ROE reporter - July 2016 (EDIT)

Some people might have read it, but the last number of ROE reporter is out.

On the last number, Jason Donville writes about Stantec, MTY Food Group, Alimentation Couche-Tard and CGI Group, saying that these companies achieve great growth by acquisition along with TIO Networks, Biosyent, Spin Master, Constellation Software, Boyd and Enercare.

He adds, a couple of lines later: "my goal is to find the next Stantec, Paladin Labs or Constellation Software."

In my opinion, most of these names are really good stocks. But there's a few alien names there, like TIO Networks, Spin Master and Enercare. After checking them quickly, I don't believe that these companies deserve a place besides Alimentation Couche-Tard and Constellation Software. And even Stantec and Biosyent aren't such great companies, still in my opinion. I could name at least 50 US stocks better than these names.   

Like I wrote, some months ago, I believe that if you want to find a hidden gem on the venture stock exchange or among small caps with a short track record, you're gonna step on a lot of shit piles along the way. Aim at 5 little companies and the odds are high that you're gonna end up with 4 crappy stocks in the long run.

In this view, I strongly believe that our goal should not to deploy a lot of energy finding the next great company but to find existing great companies that are selling at a good price. The best way to do so is to follow something like 100-150 stocks on your Iphone. By a quick look everyday (the time of a crap), you'll follow all of them. And, as time passes by, you'll see that a couple of times each year, many great business are a little less expensive than usually. Great stocks are rarely on sale (for example, O'Reilly or Priceline). But if you can manage to get them at something like 18-20 times earnings, you'll get a historical low PE ratio for a great business. And you'll do better with ORLY at 20 times actual earnings than with the improbable next Paladin selling at 5 times earnings.

Recently, a lot of great US companies have been on sale. I don't see how any great investor should pass by these names. I'll never say that Jason Donville isn't a great investor by investing only in Canada. But I'll never understand why he doesn't invest in american stocks.

François Rochon (Giverny Capital), is heavily invested in US stocks and his results have always been great. Check his website the see the results.

So, I'm distancing myself a little from Jason Donville. But, I repeat, he's the one responsible for our knowledge of Paladin Labs and Constellation Software. That alone can make us forgive many of his mistakes.

EDIT: Did you notice? No words on Concordia Healthcare. And the last words of the ROE reporter are saying: "We have repositioned the portfolio intelligently ." I bet they're out of CXR after having it as their top position in the beginning of the year.

Or, it's like Valeant: down to 1-2% of the portfolio... or even less.