Buffett's Secret to Become Rich In her excellent biography on Warren Buffett entitled "The Snowball", Alice Schroeder finally reveals the secret behind the success of multi-billionaire from Omaha! His...
The Subtleties of the P/E Ratio The price / earnings ratio is probably the most famous and most used financial ratio in the investment world. It is calculated by dividing the price of a stock by its earnings...
Fortress Paper 1. Description Fortress Paper (FTP - TSX) is a Vancouver company that specializes in the production of security papers (banknotes, passports, visas) and non-woven wallpaper...
The Thirties The high government debt load and monster budget deficit are scaring many people right now. This is unquestionably the number one fear of investors and the argument most...
Warren Buffett and You Warren Buffett has bought a few weeks ago all the remaining shares of the Burlington Northern Santa Fe Railroad that it did not already own. As we could expect, stocks of...
Chadwick Wasilenkoff with the purchase of the paper mill in Thurso, is not the only British Columbia businessman to make contrarian investments in Québec. On March 29, 2010 (just 11 days after the Thurso transaction), it was the turn of fellow B.C. entrepreneur Rick Doman to buy assets in Québec that nobody seemed to want …
Hemisphere GPS is a small firm that has been rumored for years to be an acquisition target. Despite great R&D, Hemisphere struggle to achieve meaningfull profitability. By being part of a bigger ag player, Hemisphere could benefits from stronger sales channels and lower G&A expenses and achieve greater profitability.
Hemisphere GPS (HEM.TO) is a Calgary based company that develops GPS navigation systems primarily for the agricultural sector. Formerly known as CSI Wireless, the company took a major turn in 2006 by disposing of its wireless operations to focus on the development and marketing of GPS systems.
The trend is your friend is a famous adage on Wall Street. Numerous are the speculators using technical analysis and other “momentum traders” who try to enrich themselves by surfing on an uptrend. And contrary to what one might expect, investors having a long-term horizon and basing their decisions on fundamental analysis also have a strong propensity to follow the trend …
Last June, the CEO of Fortress Paper, Chad Wasilenkoff, appeared before a Canadian Senate committee to explain its various business projects. This group of senators seeking solutions to the problems of the forest industry were very impressed with his presentation. In my opinion, this is the best explanation I have read about the activities of Fortress Paper. I want to thank Eddie Chandonnet, a reader of this blog (and experienced investor) for his discovery of this document.
The Group Aeroplan issued Q2 2010 financial results above expectations. The operating profit (adjusted EBITDA) rose by 10% and all business units contributed to this growth. These good results contrast with the current discourse of the financial media who seem terrified by the “jobless recovery” and the return of the recession.
Shares of Research In Motion (RIMM – NASDAQ) have undergone a sharp correction in recent days. The market was not impress by RIM Q1 results despite a 23% increase in profits and revenues. After this correction, the gap between current valuation and it’s valuation from two years ago is nothing less than phenomenal! On July 3, 2008, the stock of the BlackBerry maker was trading at $ 115 U.S. or 51 times their $ 2.26 profit from fiscal 2008 (ended March 1, 2008). On July 2, 2010, becoming a RIM shareholder costs a whopping $ 48 equivalent to 11 times the EPS of $ 4.32 from fiscal 2010.
Valuing cyclical stocks is a very different discipline from valuing non-cyclical ones. We have read recently in the financial media that Potash stock ( POT – TSX) was clearly too expensive. This Canadian company is the largest potash producer in the world (potash is a basic component of fertilizer). The stock of Potash is said to be too expensive because of its price / earnings ratio of 20, a ratio supposedly too high for a cyclical stock. I am not an expert in the field, but I doubt that the “high PE ratio = expensive stock” equation is really the right way to evaluate a producer of raw materials such as Potash.
Since its founding in 1986, Home Capital Group has concentrated in subrpime mortgages (or Alt-A in the mortgage jargon). These loans are granted to individuals not meeting banks criteria to obtain a mortgage. HCG has been able to succeed at the game through his niche expertise to assess the risk of this type of clientele, its traditional financing by issuing certificates of deposits and its conservative capital structure (high tier-1 capital ratio). In summary, HCG has long feasted from the crumbs that fell from the table of major Canadian banks.
Investing in stocks is often a solitary sport where independent thinking is a valuable quality. This does not mean that our success depends to 100% of our ideas. Fortunately for us, there are brilliant investor, with an incredible talent for wealth creation and who are little known to the public (this is not an article on Warren Buffett). The beauty of stock markets is that they allow us to partner with such a specimen when we finds one. What’s easier than buying some shares and then leave it to our “new partner” with the task of working heart and soul to our enrichment!