

To come here is really an experience. Beijing and Shangai may look a lot like New-York but the rest of the country is very very communist and industrial. A strange mix.

dimanche 3 juin 2018

Superficial investing: a very gay post

Every little fact has some importance when we decide to invest money in a stock:

There's the ROE, the EPS growth, the beta, the debt, the payout ratio. There's a bit of technical too, even for value or growth investors. And there's some other things, such as the face of the CEO.

You never payed attention to the face of the CEO of stocks in which you've invested money? I think you should.

I know, if you've searched for Constellation Software's Mark Leonard, you didn't find anything. And you believe that he doesn't even exist, which is probably true. But I believe that most others CEO exist. And you can find their pictures on Internet, which is a proof of their existence.

When you take a look at their faces, you may understand some things. For instance, seeing the face of Mark Thomson (Concordia Healthcare), you ask yourself: "How the fuck did I put some money on that stock?". Most of the time, they have an OK face and you have a vague positive or negative impression, but rarely as negative as when you see the face of Mark Thomson.

Anyway, here's some CEO's pictures.

Mike Pearson (Valeant): In french, we say "gras comme un voleur".

Mark Thomson (Concordia): Isn't it the worst picture someone could take to inspire trust?

Glenn Fogel (Booking Holdings): He has the look of a merciless businessman. A true killer. I like that.

Alain Bouchard (Couche-Tard): If we were both gays, I'd let him fuck me, hoping that his smegma would make of me a superhuman like he is.

Larry Page (Alphabet): Oh my god, I could never be friend with a guy with such a face. Well, it's probably only a problem of haircut. By luck, Google is an extraordinary business, so the horse compensate for the jockey.

Brock Bulbuck (Boyd Group): Very strange face. I wouldn't say that I don't trust him, but very strange face anyway.

Larry Rossy (Dollarama): Isn't he a beautiful old man? He doesn't look like he has many years to live, but I like him.

Saputo family (Saputo): I don't trust the smile of the small guy at the left.

O'Reilly: Greg Henslee: We're not used to see people in that position with such a mustache. But he looks trustable anyway.

Stanley Ma: Isn't he lovely? Here's probably one of the must trustable CEO's on the planet. I'd share a Big Mac or a Whopper with him.

jeudi 31 mai 2018

When you pay too much

I once wrote that Dollar Tree (DLTR) was a permanent stock for me. What's a permanent stock? It's a stock you love and with which you plan to spend the rest of your life. In other words, it's place in your heart is equivalent or bigger than the place of your family.

I have to say that I'm not sure anymore that DLTR is a permanent stock for me.

They've released their earnings today and, without being catastrophic, they still struggle with their integration of Family Dollar (the stock is down 12%). I don't know if "struggle" is the right word, but they clearly paid too much for that business that wasn't growing that much. And when you pay too much, like 22 or 25 times the earnings for a business that doesn’t have a spectacular growth, you have at least a couple of tough years ahead.

That's something that never happened with Alimentation Couche-Tard (I think so). Because Couche-Tard has always been very strict on the price to pay for another business. And Richelieu Hardware is a good example too. They prefer many small acquisitions to a major acquisition that would double the size of the company.

You learn that kind of lesson better when you experience it with a stock you own than when you read it on Internet.

That's why I'm not so excited about the Metro-Jean Coutu deal. Metro paid a high price for a business that didn't grow that much. I would be very surprised if Metro would surge a lot in the next 2 years.

dimanche 27 mai 2018

A return on the Beta coefficient

In august of 2014, I wrote a post about the beta coefficient.

It wasn't a masterpiece of litterature, but, I have to say that, after 4 years, I've never ceased to think that a low beta was something important. Of course, in a portfolio of 20 or 30 stocks, we should pick some stocks with a beta over 1 because some very great stocks have a higher beta coefficient. But I believe that, in a global portfolio perspective, we should target an average beta under 1.


Because most of the great stocks have a low beta. So, if your portfolio has a low beta, there's more chances that your stocks are good. The greatest stocks are highly predictable and are protected against a market correction. Well, they're not immuned to a market correction, but they resist better, because they continue to perform in a recession, which is not the case for all stocks. And we ask less questions about our picks when our stocks are less volatile. Some experts will deny this, but in my view, they're full of shit. Nobody likes to see their stocks drop 20% without any reason. 

 When I think about the canadian market, all the great stocks (or so) have a low or very low beta. For instance:

Alimentation Couche-Tard: -0,85
Metro: 0,01
Boyd Group: 0,13
Enghouse Systems: 0,22
Lassonde Industries: 0,24
Dollarama: 0,26
Constellation Software: 0,28
Open Text: 0,4
Richelieu: 0,46
CCL Industries: 0,66
MTY Food Group: 0,7
CGI: 0,73

Is it really a coincidence that this selection of 12 of the best canadian stocks includes only stocks with a beta under 0,75?

lundi 21 mai 2018

The little stock that reached 1000$

On april 16th 2012, I bought 50 shares of Constellation Software for 88,50$ each.

On paper, that stock looked great. I thought it was a total no-brainer. Everything was there: very high ROE, high growth, and a very interesting PE ratio. You didn't have to be a genius at all to buy the stock. You just had to be aware of it's existence. 

Over the last 6 years, I've never had the intention to sell my position. But I lightened it... a lot. I went from owning 50 shares, to owning 65 shares... to selling many of them, because I thought that the stock was expensive or it was too important versus the rest of the portfolio. But it always remained a very important part of my portfolio. For instance, currently, the stock represents about 7,5% of my portfolio. It's my most important stake.

Today, the stock reached 999$. Imagine: if I hadn't sold a single share, I would have 65 000$ of Constellation Software (from 5 750$ bought in 2012). That's most than 11 times your money in a 6 years time frame. That's exceptional. Very few investors can get that kind of returns over such a short period.

Would I buy right now? No, because the stock represents a large part of my portfolio. But everyone should understand that many not so solid stocks are selling for a higher price than Constellation Software.

Constellation Software is, by far, my biggest success on the stock market. 

mercredi 16 mai 2018


It's my birthday. I'm 39 years old.

I've never liked the fact that time flies. But, owning stocks changes your perception of time. Time brings new results, which brings more money. I know, there's not only money in life, but it helps. 

Since the beginning of 2018, the performance of my portfolio has been deceiving (about -2%). However, once again, my savings contributed well to the adjusted performance of the portfolio.

Since may of 2009, I keep track of the worth of my portfolio for each one of my birthdays. Here's how it looks (2009 being year 0).

May 2010: 75%
May 2011: 41%
May 2012: 38%
May 2013: 31%
May 2014: 50%
May 2015: 54%
May 2016: -8%
May 2017: 22%
May 2018: 19%

Adjusted average annual return: 36%

I believe that I've reached a point where it's gonna be very hard to achieve a performance over 20% given the size of the portfolio and given the fact that my savings don't have the same relative weight that they did in the past.

First and foremost, what's behind these numbers is a lot of discipline and control of costs. Some years, I’ve managed to save about 50% of my income. You have to be very very gifted to get a 36% annual performance without considerable savings.