lundi 29 décembre 2014

Penny stocks as top picks?

Here's the three last appearances of Jason Donville on TV with his three top picks for each of these appearances:

October 24, 2014:

Cipher Pharma
Constellation Software
CGI Group

November 28, 2014:

Directcash Payments
CGI Group
Valeant

December 24, 2014:

Patient Home Monitoring
Biosyent
CRH Medical Corp

I have three things to say:

1- Jason isn't generally that much on TV within 2 months. Sometimes, it takes about 6 months between two appearances.

2- It's strange that the top picks of Jason Donville change so much within only 2 months. Usually, he's consistent over a relatively long period of time with his top picks (Constellation Software comes back often). All the companies recommended have changed since october 24, except for CGI Group that was chosen two times.

3- It's the first time (I may be wrong) that Jason recommends some penny stocks or stocks that were penny stocks not so many months ago. I'm talking about his last top picks that include three small companies. The one that got over 1$ the longest time ago was Biosyent, about 2 years ago. Patient Home Monitoring is still a penny stock at the time of this writing (not for too long I think) and CRH Medical has just got over 1$, a few weeks ago.

I'm not very comfortable with penny stocks. I've had it in the ass with several companies like Loyalist Group, Macro Enterprises, NTG Clarity Network and even Rifco these last weeks.

I don't recommend to put a lot of money on the Venture. In fact, I almost recommend to put no money at all on the Venture stock exchange. Companies listed there are generally too small and don't have a lot of consistency in their results. So, I may be wrong, but if you don't want to get fucked like I've been, look on the TSX or the S&P500 to make your choices. The companies listed there have better chances to give you a previsible growth than almost anything on the Venture. And you could get very good growth with a medium cap. You don't have to choose a micro cap or a very small cap.

So, i'm pretty confused about Jason's last three top picks. I'll probably write again about that in a couple of months.

mardi 23 décembre 2014

How to balance your portfolio

I haven't read a lot of analysts about how to balance a portfolio. I think it's an important subject because we're never sure about anything with the stockmarket. Also, I think that a lot of investors are buying when prices are low but don't think too much about proportions (this investment VS all the others in the portfolio).

Bernard Mooney, the guy that wears brown suits and wrotes articles in www.lesaffaires.com has written a couple of books about investing. The last one suggests that you shouldn't invest more than 10% of your portfolio on a single stock.

At first, you may say: "Why 10%? Why this guy uses such a nice number as 10% and not 8% or 12,5%? How should I trust a guy with such a funny name?"

Keep calm my friend. Breathe a little ventolin. I know that some guys like Warren Buffet, Bruce Berkowitz, Bill Ackman, Carl Icahn and a lot of other superinvestors who manage more than one billion dollars have more than 15, 20 and even 30% of their portfolio on a single stock. If those fuckers don't mind betting a couple of billions on a single stock, why should you retain yourself about betting 50 000$ on Blackberry? Nothing retains you my friend. Nothing except intelligence. Because don't forget, if you don't shit in the streets and don't fuck all the beautiful girls you cross, it's because you have some intelligence.

I don't know about Jason Donville's portfolio concentration these days, but I know that at the beginning of the year, a little more than 10% of his portfolio was concentrated in Concordia Healthcare and maybe another 10% in Constellation Software. The concentration wasn't abusive. Just at the limit of what I would be comfortable with.

First lesson. Here's my suggestion of a number of positions to hold in a portfolio, depending on the money you've got:

Between 0 and 3000$: One company
Between 3000 and 10 000$: Three companies
Between 10 000 and 20 000$: Five companies
Between 20 000 and 100 000$: Ten companies
More than 100 000$: Fifteen companies

I don't think anybody should hold more than 20 companies at the time in a single portfolio. I think that the best number of stocks is about 15.

I don't think it's useful to hold less than 2% of your portfolio on a single stock.
I think it's dangerous to hold more than 10% of your portfolio on a single stock.

Sure thing, if you hold one or a couple of positions for more than 10% of your portfolio, this position should have a low beta, previsible revenues (growth quarter after quarter for a couple of years) and should be active in a conservative sector. The management must be A1 too (a lot of insider ownership, no dilution of shares or a dilution that goes with high growth, managers with a good reputation and blah blah blah).

When your biggest position is 10% of your portfolio, a drop of 10% in the value of this position affects your portfolio for only 1%. You can see that such a repartition could minimize bad periods or even bad choices of investment.

Be humble. If you think that you could do well with only 4 positions, it's up to you, but I think you could dilute risk a little more by adding 6-7 other positions. It's impossible that only 4 stocks in the stockmarket offer good appreciation potential.

That was the lesson of the day. 

vendredi 19 décembre 2014

2013=Exceptional, 2014=Very Good, 2015= ?

Last year (2013) was an exceptional year for my portfolio. It was up about 55%.

This year (2014), my portfolio is up a little bit more than 25% (dividends excluded). After an exceptional 2013, the results of this year are way above my expectations. I've never thought that I could get these results back to back.

Until the middle of the year, I thought that 2014 would be a pretty ordinary year. Even a mediocre year for someone who thinks that a flat return is mediocre. But, in the last few months, everything went well for some of my shares and my portfolio got a nice boost.

At the time of this writing, my only real bad move of the year is Rifco for which the share price is 22% lower than my average cost. The last results of the company weren't spectacular but weren't bad either. I'm not thinking about selling my shares for now because I think that it's a great company with a very good ROE. I think the company should get better in 2015 and the share price will probably be back to a more normal level. High Arctic Energy is also down, but the whole sector of energy/natural resources is down, so it's not that much related to the company.


Here's my list of best and worst performers of the year:

Best performers
Biosyent (sold)
Alimentation Couche-Tard
Constellation Software
Cipher Pharma
Ross Stores
Mallinckrodt (previously Questcor Pharma)

Worst performers
NTG Clarity Network (sold)
Rifco

And here's my Portfolio on December 19th, 2014

Canadian stocks
Cipher Pharma: 13,4%
Constellation Software: 9,7%
Valeant: 9,3%
CGI Group: 7,1%
Alimentation Couche-Tard:  7%
Rifco: 6,6%
Carfinco: 5,4%
Concordia Healthcare: 2,8%
High Arctic Energy: 1,7%

American stocks
Mallinckrodt: 7,8%
Portfolio Recovery: 5,5%
Dollar Tree: 4,3%
Gilead: 4%
Ross Stores: 3,8%
Dorman Products: 3,1%
Precision Casparts: 3,1%

Cash: 5,6%

A lot of experts are giving their pronostics for 2015. As all wise men, I don't think I'm qualified to offer pronostics about a year full of surprises (like terrorist attacks, oil price instability, epidemy, alien invasion, etc...) As a fatalistic person, I always feel that bad things are just around the corner, so I wouldn't be surprised about a drop in the markets. But most statistics show that the market is correctly evaluated. In life, most things should be evaluated from a statistic perspective (actual VS average). So, from this point of view, markets should give us a return of about 10% maybe? I don't fucking know. But it should be an okay year. If not, it should be an okay 2-3 years ahead, until markets get overvalued once again and the tower falls down once again. 

dimanche 14 décembre 2014

Healthcare stocks

I really like Healthcare stocks.

In times of turbulences like these days, you can appreciate these stocks. Because these stocks usually don't give a fuck about the state of economy which isn't the case of a shitload of natural resources stocks. Or even financial stocks sometimes. 

Most of these healthcare stocks have a low beta (consistent revenue growth however the state of economy). Plus, as long as there will be a humankind, there will be sick people and these sick people will need to take pills or go to the hospital to recieve some expensive treatment. Capitalism means that there's no pity for sick people. Give us your money and get better or die. Fuck you. We don't care about your life. We only care about the value of our shares. If we cared about your health or about humanity, we'd be doing some fucking humanitarian shit in Adis Abeba.

What I like the most about healthcare, is that there's no fashion in this industry. Well, there's fashion everywhere, but when you buy some pills because you have HIV, flu or leper, you usually don't give a fuck about the company that produces the pills. You just want to get better.

Here's some great companies that deserve attention. A patent expiration is always a threat for healthcare stocks. Stocks can get hurt a lot when competition appears. But great companies usually got a fucking pile of money to boost R&D or to buy another company to keep growing. Anyway, if your portfolio is well balanced (with 15 or 20 companies), you'll do well even if one or two of your healthcare stocks have problems. For example, if you have a portfolio of 10-12 healthcare stocks like: Gilead, Celgene, Biogen, Abbvie, Actavis, Merck, Johnson and Johnson, Jazz Pharma, Cipher, Valeant and Concordia Healthcare, I'm sure you'll do very well in the next 5 years. It's impossible that all of these go wrong. I'll even dare to say that it's impossible that more than 3 of these companies have big problems in the next 5 years. All the others will benefit from diseases all around the world which continues year after year, as the population of earth keeps growing.

So, here are 5 good potential investments:

Gilead (GILD):
Forward PE Ratio: 10
ROE last 5 years: 77

Celgene (CELG):
Forward PE Ratio:24
ROE last 5 years: 27

Jazz Pharma (JAZZ):
Forward PE Ratio: 16
ROE last 5 years: 33

Biogen (BIIB):
Forward PE Ratio:21
ROE last 5 years: 20

Cipher (CPH.TO):
Forward PE Ratio: 10
ROE last 5 years: 32


All of these stocks have achieved a surprising growth in the last years. They're all good potential investments. With these numbers, the one that looks the more undervalued is Gilead. But let's face it, Gilead is a mega-large cap with a valuation of about 160 billion dollars.

There's also stocks like Valeant and Concordia Healthcare that are good candidates, but they are harder to evaluate because of their heavy use of leverage.

So, my advice to anybody would be to put a considerable part of your portfolio in stocks like these.

mardi 2 décembre 2014

Should you buy shares these days?

Jason Donville was on BNN last week and his Top Picks were:
  1. Directcash payment;
  2. CGI group;
  3. Valeant.
I don't think there's a lot of things to buy in the market these days. Directcash Payment is one of these things I wouldn't buy even if they had a big correction and even if they pay a high dividend. It's difficult to accept at first, when you begin at investing, but you never should put a lot of attention to dividends. First thing to watch is the ROE, then, the PE ratio, then, the growth in the last 5 years. With only these 3 indicators, you'll have a good idea about the quality and momentum of an investment. By the way, with these 3 indicators, you could determine that Directcash Payment is not a very good investment. I've had shares of Directcash Payment in the past and I've sold all of them. I'm not interested anymore in this company.

CGI group is a good defensive choice, but in the long run, I don't think that the price of the stock should rise as fuck. Of course, the company may buy another company (like they bought Logica a couple of years ago) in the next months, but I don't see a lot of growth in this industry (let's think about IBM for instance). So, if there's growth with CGI, it'll be growth by acquisition in an industry with modest growth. Anyway, the stock is cheap, at about 12 times next year earnings, so you don't take a lot of risks with this company. My personal feeling, based on nothing at all, is that, with CGI, you'll get a 10-12% annual return in the next 5-10 years. It's good, but not extraordinary.

Valeant is probably the best choice of the three because of the very agressive growth of the company. They recently abandoned their Allergan acquisition because Actavis offered more money. In my opinion, the price offered for Allergan was too high even before Actavis made an offer. So, it's not a bad thing to turn around and look somewhere else. I'm sure Valeant could be a 200$ stock in 2015 because they'll surely buy something big next year. For at least a year, they've been searching for a "merger of equals", which says a lot. Valeant has a lot of debt, but interests are low, so it's time to full the credit card and buy everything in sight. A lot of superinvestors are with Valeant. From what I've read, I don't see how Valeant couldn't have a market cap two times bigger in 1 or 2 years.

I think it would be a good idea to wait for a little pullback before buying anything in the market. Non-cyclical stocks aren't on sale. Cyclical stocks are on sale but they could be even more on sale in the next weeks. So, no need to hurry to buy anything at all.

Maybe it's mainly time to invest in Christmas gifts.

vendredi 31 octobre 2014

Thank you so much Jason! (The benefits of being a stealer).

October has been a pretty fucking awesome month for my portfolio.
For the biggest part of 2014, almost nothing happened. I was a little disappointed about it because I like to make money and I also like to think that I’m a good investor. But as nothing happened, I felt like all the juice has been extracted from the oranges.
But life is full of surprises. From july 31th to october 31th, my portoflio has grown by almost 18%. Since the beginning of the year, the growth has been around 20%, which is very good after the incredible year that 2013 has been (about 50% growth for my portfolio).
So, I’m still good at stealing other's best ideas. And of course, most of my best investments are due to Jason Donville and his marvelous approach to investing. Thank you Jason, I don’t fucking know how much of my wealth is due to you, but it’s a lot. I’ve made a lot of cash lately with Cipher Pharma and with every thousand dollars that was added to the value of my shares, I've had a little thought for you and said a little prayer to the god of mercantilism.
I’ve read books by (or about) Stephen Jarislowsky, Warren Buffet, Peter Lynch, Joel Greenblatt and some other so-called investing genius, but nothing has been as good to my investment life as copying what Jason Donville has recommended as his top picks.
Forget everything society has learned you about honor, intelligence or some other bullshit. In life, what you should do is to copy the best people and analyze what they do or recommend. You remember the movie « Catch me if you can » with Leonardo DiCaprio? Until the guy get caught, he had a lot of success at imitating other people and he had a much more exciting life than almost all the assholes out there (including you and me).  Same thing with Led Zeppelin where the fucking guitarist stole a lot of riffs from other people. 

Copy great people is so fucking good. You can become rich by being an excellent stealer. Try to teach that to your children as soon as possible because if they realize this at 45, they’ll have spoiled too many years to take advantage of this great truth about existence.
So, here’s my portfolio on october 31, 2014 :
CAN (64,6%)
Cipher Pharma  (healthcare) : 13,1%
Constellation Software (softwares) : 10,1%
Rifco (financials) : 9,5%
Valeant (healthcare): 7,9%
Carfinco (financials): 7,7%
CGI group (IT consulting): 6,6%
Alimentation Couche-Tard (convenience stores) : 6,2%
High Arctic Energy Services (oilfield services) : 1,9%
NTG clarity Networks : (IT consulting) : 1,7%

US (29,2%)
Mallinckrodt (healthcare) : 6,7%
Portfolio recovery (financials) : 6,2%
Dollar Tree (dollar stores) : 3,9%
Ross Stores (discount stores) : 3,5%
Precision Castparts (aeronotics) : 3%
Gilead (healthcare) : 3%
Dorman Products (auto parts) : 3%

CASH : 6,2%

dimanche 26 octobre 2014

Wanted Technologies (WAN.V), a company from chez nous

A couple of months ago, I heard about Wanted Technologies, a small company from Quebec City, which is the city where I was born.

The company offers services in human ressources via a software or some other crap. The website of the company doesn't offers a lot of information which is a big negative point for me.

But the great financials aspects of the company are so fucking great that I almost forget the fact that I don't really know what to write when comes the time to give some details about what the company does. LOL!

Jason Donville has given some thoughts about Wanted Technologies a couple of times on BNN in the last months. He seems to think that it's a good company but it's very small and it's track record is very short.

Here's some important facts about the company:

Market cap: 28 millions dollars
PE: 10
EPS 5 years growth rate: 35% per year
ROE: 37
Recent price: 1,13$

Usually, when you see a company with a ROE as high as 37, a very small PE ratio of 10 and an EPS growth of 35% per year, you should say to yourself: "Holy fuck, I full the truck with these shares and I'm gonna be rich as fuck in a few months!".

There's two negative points that make me refuse to invest in the company for the moment (these points could vanish tomorrow because I feel like I'm on the edge of investing in this company).

1- The market cap is very small: 28 millions of dollars is, I think, too small. I would think that 100 millions dollars would be the minimum for an investment.
2- There seems to be a lot of options in this company. I'm not absolutely sure about it, but I've seen a lot of options on www.canadianinsider.com in the recent months and I don't really like this.

I'll surely follow this company and it could be a great investment in a few months or years. I need more time to see if the great history continues.

And maybe I'll read this post in 6 months, saying to myself: Fucking cunt, you should have bought that in october and you'd get a 200% return.

lundi 15 septembre 2014

Fabrice Taylor VS Jason Donville (2012)

It's been a while since I've posted some serious shit here. But here I come with some intelligent stuff with a few gross words like "cunt", "dick", "slut" and "dickfuck" to illuminate my sentences.

On stockchase, there's a lot of experts. And a lot of this lot of experts aren't very good. Not better than the average asshole at your bank or at your caisse populaire. Fuck all those assholes that try to sell us some mutual funds with bullshit such as Yellow Pages or Nortel Network on it.

So, about all those experts, Jason Donville is probably the best of them all.

But, wait, there's also Fabrice Taylor who's allright. How much is he allright? I don't fucking know. I'm giving my tongue to the cat, like we say in french.

That's where the plus value of this blog appears.

Fabrice Taylor's got some real cool hipster glasses but he also got some great investment advices

Let's compare both of them and let's extract some knowledge of this blog which is full of useless street language.

TOP PICKS OF JASON DONVILLE BETWEEN MAY AND OCTOBER 2012

2012-05-07

CGI Group: UP 80%
Jean Coutu: UP 59%
Paladin: UP 236%

2012-06-18:

Directcash Payments: DOWN 29%
Jean Coutu: UP 54%
Paladin Labs: UP 208%

2012-10-03:

Badger Daylighting: UP 195%
Directcash Payments: DOWN 31%
Softchoice corp: UP 70%
AVERAGE PERFORMANCE: UP 94%


TOP PICKS OF FABRICE TAYLOR BETWEEN MAY AND OCTOBER 2012

2012-05-25

BCE: UP 19%
The Brick: UP 38% (acquired)
Athabaska Minerals: UP 300%

2012-08-07

Performance Sports: UP 93%
Loyalist Group: UP 90%
Intertape Polymer Group: UP 69%

2012-10-22

Hi-Crush Partners: UP 199%
Birchcliff Energy: UP 51%
AMD Micro Devices (short): UP 86% (pretty bad move)

AVERAGE PERFORMANCE: UP 86% (the short of AMD was the only real bad move here)

Holy fucking cunt! With these results, I understand that I could as well start a blog about Fabrice Taylor who is almost as good as Jason Donville.

Don't fuck with Taylor too!

dimanche 31 août 2014

Using the Magic Formula

I'm seriously thinking about using the magic formula (TM: Joel Greenblatt) in a near future.

This link show us that, from 1988 to 2009, the magic formula compound annual growth was about 24%.

Fuck. It means that in about 3 years, your money has doubled.

I've written a bit about it before, but this method consists roughly of selecting 20 to 30 stocks, of equal weight in your portfolio. You chose all the stocks for which the ratio between ROE and PE is the highest. And you repeat this exercice every year. That's the method used by Jason Donville for selecting a lot of his stocks.

Let's see some examples:

Rifco
Forward PE: 15
ROE: 45
ROE/PE: 3

McDonald's
Forward PE: 16
ROE: 35
ROE/PE: 2,2

Those two would be good candidates for a magic formula portfolio because you get a good ratio (the ROE is at least twice the forward PE ratio). Jason Donville establishes that a ratio higher than 2 means that the company would be a good buy.

One of the biggest ratio you could get is the one of IBM

IBM
Forward PE: 10
ROE: 95
ROE/PE: 9,5

In these times where value is hard to find, maybe we should put our faith in magic. A lot of great investors are in a stand still mode. So, let's be humble and do the same as those rich mofos. Or, let's put all our fucking money in Berkshire Hathaway. Or, dare I say, let's put our faith in magic.

So here's a list of some stocks that could be great choices in a magic formula portfolio.

Canada:

Cipher Pharma
High Arctic Energy Services
Rifco
Carfinco

USA:

IBM
AAPL
Gilead Sciences
Ruger
Smith and Wesson
TJX
Ross Stores
Nu Skin (watch out, but very cheap)
Herbalife (watch out, but very cheap)

jeudi 14 août 2014

The negative investor

Holy shit. My small cap stocks suck big time these days.

I'm so fucking mad.

Loyalist Group, Macro Enterprises, Avigilon and NTG Clarity Network are almost all at their lowest price in a year. I'm so fucking mad about the TSX and the Venture.

Of course, I have some stocks like Constellation Software, Alimentation Couche-Tard, Cipher Pharma and Questcor that are almost all at their highest, and I've put much more money in these stocks than in the ones above.

That's what it takes to make you understand what a negative person is.

mardi 5 août 2014

What about Beta, bro?

Some investors are proud to tell us that they don’t use beta. They don’t give a shit about beta.
But what the fuck is a beta? An old videotape, just before the VHS? Oh shit, those investors are pretty up to date by letting down an old technology that’s been obsolete for 20 years.
But a beta is also a greek letter, a version of a software and maybe a lot of other very cool things.
In investment, beta exists too. So many fucking definitions of the same greek word, which is in fact a letter. Holy cunt.
So, in investment, a beta is a measure of volatility. A beta higher than 1 means that the price of a stock moves with more emphasis than the stockmarket. A beta lower than 1 means that the price of a stock moves with less emphasis than the stockmarket.
For example, if the beta of McDonald’s is 0,36, it means  that the price of the stock moves with less emphasis than the stockmarket in a normal day.
In his last ROE report, Jason Donville tells that he never watches the beta coefficient of the stocks in which he invests. But it appears that most of the stock he buys have low beta.
Come on everybody, wake up! I’d even dare to say, come on Jason, wake up!
If the price of a stock moves with more emphasis than the stockmarket, it’s mainly because this stock is affected by the economy in general. If a stock is affected by the general state of economy, it’s because it’s earnings fluctuate in relation with the state of economy. And if you're looking for stable growth like Jason Donville or a lot of other good investors, you'll be looking for companies that grow in a steady way.
So, if you buy a stock with a low beta, earnings are generally more predictable than a stock with a high beta. That’s why beta coefficient tells something and has some importance in my opinion. It GENERALLY (there are some exceptions) reveals that the earnings are stable whatever the state of economy is.
Below are the Beta of some stocks. You’ll see that healthcare stocks have a low beta. And construction related stocks have a high beta:
SOME BETA'S
Alimentation Couche-Tard: 0,04 !!!
Berkshire Hathaway: 0,35
McDonald’s: 0,36
Merck: 0,39
Pfizer: 0,68
Valeant: 1
Deere: 1,29
Caterpillar: 1,59
Bombardier: 1,65 
Appreciate low beta's, bro.

dimanche 27 juillet 2014

How much would you pay?

Hi folks. How are you doing?

Me, I'm fine. I went to a karaoke yesterday night. Took some beers and sang some great tunes such as "99 Red Balloons", "I Want to Break Free" and "What's The Frequency Kenneth".

Today, I'm in my underwear, laying on the bed with a laptop on the belly. Wow! What a life! I guess you wouldn't have imagined that. Usually, you're reading blogs about stocks, thinking that the writer wears nice clothes with a "cravate" like we say in french. But have you ever thought that some of those writers could be in underwear or actually completely naked? What a fucking change of perspective this information may have on you!

Which leads me to a question that I would like to ask to some investors: How much would you pay for a company that offers the growth that you're looking for?

The question is complex. You need to have more details to answer in a good way.

First of all, the question is asked only with a good company in mind. The same company evolves in a solid industry, without moral issues about the management or the product (let's exclude companies such as Herbalife, Nu Skin and even Ruger or Smith and Wesson). In other words, how much would you pay for a great company, in a great sector that offers great growth?

I'm usually very reluctant to pay more than 20 times earnings. It's my mental limit. But I could, on some occasions, transgress this rule to buy something expensive. But to pay higher, I need a very good company, with a very high growth rate.

Let's examine 6 good companies on the Venture or the TSX that are expensive. And let's see which one offer highest growth for the lowest price.

RX.V: Biosyent (healthcare):

Actual PE: 52
Sales Growth Rate 5 years: 48% per year
EPS Growth Rate 5 years: 100% (4 years)
Average ROE 5 last years: 45
Debt: Low
EPS 5 years/PE: 1,93

ACQ.TO: AutoCanada (financial):

Actual PE: 40
Sales Growth Rate 5 years: 11% per year
EPS Growth Rate 5 years: 40%
Average ROE 5 last years: 24
Debt: High
EPS 5 years/PE: 1

AVO.TO: Avigilon (security systems) :

Actual PE: 38
Sales Growth Rate 5 years: 102% per year
EPS Growth Rate 5 years: 250% (4 years)
Average ROE 5 last years: 17
Debt: Low
EPS 5 years/PE: 6,6

BAD.TO: Badger Daylighting (industrial equipment):

Actual PE: 32
Sales Growth Rate 5 years: 17% per year
EPS Growth Rate 5 years: 13%
Average ROE 5 last years: 27
Debt: Medium
EPS 5 years/PE: 0,4

ESL.TO: Enghouse Systems (softwares):

Actual PE: 31
Sales Growth Rate 5 years: 28% per year
EPS Growth Rate 5 years: 32%
Average ROE 5 last years: 12
Debt: Medium
EPS 5 years/PE: 1

BYD-UN.TO: Boyd Group (auto repair):

Actual PE: N/A (negative EPS)
Sales Growth Rate 5 years: 23% per year
EPS Growth Rate 5 years: Negative EPS
Average ROE 5 last years: 12
Debt: High
EPS 5 years/PE: N/A

Jason Donville uses the ratio ROE/PE to screen good companies. I propose my own formula this time: The Penetrator coefficient which is EPS 5 years growth/PE. Some disciples of a well known investor call that the PEG ratio. I call it the Penetrator coefficient. Fuck you Peter Lynch.

Using the Penetrator coefficient, the best company appears to be Avigilon. The stock is expensive, but the growth is very, very high. Few stocks offer such growth. The forward PE is about 18-19 times, which isn't high at all.

I've written before about Avigilon, so, I don't want to go further and appear like someone who wants to pump the shares. These 20 readers of my blog sure can make a fucking huge difference on the TSX.

I still don't think that you shouldn't buy too much of these companies which are expensive. But, if you select a place in your portfolio for high growth/high PE companies, you should only keep the greatest ones. And at this moment in time (all-time highest TSX level), you probably shouldn't buy too much of these companies that are too at an all-time high PE ratio.

dimanche 6 juillet 2014

Outside the crisis: Canadian Banks

Once upon a time, I was a big fan of Canadian Banks. My knowledge was limited about investing, so, I took up every advice from my friend at work.

He was a big fan of Canadian Banks. So I became like him. The first shares I bought were some Nova Scotia Bank shares, in the autumn of 2008. Then, I bought some Royal Bank shares and finally, some TD Bank shares.

I didn't know about the importance of growth at the time. I thought that choosing a blue chip was the most important thing in investing. Yeah, I can hear you laugh, motherfuckers. Laugh at the stupid cunt I was back then.

I sold all of my shares of these banks in 2012. I realized that I couldn't evaluate banks with the same precision as some retail or healthcare companies. So I took a big breath and sold about 40 or 50% of my portfolio in a couple of days. In retrospective, it was a good move.

Because Canadian Banks may be a secure investment. They may be some of the greatest banks in the world. But their growth rate isn't that high. Too many people are blinded by the fact that they're "blue chip" and about their high dividend yield.

Today, I don't own a single company with a growth rate inferior to these banks. Let's take a look at the earning per share (EPS) growth rates of the Canadian Banks in the last 5 years:

Royal Bank: 10,4%
TD Bank: 7%
Nova Scotia Bank: 11%
National Bank: 13,5%
Montreal Bank: 11,8%
Laurentian Bank: 2%
CIBC: -3,6%

That explains why not a single of those banks doubled in the last 5 years while a lot of other companies did.

Those numbers don't mention if the bank made a big acquisition that took a lot of money and resulted in a decline of EPS. So, don't take these numbers at the foot of the letter like we say en français. You should also take a look at the ROE to see the quality of the business.

ROE of Canadian banks is generally good but not excellent (between 15 and 20 for most of them). That's better than keeping some money under your bed, but you could easily find something better in the last 5 years. Just take a look at a chart of these banks VS some great American companies (TJX, ROST, DLTR, GWW, AAP, ORLY, GOOG, etc).

If you compare Canadian Banks with champions of the TSX (Dollarama, Home Capital Group, Badger Daylighting, Enghouse Systems, Alimentation Couche-Tard, Constellation Software, Stella Jones, etc), you'll see that in the long run, a big bank (or a blue chip) isn't generally a champion of performance.

It's mostly a good investment for insecure people or old people about to die.

mardi 1 juillet 2014

Top picks from 2009 to today (Part III: 2012)

Today, we'll take a look at Jason Donville's Top Picks of 2012.

Once again, every Top Pick for which the price has rised from 100% at least gets a rating of "good". Every Top Pick for which the price has rised between 0 and 100% gets a rating of "average". And finally, every Top Pick for which the price has declined gets a rating of "bad".

The Standard and Poors (S&P) index has been up 56% since January 1st 2012. That's why it's still required to get a 100% yield to get "good". 

Precision: Some companies could go private or be bought a little after Jason made his picks. I don't consider anything else than the price at the time when the Top Pick was made and the last price recorded for the shares. Only the result in appreciation is considered.

2012-01-16

Paladin Labs: UP 230% (GOOD)
Carfinco: UP 23% (AVERAGE)
Constellation Software: UP 233% (GOOD)

2012-03-05

Carfinco: UP 15% (AVERAGE)
Constellation Software: UP 193% (GOOD)
Total Energy Services: UP 25% (AVERAGE)

2012-05-07

CGI Group: UP 74% (AVERAGE)
Jean Coutu: UP 55% (AVERAGE)
Paladin: UP 236% (GOOD)

2012-06-18:

Directcash Payments: DOWN 35% (BAD)
Jean Coutu: UP 50% (AVERAGE)
Paladin Labs: UP 208% (GOOD)

2012-10-03:

Badger Daylighting: UP 272% (GOOD)
Directcash Payments: DOWN 37% (BAD)
Softchoice corp: UP 70% (AVERAGE)

2012-11-23

Badger Daylighting: UP 273% (GOOD)
Enghouse Systems: UP 134% (GOOD)
High Liner Food: UP 79% (GOOD)


A few stats about those 6 appearances on the TV:

1/6, Donville has had 3 good top picks
2/6, Donville has had one bad top pick
2/6, Donville has had 2 or 3 good top picks
6/6, Donville has had at least one good top pick

If we attribute a note of 10/10 for each good top pick, a note of 5/10 for each average top pick and a note of 0/10 for each bad top pick, Donville would get the global score of 125/18 which is equivalent to 6,9/10. So, his top picks for that period were "average plus".

lundi 30 juin 2014

Avigilon (AVO.TO): An exception of investment

Avigilon is one of the companies in Canada that offers the highest growth. In fact, the compound annual growth rate since 2008 is over 100%! In the last years, the CAGR is about 75% which is still great.

The company produces security equipments (HD video surveillance, door readers, security control software, etc).

Their HD cameras are way better than competition from what is seen on the website of the company. I know, my brothers, a website could say anything to sell crap. But the exceptional growth in sales must mean something about the quality of the products. 

Recently, Canon has acquired a company named Milestone that produces security systems. By doing so, Canon wants to become a leader of security equipment. So, there's competition in sight. But, there's already competition for Avigilon because Milestone exists since 1998, so we'll see in a couple of years if this support of Milestone by a giant (Canon) will become a real threat. I bet that a couple of years of strong growth are still ahead.

The security market should go from 12.6 billion dollars in 2012 to 23.2 billion dollars in 2016. So, there's a lot of room for growth. Security systems have their place everywhere: stadiums, hospitals, airports, banks, offices, shopping mall, casinos, school campus, transportation (subway, bus), etc.

In 2013, the revenue of Avigilon was 178 million dollars. They plan to reach 500 millions of revenue in 2016 (180% of growth). So, they think that a strong growth will continue for at least the next couple of years. A couple of sentences before, I wrote the same thing. It looks like i'm already brainwashed by the marketing of the company.

Three important managers left the company in the recent months. The last departure caused a major drop in the share price (which is still expensive by PE ratio). That drop caused a lot of insider buying around 20$ (recent price is around 22,50$). In may, at least 5 executives of the company bought AVO shares for a minimum 50 000$. Insiders usually don't lose money, so it's a good sign to buy if you ask me.

And what thinks Jason Donville of that company (once again via Stockchase)?

2014-06-19 (BUY): Dipped down pretty low 3 or 4 weeks ago, and is sorry that he didn’t pick it up at that time. Has liked this company, other than it's valuation, for some time. If it comes back 5%-7%, he will be a buyer.

2013-08-22 (DON'T BUY): Outstanding technology but he thinks on valuation that the stock is rich. He questions if they can sustain the growth rate that they have had and this is why the stock is starting to flatten out.

2013-01-08: (DON'T BUY): When a company is growing like this one, they have to finance and one of the ways is by raising more equity. Growing pains of a great growth company. However, this company does not have a lot of recurring revenue so he has taken a pass on this. Thinks it is getting expensive, but so far he has been wrong.

Some important statistics:

Highest PE ratio last 5 years: 58
Lowest PE ratio last 5 years: 32,5
Actual PE ratio: 35,6
Dividend: none

Sales growth rate last 5 years: 102%
Sales growth between most recent quarter and equivalent quarter one year ago: 74%

PE/Growth ratio: 0,48 (under 1 is considered attractive)

Average ROE last 5 years: 17,2
Actual ROE: 21,4

Donville/Greenblatt ratio (ROE/forward PE ratio): 1 

Disclosure: I've bought some shares on june 27th. With the actual evaluation, I can't build a massive position. But I'd be comfortable with something like 3 or 4% of my portfolio. The recent massive insider buying gives me confidence that it's a good time to buy. Let's see if i'm just being manipulated.

dimanche 29 juin 2014

Top picks from 2009 to today (Part II: 2011)

This time, let's examine all the Top Picks of Donville in 2011. Let's see if he gets better with time or if he turns to vinegar.

Once again, every Top Pick for which the price has rised from 100% at least gets a rating of "good". Every Top Pick for which the price has rised between 0 and 100% gets a rating of "average". And finally, every Top Pick for which the price has declined gets a rating of "bad".

Precision: Some companies could go private or be bought a little after Jason made his picks. I don't consider anything else than the price at the time when the Top Pick was made and the last price recorded for the shares. Only the result in appreciation is considered. This precision is made for two top picks of 2011: Distinction Group and Neo Materials.

January 20, 2011:

CGI Group: UP 105% (GOOD)
Glentel: DOWN 21% (BAD)
Chesswood Group: UP 105% (GOOD)

April 26, 2011

Distinction Group (GD.to): UP 36% (AVERAGE)
Canyon Services Group: UP 35% (AVERAGE)
Boyd Group Income Fund: UP 367% (GOOD AS FUCK)

May 25, 2011

CGI Group: UP 79% (AVERAGE)
Carfinco: UP 32% (AVERAGE)
Home Capital Group: UP 67% (AVERAGE)

July 11, 2011

CGI Group: UP 68% (AVERAGE)
Canyon Services Group: UP 35% (AVERAGE)
Boyd Group Income Fund: UP 232% (GOOD)

August 17, 2011

Paladin Labs: UP 268% (GOOD)
Neo Material Technologies: UP 5% (AVERAGE)
Carfinco: UP 38% (AVERAGE)

September 8, 2011

Total Energy Services: UP 73% (AVERAGE)
Neo Material Technologies: UP 14% (AVERAGE)
CGI Group: UP 108% (GOOD)

October 17, 2011

CGI Group: UP 92% (AVERAGE)
Carfinco: UP 41% (AVERAGE)
Constellation Software: UP 268% (GOOD)

December 12, 2011

Paladin Labs: UP 260% (GOOD)
Home Capital Group: UP 90% (AVERAGE)
Constellation Software: UP 236% (GOOD)

A few stats about those 8 appearances on the TV:

0/8, Donville has had 3 good top picks
1/8, Donville has had 1 bad top pick
2/8, Donville has had 2 or 3 good top picks
7/8, Donville has had at least one good top pick

If we attribute a note of 10/10 for each good top pick, a note of 5/10 for each average top pick and a note of 0/10 for each bad top pick, Donville would get the global score of 160/24 which is equivalent to 6,7/10. Last time, with a global score of 6,9/10, Donville got "average plus", this time he'd get the same rating.

samedi 28 juin 2014

Joel Greenblatt and Jason Donville

Have you read: "The Little Book That Beats The Market" by Joel Greenblatt?

You should. It's a good book, pretty simple and interesting. Also, the central idea of that book is very easy to understand and to apply: if you want to beat the market, choose the equities that offer a high ROE and a low PE ratio. Every year, do again the exercice by selling all your holdings that don't respect these two criterias and buy some new ones that do.

But there is a warning: It doesn't work year after year. It works more than it doesn't but every three or four years, that magic formula doesn't work and the market beats the magic formula. You have to keep faith in better days because the year after, it should work once again.

So that's it. Joel Greenblatt concludes the book by saying that if you respect this method, you'll easily beat the market in the long run and you'll have more time to enjoy life instead of losing all your precious lifetime by reading constantly annual reports and other boring documents.

Now, what you'll learn is that Jason Donville is the Canadian equivalent of Joel Greenblatt. Yes, my brothers, their approach is very similar. And you'll see it pretty quickly if you go to the website of Jason. The section "ROE reporter" is very interesting. In fact, it's as much interesting as any presentation of Jason at BNN. Each January of each year, he presents there the best Canadian equities by dividing ROE by PE ratio. He takes away the companies that don't have consistent earnings and keeps the rest as good picks.

So simple. And then you realize how much you've been exposed all your life to an incredible number of cocksuckers that always talk about fucking "resistance level" and "pattern of heads, shoulders" or some other fucking part of the human anatomy. Fuck man! Just trim everything in that fucking business world and keep only Warren Buffet, the guys at Sequoia, Joel Greenblatt, Jason Donville and two or three other guys that you could find on www.dataroma.com.

So many fucking years spoiled by exposition to stupid people. I'm so pissed.

mardi 24 juin 2014

Concordia Healthcare: Fuck my genetics

What the humanity owes to Jason Donville is the discovery of Paladin Labs and Constellation Software. Two huge home runs of the last few years on the TSX. I've had them both and I've made a lot of money because of Jason, my financial hero.

Of course, he's had some strange recommandations too. And because I follow his advice like if he was the Christ of investing, I lost some money because of him too. But none of his recommandations resulted in a total failure.

So, keeping in mind that he made us aware of Paladin and Constellation, each new discovery made by him is susceptible to be another great one.

At the last appearance of Jason Donville on BNN, I've seen that the biggest position (13%) of his fund is now Concordia Healthcare. It was quite a surprise for me, because, from what I knew, his biggest position was Constellation Software in January. And he never spoke of Concordia Healthcare before. How could such a big position appear out of the blue?

And what about Concordia Healthcare?

First thing I always do is to check the ROE on Reuters. The ROE is -111 which is awful.

Second thing I do is to check the performance of the share:

52 week low: 0,96$
52 week high: 35,65$
Actual price: 31-32$

Phew, that's what we call performance.

Third thing I do is to check everything on the balance sheet (debt, revenues, growth in EPS, etc). And then, I see...

I see absolutely nothing interesting. Well, let's precise that the track record is very short, so it's actually hard to see anything under these circumstances.

And then, I think about Sequoia Fund and the big position they took in Valeant a few years ago.
At the time, I didn't understand what was so attractive with this highly leveraged company (a lot of debt). Still today, even if I have a large position in Valeant, it doesn't respect my usual criteria of selection. All I see is a desire to eat everything, especially elephants and hippopotamus. And even blue whales. 

So, from the little that I understand at this moment, it seems that Concordia Healthcare follows the same pattern as Valeant (a lot of acquisition that results in a lot of debts).

All I can do is to think that some superior intelligence has seen something before me that I'm unable to see at the moment.

I feel like a fucking homo erectus who can't follow homo sapiens Donville even if I live at the same fucking era. I feel retard. Fuck me. Fuck my genetics.

lundi 23 juin 2014

Top picks from 2009 to today (Part I: 2009-2010)

This blog is pretty recent and I'm already doing an investigation like if i'm fucking payed to do this. But no, my brothers, i'm not payed at all. I only do this for science and for love of the human race. Use the fruit of my research to get wealthier and die rich. That's all I'm seeking. To make you some old fucking rich people who spend their retirement days in Florida with their orange fluo skin.

Via www.stockchase.com, here are the top picks of Jason Donville from October 2009 to December 2010. Besides each choice, you'll see the rise or drop in the price of shares since Jason chose it as a Top Pick.

Every share that has doubled or more since then is a good choice. Each return in share price which is between 0 and 100% is an average choice and each choice where the price has declined is a bad choice. The dividends were not included in that study so it's a bit incomplete. But as an approximative study, it's not bad. Anyway, I'm not giving that to an University to get a PhD so give me a bad rating if you want. I don't give a fuck. I already have my degrees so any shitty analysis would have no consequences on my education path which is well behind me.

Let's see if Donville kicks ass. Don't forget that he's not compared with anyone so if the results are so-so, probably a lot of mofos who call themselves investors or analysts would get worse results.

And don't forget that the companies that he ranks as "strong buy" or "buy" aren't considered. I've retained only the "Top picks". Otherwise, it would have been a fucking huge job for me to compile everything. You know, I've got a life, even if I'm a blogger.

TOP PICKS OF JASON DONVILLE FROM OCTOBER 2009 TO DECEMBER 2010

October 16th 2009:

Home Capital Group: UP 158% (GOOD)
First National: UP 39% (AVERAGE)
Canadian Western Bank: UP 78% (AVERAGE)

December 3 2009:

Carfinco: UP 336% (GOOD)
Pethealth: DOWN 11% (BAD)
Royal Bank: UP 30% (AVERAGE)

January 22 2010:

Genworth: UP 49% (AVERAGE)
Home Capital Group: UP 145% (GOOD)
Manulife Financial: UP 8% (AVERAGE)

February 24 2010:

Constellation Software: UP 525% (GOOD AS FUCK)
Total Energy Services: UP 149% (GOOD)
MTY Food Group: UP 218% (GOOD)

March 23 2010:

Paladin Labs: UP 511% (GOOD AS FUCK)
Imperial Metals: UP 94% (AVERAGE)
Altus Group: UP 84% (AVERAGE)

May 14 2010:

Logibec Groupe informatique: UP 16% (AVERAGE)
Directcash Payments: DOWN 9% (BAD)
Constellation Software: UP 490% (GOOD AS FUCK)

June 29 2010:

Paladin Labs: UP 511% (GOOD AS FUCK)
Home Capital Group: UP 128% (GOOD)
Critical Control Solutions: DOWN 24% (BAD)

August 6th 2010:

Paladin Labs: UP 421% (GOOD AS FUCK)
Carfinco: UP 83% (AVERAGE)
Critical Control Solutions: DOWN 39% (BAD)

August 30 2010:

Constellation Software: UP 501% (GOOD AS FUCK)
Home Capital Group: UP 122% (GOOD)
Directcash Payments DOWN 19% (BAD)

October 4 2010:

Canadian Energy, Services and Technology: UP 458% (GOOD AS FUCK)
MTY Food Group: UP 136% (GOOD)
Altus Group: UP 64% (AVERAGE)

December 6 2010:

Glentel: DOWN 7% (BAD)
Canyon Services Group: UP 60% (AVERAGE)
MTY Food Group: UP 120% (GOOD)

A few stats about those 11 appearances on the TV:

0/11, Donville has had 2 or 3 bad top picks
1/11, Donville has had 3 good top picks
4/11, Donville has had 2 or 3 good top picks
6/11, Donville has had 1 bad top pick
11/11, Donville has had at least one good top pick

If we attribute a note of 10/10 for each good top pick, a note of 5/10 for each average top pick and a note of 0/10 for each bad top pick, Donville would get the global score of 215/33 which is equivalent to 6,5/10. So, his top picks are usually between average and good. Something like "average plus".

It's not perfect, but some of his choices were so good that they could absorb any mistake and make a great global result.

We'll discuss more about that soon.


dimanche 22 juin 2014

Donville is the shit. My portfolio says so.

If you're from outside Quebec, you probably couldn't read the first post from this blog. Too bad for you my friend. But it was just a presentation. Now, here's the real beginning of the story.

Jason Donville is the shit. He made me wealthier and aware of some great companies that I'd never heard of.  For at least a year, I've been pretty excited about all of his appearances at BNN. I always watch him via the website and follow a couple of hours later the website www.stockchase.com to read what he just said (because that site gathers a lot of information about all the analysts in Canada that made a TV appearance).

So, to understand how Jason Donville has influenced me, here's my actual portfolio. You'll recognize a lot of Donville's suggestions. From what I know, more than 50% of my actual portfolio includes some of his suggestions.

Canadian Shit
Rifco: 12,7%
Constellation Software: 9,8%
Cipher Pharma: 8,9%
Valeant: 7,5%
CGI: 7,2%
Carfinco: 5,8%
Alimentation Couche-Tard: 5%
Loyalist Group: 3,1%
Macro Enterprises: 2%
NTG Clarity Network: 1,9%

American shit
Questcor Pharma: 7,1%
Portfolio Recovery and Associates: 6%
Dollar Tree: 3,3%
Ross Stores: 2,1%

CASH: 17,6%



Why don't fuck with Donville

Je suis un gars de la région de Québec. Je suis investisseur depuis environ 6 ans. J'ai d'ailleurs fait mes premiers pas en pleine crise, à l'automne 2008, à l'époque où l'apocalypse était à nos portes selon plusieurs analystes financiers.

J'ai commencé en suivant les conseils d'un collègue de travail investisseur. Avec le recul, je réalise que ses conseils étaient relativement peu avisés à certains égards. Puis, j'ai lu le livre de Stephen Jarislowski. Puis, j'ai lu d'autres trucs, sur Internet et à la bibliothèque. Puis, j'ai appris l'existence de Jason Donville et j'ai réalisé que ses conseils étaient parmi les meilleurs du milieu financier canadien. Peut-être étaient-ce même les meilleurs .

Aujourd'hui, une majorité de mes investissements ont été faits en tenant compte des suggestions de Jason Donville. Je dois donc une bonne partie de mon succès financier à ce type de Toronto.

Ce blog visera à traiter des meilleurs choix d'investissement selon Jason Donville (et parfois, selon moi). Je compte également revenir sur sa méthode d'investissement en soulignant autant ses nombreux bons coups que ses quelques mauvais coups.

La majorité, sinon la totalité de ce qui sera écrit sur ce blog le sera en anglais. Je ne suis pas parfaitement bilingue, mais j'ai bien l'intention d'utiliser un langage imagé afin d'accrocher l'attention de tous ceux qui passeront ici.