Jason Donville on BNN (june 30th, 2015)

Happy Canada day, you capitalists out there. I have some great information to offer you if you're too lazy to watch all this online, on BNN website.

We all know that canadians are lazy. The government takes care of everything for us, so why not let Penetrator take care of you by vomiting directly in your throat in a few seconds what Jason Donville has said in about an hour? Why should you waste a precious time that you could spend playing Angry Birds?

So, Jason Donville was on BNN today.

First of all, one of the most valuable information that you could get to reproduce great performance is a portfolio review. Here's the top 5 of Jason Donville's fund which has been published on Market Call:

1- Concordia Healthcare: 12,1%
2- Constellation Software: 10,8%
3- CGI: 8,2%
4- Enghouse: 6%
5- Patient Home Monitoring: 4,6%

Where is Valeant?

And now, here's some of Jason's recommandations (not all of his opinions, but the most interesting to me):

TOP PICK 1: Constellation Software (CSU.TO)
TOP PICK 2: CRH Medical (CRH.TO)
TOP PICK 3: Tucows (TC.TO)

Buy recommandation: Couche-Tard
Buy recommandation: CGI
Buy recommandation: Patient Home Monitoring
Buy recommandation: Nobilis Health

Don't buy: Callidus Capital
Don't buy: Knight Therapeutics
Don't buy: Amaya Gaming Group
Don't buy: Directcash payment

Watch list : Ten peaks coffee (TPK.TO)

My comments: Even if it had a correction, I don't feel that Constellation Software should be a top pick. It's still pretty expensive (about 26 times next year earnings) I don't think either that Couche-Tard is a buy at current level because it's expensive too. However, I think that CGI and Nobilis Health deserve a buy rating.

I also believe that Callidus Capital is worth a look. It's pretty cheap these days and the last results were pretty good in my opinion. I don't understand Jason comments about it ("too much of he said or she said and a little too like Amaya..."). I also believe that Knight Therapeutics deserves some attention. I don't know if it's a buy or a hold, but they got a shitload of money and their CEO (previously Paladin's CEO) is a great manager. All in all, I own a small position of both these companies and believe that they should be on anybody's watch list.

Finally, Ten Peaks Coffee is very interesting but it's very small and as said before, I'm less and less interested in very small caps. But it still looks very good. You should take a look at it too and I would be interested to get some comments about it.

Some reasons to buy more shares of Valeant

Once in a while, people ask me what they should do with their portfolio. For example: Should they reduce their positions with title A to buy more title B?

The answer is that I know sweet fuck all about your portfolio (how much money you have, how many companies you own, what are your goals, etc) so I don't really know what to answer. I'm not a fucking genius. I doubt about my own choices so imagine how would I feel about my recommandations to people I don't know who own portfolios about which I know absolutely nothing.

You may find it stupid, but as time passes, I attribute more and more importance to the proverb: "The trend is your friend" (for non cyclical stocks of course) and about choices of insiders and superinvestors. I still take a look at metrics before investing, but sometimes, the analysis is hard with conventional metrics. Like it is with Valeant.

Jason Donville once said that Valeant is a great company with complex accounting. It's absolutely true. Few companies use leverage that much. But few companies create this amount of value for their investors.

Recently, I've been buying more shares of Valeant for these reasons:

• Of course, Valeant operates in healthcare which is my favorite field of investment (non cyclical);
• Forward PE ratio is about 18 which is reasonable;
• Michael Pearson (CEO) has said recently that the stock was still undervalued;
• Three insiders have been buying the stock since may 27th 2015 (1,7M$, 260 000$ and 3M$);
• Jason Donville recently said that the stock was still one of his top picks;
• Three of my favorite superinvestors (that achieve great returns year over year as said in a recent post on this blog) own big positions of their portfolio in Valeant;

1. Robert Goldfarb (Sequoia Fund): 30%
2. Bill Ackman: 26%
3. Lou Simpson: 13%

Nobody among these three guys has sold a share of Valeant in the last quarter. Even more, Lou Simpson added to his position in the last quarter and Bill Ackman has INITIATED a 26% position in the last quarter (an investment of more than 5B$!).

With these guys beside me, I feel pretty safe. It's one of my advice to you: sometimes, it may be a good idea to select an investment in which you'll have great companions. These guys had excellent returns in the last few years and if they have so much money invested in Valeant, it's surely because they believe that it's one of the best companies to contribute to their returns.

The strange case of Precision Castparts (PCP)

Recently, I've been a shareholder of Precision Castparts, this big company (29B$) which is a manufacturer of metal components for various industries (most notably aeronautics).

After a few months, I sold my shares (before the big drop of price in january after the disapointing earnings). I simply couldn't see what was so good about this company. I should have done it before buying you may tell me. Stupid fucker you may add.

Yeah, you're right. I still act like a stupid fucker sometimes (less and less as years go by, however).

But it's a superinvestor darling stock, so I guess, I acted like a stupid lemming, following the group (to the cliff).

In fact, Precision Castparts is not a bad company, but I don't think it's a superb company either. It's a medium company. Look at these metrics for yourself:

Actual PE ratio: 19,7
Actual ROE: 14
Average ROE last 5 years: 15,5
EPS 5 years growth rate: 11% per year
Dividend yield: A very funny 0,06%
Payout ratio: A ridiculous 1%

And recently, via www.dataroma, I've seen that a lot of superinvestors have been buyers of the stock:

• Lou Simpson (very big buyer because the stock went from 0% of his portfolio to 9,75% in the last quarter);
• Robert Goldfarb (Sequoia Fund);
• Wallace Weitz (don't know who the fuck this is);
• Daniel Leob (don't give a fuck about him too);
• Warren Buffett (prostate cancer but still able to invest better than many healthy prostates out there)

What the fuck do those people see in this company? I could name you at least 50 companies that seem more attractive to me than PCP.

Fuck all those superinvestors!

Models to follow

Almost everybody on earth wants to have a model to follow. For some people, it’s Jesus. For others, it’s Barak Obama, Adolf Hitler or even Bon Jovi.

And for us, investors, who is it? We don’t believe in religion, we’re too rational for that. We don’t give a fuck about god, about Wayne Gretzky or about Bob Marley. Our only god is money. We jerk off in our bed thinking about money. When we fuck a girl, we think about money. Nothing else matters, like would sing Metallica. 

If you’re on this website, the probability that Jason Donville is one of your model is high. But what about other investors? There's not only Jason Donville out there. There’s also some other excellent fuckers that have the capacity to turn 1 cent into 2 cents in a couple of years. With that ability, they could become millionaires in a couple of centuries. Holy fuck, I'm such a clown. 

On the website www.dataroma.com, we can see the portfolio value of many superinvestors over a period of time. I’ve completed a list of 6 investors who deserve attention and 3 other investors who deserve inattention. 

I’ve never cared about value investing and the results of these three investors confirm me that value investing isn’t as powerful as growth investing.

Investors to follow (growth investors)

Carl Icahn

Portfolio value 2013 : 21,5 billion dollars

Portfolio value 2015 : 32,1 billion dollars

Bill Ackman 

Portfolio value 2010 : 3,32 billion dollars

Portfolio value 2015 : 15 billion dollars

David Einhorn

Portfolio value 2010 : 2,93 billion dollars

Portfolio value 2015 : 7,5 billion dollars

Robert Goldfarb (Sequoia Fund)

Portfolio value 2010 : 2,26 billion dollars

Portfolio value 2015 : 7,5 billion dollars

Seth Klarman

Portfolio value 2010 : 1,64 billion dollars

Portfolio value 2015 : 5,81 billion dollars

Lou Simpson

Portfolio value 2012 : 1 billion dollars

Portfolio value 2015 : 2,91 billion dollars

Investors to avoid (value investors)

Bruce Berkowitz

Portfolio value 2010 : 8,34 billion dollars

Portfolio value 2015 : 4 billion dollars

Eddie Lampert (Sears)

Portfolio value 2010 : 12,3 billion dollars

Portfolio value 2015 : 2,24 billion dollars

Prem Watsa (Fairfax)

Portfolio value 2010 : 3,24 billion dollars

Portfolio value 2015 : 1,42 billion dollars

Information is knowledge, knowledge is power. You’ve got the power.

Just remember the first 6 names and Jason Donville and you’ll have great models to follow.