mardi 29 décembre 2015

EDIT: Take a look at me now: Penetrator's portfolio review

Against all odds, the Penetrator's portfolio is up about 4% this year (dividends included). It’s fucking incredible. Until I calculated it, I thought it would be down about 5%. I think that the conversion rate between US dollar and CAN dollar helped me a lot (some stocks like Gilead (GILD) had a flat return but the exchange rate dropped by about 12% between the beginning and the end of the year). 


The S&P/TSX is down about 11%, so my relative performance is a positive 15%, which is excellent in my not so humble opinion. Which reminds me a great joke I've read before. Did you know that if you got 3.14 onions, you've got opinions?


Ok, keep going with the stock market and stop these silly jokes you may say. Fuck off I add. I'm always cursing and writing CUNT in capital letters. Couldn't you just appreciate the clean break I'm giving you with this totally harmless joke?

Now, please take a look at that list: Cipher Pharma, Valeant, Rifco, Concordia Healthcare, Home Capital Group, Nobilis Health, Callidus Capital, Mallinckrodt, Portfolio Recovery. Just take a look at the shitload of stocks I’ve owned this year which did bad… It’s a fucking miracle that I’ve achieved to get a 4% yield overall.


My best performing stocks have been Constellation Software, Alimentation Couche-Tard and CGI group.I haven't got any spectacular performance with any of my stocks, except maybe for Constellation Software.


By the way, during the year, I’ve sold more than 50% of my position in Constellation Software because I was less and less comfortable with the valuation of the stock. I’m still uncomfortable with it because 30 times next year earnings seems a lot to me. But it’s a great company. Like Dollarama, Couche-Tard and Computer Modeling Group, it deserves a high valuation. But, speaking of Computer Modeling Group, I have the feeling that Constellation Software is becoming the same : A great company so highly valued that the potential for an appreciation is greatly reduced. Whatever, with 7,2% of the portfolio, it’s a reasonable position and I don't plan to sell more in the short term.



Here's my portfolio on december 29th, 2015 :



Canada (58,6%)

Concordia Healthcare : 9,5%

CGI Group : 9,2%

Valeant : 8,5%

Alimentation Couche-Tard : 8,4%

Constellation Software : 7,2%

Home Capital Group : 6,3%

Canadian Pacific : 2,9%

Callidus Capital : 2,4%

Logistec : 2,1%

Nobilis Health : 2,1%



USA (41,3%)

Gilead : 9,9%

Allergan : 7,9%

Ross Stores : 5,9%

Dollar Tree : 5,3%

Apple : 4,6%

Chicago Bridge and Iron : 4,5%

Polaris : 3,3%

dimanche 20 décembre 2015

Performance of 40 stocks from january 1st to december 18th 2015

2015 has been a crappy year. Not crappy in the way that 2008 and 2009 have been, but crappy enough to say that 2015 sucked.

I've written a list of best and worst performing stocks for 2015. I'm amazed at the huge drop of some stocks I've owned this year. Luckily, I've sold most of them before the biggest part of the drop happened. But I've lost a lot of money anyway. So I'm not so joyful about the performance of my portfolio which should be between -5% and 0% this year.

It must have been a difficult year for Donville Kent too because there's a lot of bad performing stocks among Jason Donville's usual picks. Just take a look at Valeant, Patient Home Monitoring, Home Capital Group, Pulse Seismic,  Delphi Energy... A true shit storm.

Here's a list of some canadian and american stocks. The performance of each stock is written to show how bad the year has been for many. Take note that the list only refers to stock's price from january 1st to december 18th 2015. So, for instance, Valeant's drop doesn't consider the fact that the stock was 346$ in august 5th then 94$ in november 17th.

Positive yield stocks:
Netflix: 142%
Smith and Wesson: 125%
Amazon: 114%
Constellation Software: 69%
Delta Airlines: 63%
Stella Jones: 60%
Dollarama: 33%
Alimentation Couche-Tard: 28%
CGI Group: 25%
Nobilis Health: 25%
CRH medical: 24%
Allergan: 19%
Ross Stores: 12%
Concordia Healthcare: 10%
Dollar Tree: 8%
Gilead: 8%
TJX: 1%

Negative yield stocks:
Wells Fargo: -2%
Apple: -4%
MTY Food Group: -6%
Badger Daylighting: -7%
IBM: -16%
Exxon: -16%
Carmax: -20%
Valeant: -22%
American Express: -27%
Patient Home Monitoring: -30%
Pulse Seismic: -30%
Portfolio Recovery: -39%
Sears Holdings: -41%
Biosyent: -42%
Home Capital Group: -43%
Polaris: -44%
Michael Kors: -47%
Delphi Energy: -47%
AutoCanada: -50%
Callidus Capital: -53%
Cipher Pharma: -63%
Rifco: -63%
King's College (formerly Loyalist Group): -99%

For those liking the magic formula, we now have the possibility to buy some great high ROE stocks that have low PE ratio (Apple, IBM, Valeant, Polaris, Michael Kors).

P.S. There's someone using my name on stockhouse. It's not me, obviously. I'm not writing anywhere but here.

mercredi 16 décembre 2015

Valeant going to zero

Not so long ago, in a galaxy very close, many people thought it was the end for Valeant. "Sell before it's too late because that stock is going to zero!" Then, the stock became oversold like nothing before. The stock was like a fucking jar full of AIDS.

Many fuckers out there, like some columnists or investors were very proud to tell us: "We have always said that Valeant was toxic!" I thought to myself: "Fuck you asshole. You're simply using that crazy panic to try to convince us that you're a good investor and that we should put our money in your hands."

Because it's like trying to tell us that these people are good investors and could predict huge drops. FUCK YOU. It's so fucking easy to write some shit about all the companies in which you've never invested when a panic comes out of nowhere. I could do that all the time. Each week, there's a company that goes down a lot.

But I don't have any services to sell to stupid people, so I don't need to do that.

I have to admit that I was a bit nervous when that panic happened. But I never thought one second that Valeant would be a majestic fraud. However, there was maybe a small or medium fraud in there, I was not so sure. I'm still not 100% sure.

Today, Mike Pearson, the CEO, released some guidance for Valeant. And some people are crazy enough to tell that these projections are disappointing. Disappointing regarding what? Regarding what was expected? OK, maybe a little. But regarding the actual price of the shares? Regarding that, the guidance is fucking awesome. We have a stock that is selling about 11-12 times this year's earnings and about 9 times next year earnings. You just have to check the 30% increase in EPS from 2015 to 2016 to see that that stock isn't fucking going to zero.

2015: EPS of 10,30$ per share VS EPS of 11,75$ expected
2016: EPS of 13,50$ VS EPS of about 14,30$ expected

You may dislike Valeant. You're perfectly entitled to. But these numbers show us a company that's doing well, not a company that's bleeding to death.

Don't forget that not more than one or two months ago, thousands of people were convinced that Valeant was going to zero. A lot of people tried to get some exposure during the panic and I've hated that.

I think I'm writing to them actually. Fuck you once again.

mardi 15 décembre 2015

A couple of lines on fatherhood

I love to be a father, but fuck, sometimes, I'm pissed off about all the shit I have to worry about.

My kid must put his glasses. He must hide his strongest eye 2 hours per day to exercise his weakest eye. Otherwise, he may have cross-side eyes one day and finish his life alone or worse, get an ugly cross-side eyes girlfriend.

His teacher is an old hag which seems to work in slow-mo mode. She said to me that my son had no problem to learn but he was whimsical (losing his things in his desk). She said to me that he masturbated in class. Well, at 6 years old, it's not old perverse masturbation with both hands in the pants. It's just that when he's excited (when he's laughing for instance), he tends to put his hands on his little pee-pee.

At the recommandation of his teacher, we went to see some speech therapist (orthophoniste en français) to see if my son had understanding problems. He made many exercices there and at home too, and fuck, I have to say that this shit was not bad, but how the fuck a 6 years old little boy should know how to sequence 4 images of a story with a magnet or a popcorn machine when he hasn't used or even saw any of these things in his life? The speech therapist was kind but she told us some fucking statistics about how retard my son is on some aspects and it made me mad.

Fuck you with your fucking statistics. My son knew his ABC when he was 1 year old and he now knows all the planets on the solar system and he even knows that it's raining acid on Venus. You may tell me that fucking Rain Man knew much more things and he was a fucking autistic. Yeah, right, but my son isn't a fucking retard. He's just clumsy and he has my fucking genes which means that he'll never be the football hero of his college.

Today, it was his last appointment with the speech therapist. I thought we would inherit a recommandation to consult for the long term at the low rate of 100$/hour. But, thank god, it looks OK to stop here (but to continue to practice at home).

However, the final recommandation of the speech therapist was to NOT USE IRONY WITH HIM (written in capital letters in his diary).

Fuck, irony is my life. Since he's a baby I feed him with irony. Have I ruined his childhood? How could irony be so wrong? It's how I manage to stay alive.

And still today, his fucking teacher wrote in his agenda that he lost his cisors. She wrote "his attention is very fragile" (exact words used many times by the speech therapist. That fucking bitch was only waiting to use somebody else's opinion to avoid any responsability in kids problems). Fuck you old hag, it's me that didn't put those cisors back on his schoolbag yesterday.

Oh. By the way, I should double these troubles. My girlfriend didn't have a miscarriage. She lost blood for some days. But there's a baby in that belly.

I should be father for a second time next summer.

mercredi 9 décembre 2015

Tchoo tchoo

I've always liked railroads. To me, they represent one of the best business that could exist: high barriers to entry, essential for the economy, very easy to understand... and I can't see how railroads could become obsolete.

In the past, I've owned some shares of Canadien National (CNR.TO). I liked the company and the great work of Hunter Harrisson. But the PE ratio eventually became too high VS ROE and EPS growth. So I sold my shares and went to buy some fucking shit.

Recently, I've took another look at railroads. Three of the best railroads (if not the three best) are close to their 52 weeks lowest price (the PE ratio is low too). In times like these, it may be a good time to buy something because the sector is not very popular. And it's a great sector. Not like that fucking oil and gas sector.

So, here's a quick look at three of the best railroad operators:

Canadien National (CNR.TO)

Forward PE: 16
ROE: 24
Annual EPS growth last 5 years: 14%
Share buyback: Yes
Debt: Medium
Dividend: 1,7%
I've read a couple of times that CNR was the best railroad operator in North America. I don't believe it's still the case, but this is nevertheless a great company that have been commited to shareholders for a long time.

Canadian Pacific (CP.TO)

Forward PE: 15
ROE: 27
Annual EPS growth last 5 years: 21%
Share buyback: Yes
Debt: Medium-High
Dividend: 0,8%
Canadian Pacific has never been as well managed as CNR until recently. Hunter Harrisson, former CEO of CNR didn't hesitate to betray his former company, jumping the fence to CP with the help of Bill Ackman, the guy who doesn't give a fuck about morality when it's time to make some money. The results are there. Take a look at Pershing Square results over time. It looks once again that this fucking christian morality still retains us to make money and have some pleasure in our fucking existence. Recently, CP tried to buy Norfolk Southern, an average american railroad operator. I believe a deal won't be easy. But it could be very positive for CP.

Union Pacific (UNP)

Forward PE: 13
ROE: 24
Annual EPS growth last 5 years: 25%
Share buyback: Yes
Debt: Medium
Dividend: 2,9%

Probably the best railroad company in America. The last results haven't been that great, but the company has done very well over time. It would probably be my first recommandation if anybody wanted to buy a railroad even if CP does better these days.

Whatever the fuck I'm saying, I've just bought some CP shares. I just need two sentences to do the opposite to what I've just said.

Anyway, 5 years from now, I'm pretty sure that anybody would do well with any of these three companies.

mercredi 25 novembre 2015

Pfallergan

On monday, Pfizer announced that it would buy Allergan. Some funny guy on seeking alpha named the new company "Pfallergan". I like it.

I like it much more than that fucking transaction in which an average 200 billion dollars company will buy a great 120 billion dollars company.

Pfizer is one of the first companies I've took a look at when I started investing, 7 years ago. Even if I analyzed companies like a fucking ape at the time (mainly by taking a look at a chart), I wasn't impressed by Pfizer.

Today, I still can't see what could be great with this company. Their earnings per share have increased by 3% on an annual basis over the last 5 years. That's mediocre. Who the fuck is looking to buy a company that grows so slowly? I can't think of anybody intelligent. Maybe it's the case for those fuckers who run a mutual fund and want to impress their stupid clients by showing them universal known names such as Pfizer.

And the average ROE of Pfizer has been about 11 for the last 5 years. For the recent years in which I've been a bit more clever, I've never invested in such a low ROE business combined with such low EPS growth.

Do I really have to take these 11.3 shares of Pfizer for each of my Allergan shares? I don't want to be part of the Pfizer community and I think my shares deserve a better price and a better acquirer. Fuck, I'm so upset. Couldn't Pfizer just give me 400$ for each of my shares and do the fuck they want with Allergan?

I agree with the US government. This transaction is deeply immoral. A lot of money will vanish from the USA and go to Ireland. That money could have been pretty useful in the US like by putting more money on NSA's surveillance programs, hire more snipers to track and kill Edward Snowden or upgrade Guantanamo to help people there to drown more prisoners.

dimanche 22 novembre 2015

Carmax (KMX) or Lithia Motors (LAD)?

A commentator on a recent text suggested to me to take a look at Lithia Motors (LAD), a company similar to Carmax. I've looked at it and it seemed to me like a very interresting investment. In fact, it's probably one of the most interesting companies right now on the stock market in my opinion because of the valuation VS growth. However, the sector may be a little too much related to the general state of the economy.

And even if Lithia Motors looks pretty good, I have to say that Carmax looks interesting too. The stock was recently at an annual low, altogether with many other stocks. It's often a good time to shoot when many companies are down at the same time. It means that your target probably hasn't internal problems.

Here's how I work to analyze a company which seems interesting. In this case, I was able to compare two similar companies with the same metrics. I think we always can compare any two companies, whatever the sector in which they operate. But when the comparison is between two companies in the same sector, it's even easier to make a choice. 

Carmax:
Actual PE ratio: 18
Lowest / Highest PE ratio last 5 years: 17 / 25
Performance last 5 years: 64%
Performance last 10 years: 281%
LT debt / annual profits: 15,6 times (pretty high)
Number of shares last 5 years: small buyback
Annual EPS growth last 5 years: 17%
Actual ROE: 19
ROE last 5 years: 17
Dividend: None

Lithia Motors:
Actual PE ratio: 17
Lowest / highest PE ratio last 5 years: 12 / 28 
Performance last 5 years: 792%
Performance last 10 years: 310%
LT debt / annual profits: 13,3 times (pretty high)
Number of shares last 5 years: no buyback, but no dilution either
Annual EPS growth last 5 years: 93%
Actual ROE: 25
ROE last 5 years: 18
Dividend: 0,7%

Winner in each category 

Actual PE ratio: LAD
Lowest / highest PE ratio last 5 years: KMX is the closest to the lowest PE ratio of the last 5 years
Performance last 5 years: LAD
Performance last 10 years: LAD
LT debt / annual profits: LAD
Number of shares last 5 years: KMX
Annual EPS growth last 5 years: LAD
Actual ROE: LAD
ROE last 5 years: LAD
Dividend: LAD

Lithia Motors seems to me to be the best investment. The growth is better, the ROE is better, the debt is smaller and the PE ratio is smaller. There's a lot of debt in this industry (probably because they have to buy used cars before selling them). But both companies are very well managed and I think both will do well in the future.

In fact, I may buy both companies pretty soon. But If I do, the biggest investment will be LAD because most of the numbers suggest that this company will continue to do better than KMX. 

lundi 16 novembre 2015

The price to pay for a great stock

Today, I've received a transaction receipt that informed me that my last purchase in US dollars had a 35% conversion.  Holy whore. It's so expensive to buy stocks listed on some american stock exchange... We're so far from 2011 when we could purchase 1,05 american dollar for 1 canadian dollar.

Dry your eyes my little friend. I know you don't cry for Paris. You, cold heart motherfucker, you're only crying because of the conversion rate. Even if it's hard for us to accept, we must understand that if we want a great ROE stock, we have to look south of the border. In fact, there's not so much great stocks in Canada. If you're looking for the Joel Greenblatt/Jason Donville recipe (predicable earnings + low PE + high ROE), you won't find a lot a opportunites in the country of Glass Tiger. You may rather take a look at the country of Paula Abdul.

Here's a list of a few canadian companies that have a ROE higher than 30 (I may have forgotten some, but there's not much more to be listed):

Constellation Software
Rifco
Gluskinn Cheff
Dollarama
Computer Modeling Group

The list is short. More, on this list, 3 stocks are fucking expensive (CSU, CMG and DOL).

And here's a list of a few US listed companies that have a ROE higher than 30 (there are much more companies than this that got a ROE higher than 30):

Accenture
Apple
The Buckle
Colgate Palmolive
Fossil
Kraft
Lockheed Martin
Mastercard
McDonald's
Novo Nordisk
Paychex
Priceline
Polaris
CH Robinson Worldwide
Ross Stores
Strayer Education
Starbucks
TJX companies
IBM
Gilead
Sherwin Williams
Biogen
Dollar Tree


See that bunch of great US stock? Many of them aren't expensive at all (10-15 times earnings).

I'd rather pay a 35% conversion rate for a company which is selling at 14 times earnings, have a ROE of 40 than to pay 18 times earnings for a canadian stock with a ROE of 20.

No wonder why american markets are usually performing better than canadian market.

USA is the real shit.

jeudi 12 novembre 2015

4 inexpensive stocks to watch (close to their lowest PE ratio for the last year)

Many stocks are close to their lowest price for the last 52 weeks. Here’s a few cheap suggestions and most of them haven’t been discussed before on this blog.



Amaya (AYA.TO) : This gambling company is almost as controversial as a drug company. But growth look promising. The market reaction after results were released this week was completely crazy. If I were to start a portfolio, I would maybe put 2% of it on this stock, but not much more than that. 


Forward PE : 9

ROE : X

EPS growth 5 years : 64%

Debt : Very High



United Therapeutics (UTHR) : I’ve been a shareholder of UTHR in the past. The prospects of the company are still looking good. Their sales are mainly due to a few drugs, but the price of the share is not expensive. They have a lot of cash, they don’t have any long term debt and they generate a lot of cash. A safe investment that should bring good returns over time.


Forward PE : 12

ROE : 49 (the selling of a review voucher is in cause, usually the ROE is around 20-25, which is still good)

EPS growth 5 years : 79% (the selling of a voucher is in cause, once again…)

Debt : None



Polaris (PII) : I’ve just initiated a position in Polaris. This company produces snowmobiles, all-terrain vehicles and motorcycles. The numbers have been impressive for a long time. Their last quarterly results were pretty good but failed to impress the market. The ROE is very high (one of the highest ROE on the stock market) and the PE has rarely been this cheap. I’ve always liked this company but thought until recently that the PE was too high.


Forward PE : 13

ROE : 55

EPS growth 5 years : 34%

Debt : Medium



Carmax (KMX) is a company that some bald columnist on the gazette likes a lot. It’s simple : that guy doesn’t miss an occasion to write how much he likes that company which sells used cars. To me, the numbers of the company have always been OK, borderline good. But I’ve never been astonished by it’s results. Whatever. It’s a good company and the PE has rarely been this low. 


Forward PE : 16

ROE : 19

EPS growth 5 years : 17%

Debt : High

lundi 9 novembre 2015

Money isn't everything

Until august, that was a good year for me. My portfolio was up and my few mistakes were largely compensated by my best moves. 

Then, fall came and shit hit the fan. Since july 31th, my portfolio is down about 20%. And I don’t even count the money added to the portfolio since july 31th. So it’s a pretty shitty year. In fact, it’s the worst year of my life as an investor (I invest in the stock market since the fall of 2008).

But money isn’t everything. There’s other things in life such as butterflies, rainbows and love. And there's family. My girlfriend recently found out that she was pregnant after two miscarriages in the last years.

I said to myself : « I may lose some money, but I may regain it later. And if it’s not the case, at least, I’ll achieve my only real goal in life since I’m young which is to have at least two kids. »

Today, my girlfriend had a third miscarriage.

dimanche 8 novembre 2015

Nobilis Healthcare is suing a short seller for 300 million dollars...!

Last week, Nobilis Healthcare (NHC.TO) announced that it planned to sue for 300 million dollars the short seller at the origin of the big drop of NHC stock price in october.

The amount of 300 million dollars is equivalent to the drop in market valuation after the negative article was written on seekingalpha.

Nobilis Healthcare affirms that numerous statements in the article were untrue and damaged Nobilis Healthcare reputation. For example, the article said that Nobilis bought crappy hospitals and assets and that there was a lot of turmoil inside the business.

Which brings me to te question that a lot of people are asking these days. Should short selling be illegal?

I agree that when false allegations are made and damage a company reputation, the company should react with vigor, and even more if the quality of the products sold is attacked. For example, if I'm the CEO of McDonald's and some blogger is writing that the BigMac is made of human flesh instead of beef and the article convince million of investors to sell the stock, I'd probably be angry. And if the sales of McDonald's are impacted a lot, I'd probably want to sue this guy.

But if the guy is writing that the management of McDonald's is selling all their stocks and McDonald's is poorly managed, it looks minor to me. Almost nobody will stop eating that tasty BigMac for such reason.

In the case of Nobilis, it looks to me that both the management and the product were attacked ("inappropriate success rate for it's medical procedures"). But I wonder if the sales of Nobilis will be hurt by such an article.

Which brings another question. How does the market react in the presence or absence of a legal action? Will the market believe that the short seller is right if the company doesn't sue him? Will the market believe that the company is just trying to preserve it's image and will have time to build a solid argument before the process take place (in a couple of years)? Is the company only trying to scare all the others short sellers out there with a massive suing?

I don't know if I'm pro or against short selling. I believe that most of the opinions (or articles) about companies are generally biased (it may be too positive or too negative). If we sue the short sellers, why wouldn't we sue the longs too? Both may say a lot of lies that may result in a loss of many thousands of dollars for us.

Actually, I realize that we should sue maybe 10% of the people who are writing or saying things about stocks because there's probably more opinion than facts out there. The problem is not the analysts, the shorts or the longs. Like I've written a couple of times before, the problem is the individual investor. 

Let's not forget one thing: individual responsability. If you're on the stock market, you have to know (otherwise you're stupid) that you'll surely lose some money on some investments. Whatever analysts or bloggers are saying, you're the one who pushes the ENTER button after a purchase or a sell order.

I may be wrong, but did it ever happen that a great company was really hurt (and even went bankrupt) because of false allegations? My opinion is that a great company shows to the market how great it is by continuing to deliver solid results. So, all the people who sold their Nobilis shares after that negative article are naive. They should have wait for the next results which are coming. Judge a company on it's results. Not on the opinion of some bloggers who are writing articles on a keyboard full of chips crumbs.

lundi 2 novembre 2015

Andrew Left received some death threats or what?

Man, I’m so fucking tired about reading hundred of billion of theories about how Valeant is the worst scandal in the history of capitalism. In fact, I’m not reading all these theories, I just see all these titles on Seekingalpha and, to me, it feels just like when I hear « Hotel California » on the radio : It’s way too much. I can’t take it anymore.

Holy fucking shit, what a domino effect. I don’t recall a single company being hated so much since the big US banks in the 2008-2009 crisis.  

Last week, Valeant’s stock was still down a lot in anticipation of the next attack of Citron that has been released today. I guess a lot of people thought that it would be the fucking coup de grâce. Like if the guillotine was about to fall and take away the small drop of life that was still left in Valeant.

Well, I’ve read the last Citron report and I thought : 

What? Did the guy (Andrew Left) became some pussy or what? Or did someone came to him with a rusted crow bar, saying he’s gonna break his two legs with tetanus as a bonus if he planned to continue his ranting? I can’t believe how a fucking wet firecracker it is. Or should I say WeT FiReCrACKer!!! like we could read on Citron fabulous website.  

But maybe Andrew Left wrote such a boring article just because thousands of lemmings took the relay and pushed the fabulation way further by writing articles with much more sensationalist titles, comparing Valeant to the Titanic, the Challenger, Tchernobyl, the comet that fell on earth 65 million years ago and killed all the dinosaurs or some other fucking tragedy. Maybe the guy knows that the story is now much larger than him and he doesn’t have to be creative anymore.

In fact, he surely knows that he's not as creative as all those assholes who think that Elvis is still alive or that the World Trade Center attack didn’t really happen (because it’s just a David Copperfield trick). Those cocksuckers are able to bring the story to a fucking parallel universe that only people who ever got into a black hole can understand. That’s where we are : surrounded with people that have been in a black hole. Holy motherfucking shit.

mercredi 28 octobre 2015

Gilead and Apple

Gilead and Apple results were released yesterday and both results were pretty good. But Mr Market didn't seem to have an erection at all. Ok, maybe a small one with Apple, but jack shit with Gilead.

Me, I had an erection. I don't own shares of Apple anymore but it may very well be the case once again in the future.

To me, Apple and Gilead are very similar:

Two large caps, for which a few products count for a big part of the earnings. Both companies are full of cash (they both actually have much more money than a lot of countries) have a very high ROE, high EPS growth and small PE ratio because investors seem to believe that such high growth can't continue VS limited diversity of products sold.

The only big difference between the two is the sector (commodities VS healthcare).

I'm still amazed how much Gilead share price remains flat whatever the results look like. Holy fuck, the last results were so great and the price of the stock decreased by 2-3%. I can't believe it.

The last results of Apple were great too. This time however, the price of the stock raised by 3-4%, which is not bad. But it should have been much more in my opinion.

Let's take a look at important numbers:

Apple:
Forward PE ratio: 11
ROE: 41
annual EPS growth last 5 years: 38%

Gilead
Forward PE ratio : 9
ROE: 93
annual EPS growth last 5 years: 39%

If you analyze the results and read comments on seekingalpha, you can always find reasons to worry about any stock. You can even find some reasons to worry with companies like Apple and Gilead even if they have so much money that they could buy a medium or even a large cap tomorrow without raising any debt.

But come on, let's face it, it would be pretty hard to find companies for which you'll get such exceptional earnings for such a cheap price.

Maybe the two best examples out there of companies that should be part of any portfolio, particularly given the concept of a magic portfolio (Joel Greenblatt).

jeudi 22 octobre 2015

The little story of a fucking panic, for all the motherfuckers out there that follow fucking hypes like they were brainless assholes

On july 23, Valeant shares were sold at 341$ (CAN). At this time, many people didn't like Valeant practices which were (and still are) to buy medium and large pharma companies, make cuts, drop the budget allowed to research and development and rise drugs price. But the stock was still popular and the future of the company looked pretty good.

Three monts later, on october 22, Valeant shares are at 144$ (CAN). What happened in the meantime?

About one month ago, Hillary Clinton wrote some shit on twitter about drug prices that rose too much and Valeant was linked to that comment. A few days later, while their was still a lot of pressure on healthcare stocks, Citron Research, shorting specialists, released an article which was very negative about Valeant. The stock went down a lot.

This week, Citron Research released another article which said that Valeant stocked their drugs in a specialty pharma and the storage was considered as a sale (or something like that). In other words, Valeant sales were probably lower than what was on the quarterly results.

First of all, I have to say that I know a bit about Citron Research. A couple of years ago, I bought a stock which was named Questcor. They had a blockbuster drug (Actar Gel). Citron Research published a lot of articles that made the stock drop like fuck, to a ridiculous level. I don't remember the exact numbers, but I'd say something like a PE of 8, a ROE of 50 and EPS growth of 50% (these numbers are surely incorrect, but the difference between PE and ROE/EPS growth was completely insane).

So, I bought some shares of Questcor. And the results of the company continued to be good. And the stock went up. And Citron Research lost probably a lot of money that they couldn't reinvest to upgrade their fucking website which looks like it's been made in 2002.

I know. A single choice like that doesn't mean that they're always wrong, but I've never liked their approach and kind of writing (titles that look like a fucking magazine for teenagers with exclamation marks everywhere). It doesn't look serious at all. And they use a lot of shortcuts to reach their goal which is too destroy a company image.

Don't get me wrong. Even if my biggest position was Valeant until today (I haven't sold a single share but the price dropped so much that the percentage dropped too), I'm not madly in love with the stock. I don't worship this company. But I think they're very efficient at reducing costs and transform an acquisition in a success in a short period of time.

I want to adress here a few questions which seem obvious to me. But it seems that a lot of people haven't asked themselves about these.

1- How the motherfuck Citron Research didn't release their article before the Hillary Clinton tweet?
2- How the fuck everybody loved Valeant in the summer and now, three months later, everybody hates Valeant, everybody thinks the stock is the worst fraud in history and many dare to tell us that the stock will go to 30 or 50$ pretty soon.
3- How the cunt people were willing to pay almost 350$ for a single share of Valeant and are now ready to sell them for 120 or 140$ EVEN IF NOT ANY FUCKING FUNDAMENTAL HAS CHANGED.
4- Why everybody has a negative opinion nowadays (kinda "I told you so") but almost everybody shut their fucking mouth 3 months ago?
5- What makes Citron a reliable source that should guide your actions?
6- Valeant may not be perfectly clean. I don't know. But a massive fraud that will bring the stock down to 50$? Come on, they've got plenty of popular drugs. They've got Bausch and Lomb. Do you think they sell imaginary products?!?
7- You sell on the news. You surely buy on the news too. So you follow what is popular and flee what isn't. You do exactly what many great investors have told not to do. 
8- You really believe that this stock is junk? Just take a look at the great investors that have a big part of their portfolio in Valeant (Robert Goldfarb, Bill Ackman and Lou Simpson who are probably in the top 10). They may be wrong, but if they're wrong, it means that they act like all you fuckers and fuck, I want to die if that's the case.
9- Stop that fucking bullshit about Valeant's model which can't continue forever (cutting R&D expenses). What tells you that Valeant will follow the same track forever? Do you believe they're too stupid to adapt their style in the future? Is that because you are idiots who have lived your life doing always the same fucking thing from 0 to 80 years old?

FUCK YOU PEOPLE ON THE STOCK MARKET. YOU CHANGE YOUR OPINION FOR TWO OR THREE BAD REVIEWS THAT CAME OUT OF NOWHERE AND YOU PANIC BECAUSE YOU BUY WITHOUT REFLECTION, THEN YOU SELL WITHOUT REFLECTION. YOU ONLY DESERVE TO LOSE ALL YOUR FUCKING MONEY ON THE STOCK MARKET AND DIE AS A FUCKING HOBO.

lundi 19 octobre 2015

Latest top picks (october 19th, 2015)

Us, canadians, will get a new government tonight. It'll sure be a liberal government after 10 years of a conservative government. I'm a bit sad, because except for being crazy people with far west values, conservatives were the best ones when it was time for economics and measures to help middle and higher classes (something that doesn't happen very often in Canada and even less in the province of Quebec).

So, what will happen with the TFSA or CELI (as we say in french)? It will probably be back to 5000 or 5500$. And maybe it will be deleted. Fuck. I think that this measure was probably the best that was initiated in Canada for the last 20 or 30 years. Maybe the best measure since confederation (governments usually create things for taxation purposes, not to allow people to get richer).

Well, fuck all that, we've got to get on with these. Gotta compete with the wily japanese.

It's always time for a Pink Floyd sentence. And it's even more always time to come back to a Jason Donville's appearance on television. And tonight, Jason was on BNN. His three top picks were three stocks that I own: Valeant, Concordia Healthcare and Nobilis Health.

First of all, thank you Jason for pumping my shares. It's almost certain that Concordia and Nobilis will be up a lot tomorrow. However, Valeant may not be impacted because the market cap is much too high.

I share the optimism of Jason Donville for Valeant. Have you seen their results released today? They were excellent. I can't see how anybody could say that those were bad results. Like Jason, I'm pretty sure that the stock will be much higher a year from now (I'd guess it will be at least 350$).

Concordia is perceived by many many many people as a junior Valeant. If Valeant gets hit, Concordia usually gets hit. The stock is down like crazy these days. I think it should be at last twice this price and yeah, like Jason said tonight, it may very well be bought by a larger company at this price. For myself, I added a lot to my position recently (maybe 35-40% more).

Nobilis Health has been hit pretty bad by a negative article on Seeking Alpha. In a few words, the article told that this company buys cheap (mediocre) hospitals that don't return much money. I'm not so sure about the accuracy of the article, but as I said before, I doubt more and more about small caps. So I don't think I'm in Nobilis for the long term. My position isn't that big, but I ask myself some questions about this company. Not negative questions, just questions related to the small cap aspect. I however have to say that I believe much more in Nobilis Health than I believe in Patient Home Monitoring (PHM.V).

To conclude, I don't know if you read some articles that I wrote in the summer of 2014. Just take a look at the last one, for instance. In this article, I wrote that:

1 appearance out of 6 would give us three top picks that showed great results.
2 appearances out of 6 would give us two or three top picks that showed great results.
6 appearances out of 6 would give us at least one top pick that showed great results.

We never know, but tonight, I'd guess that Jason may get results that were above is average results. In other words, I'd guess that at least two of his top picks will be much higher at the same time next year.

mardi 13 octobre 2015

Jason Donville VS Fabrice Taylor VS Bruce Campbell VS Christine Poole

I take a look at www.stockchase.com a few times per week. Most of the analysts don’t do much for me. They select Netflix as a Top Pick? What the fuck. They only recommend natural resources companies? What the motherfuck? I can’t follow that kind of people.



I really believe that most of the analysts are worthless. Not very imaginative, not useful and without any financial skills for most of them. Just take a look at the recommandations VS the ROE of the companies selected. Most of them have a low ROE and a track record which is only average.
How come these people have any exposure?



It's been said before but the best analyst is without a doubt Jason Donville. After him, but no so close, there’s Fabrice Taylor. And there may be two or three others (maximum), like Bruce Campbell and Christine Poole. Except for these 4 analysts on www.stockchase.com, I’d say : forget it. Don’t even bother to read what the others are talking about because it’s probably just shit.



Last year, I made an analysis about recommendations from Jason Donville VS recommendations from Fabrice Taylor. Now, I’ll add two other names (Christine and Bruce) and we’ll take a look at the results of the top picks of these four people over the last year.



Three important considerations :
  • They never appear on TV at the same time, so, their results aren’t for the same period of time. I’ve however tried to chose times that were as close as possible;
  • This analysis only compares THREE top picks for each of these 4 analysts. It’s not based on 5 years of close following.
  • To do the math, I've selected the price of the top pick the day BEFORE it was a top pick. For example, if Constellation Software was a top pick on october 24th, I take the price on october 23.



Jason Donville, october 24, 2014

Top picks: 
Constellation Software (CSU.TO) UP 84%
Cipher Pharma (CPH.TO) DOWN 53%
CGI Group (GIB-A.TO) UP 29%
AVERAGE RETURN: 20%

Fabrice Taylor, october 15, 2014

Top picks:
Diversified Royalties (DIV.TO) UP 13%
Delavaco Residential (DVO-U.V) DOWN 75%
Vecima Network (VCM.TO) UP 45%
AVERAGE RETURN: -6%

Bruce Campbell (Stone Castle Investment), october 22, 2014

Top picks:
Patient Home Monitoring (PHM.V) UP 41%
Slyce Inc. (SLC.V)  DOWN 51%
Concordia Healthcare (CXR.TO) UP 20%
AVERAGE RETURN: 3%


Christine Poole, october 7, 2014

Top picks:
Emerson Electric (EMR.N) DOWN 25%
Enbridge (ENB.TO) UP 6%
Manulife (MFC.TO) DOWN 14%
AVERAGE RETURN: -11%

Even with such a bad top pick as Cipher Pharma, Jason still kicks their asses and pussy!

lundi 12 octobre 2015

The benefits of diversification.

A lot of investors talk about their stock like other people talk about religion: with too much conviction.

It happens in various ways: all the way while they own their stock, after an acquisition, after a decision made by the government, or simply because they want to pump their fucking shares on any occasion.

Other people are the same, the other way: they hate so much a stock that they jump on every occasion to put down the stock. If the stock drops a lot, they'll write or say: "I told you so!". If they are financial analysts, they'll write a short thesis after a big drop, jumping on the occasion to get some exposure in a tumultuous period.

Both ways make me sick like I've got the fucking Ebola. It makes me want to shit my guts and die.

A little exageration here, but, come on, versus the stock market and many many stocks, we are all blind or we have a very limited view about internal affairs of a business.

Have you read the thesis of Citron Research about Valeant? Or the writing on Seeking Alpha about Nobilis Health? Both of these are out in a period where almost everybody is anxious about what will happen with Healthcare stocks. I can't take these writings seriously but it looks like a lot of people do.

I could be excited and tell myself that it's a good period to buy more. But I still have a lot of money invested in these stocks.

More, I say to myself that the people who bought these stocks are easy to manipulate. Didn't they do their due diligence before buying? Do they doubt so much about their choices that any negative review make them feel nervous at the point to selling their shares with a loss?

Nothing new here, I've already written about how much market reactions make me ill. But I have to be honest here: With about 50% of my portfolio in Healthcare stocks, I've been too concentrated in the last few months. I'm sick about market reactions, but my sickness is partially due to myself.

I still believe a lot in healthcare stocks. But 50% is too much. Maybe the proportion should be 25 to 35% and not much more. I however think that this sector should be the largest in a portfolio. It's defensive and agressive at the same time. You'll get a low beta too. And as time goes by, more and more people will get ill and more and more people will die, simply because more and more people live on earth.

mercredi 7 octobre 2015

Not fucking related to the stock market

I just found out that very funny video on Youtube. It's about the trickiest games on the original Nintendo (NES). Just take a look at it. The guy that narrates uses just the same fucking language as I do!

Wow. This is my cosmic brother.


lundi 28 septembre 2015

Ayoye tabarnac

Today, I've been feeling like I had a pole in the cunt. I don't really know how it feels because I actually don't have a cunt. But, two of my favorite stocks, Valeant and Concordia Healthcare, are down like crazy these last days.

Concordia lost about half of it's price in the last weeks and Valeant lost about 1/3 of it's price in the last days. These two represent a big part of my portfolio so it hurts a bit. But, in a way, it doesn't hurt that much because these two are down for no dramatic reason.

Valeant is down about 20% because of an Hillary Clinton tweet about abusive drugs price that had repercussion among the american politicians.

Concordia is down about 50 fucking percent because of a public offering and maybe because of the politicians discussions too.

Not any of these companies has released bad news. It looks to me exactly as the same thing that happened to Visa and Mastercard 3 or 4 years ago, when the governement talked about abusive fees for credit card companies. These two stocks were down a lot and bounced back like fuck months after.

It's a little panic now. The panic won't last forever. Cash is king and pharma stocks are full of cash. And more, some pharma like Valeant, Concordia and Allergan seem 100% commited to value creation for shareholders.

Can you imagine hundred of billion dollars vanish from the market if american government regulates drugs price? What kind of government would like to be responsible for that?


mardi 22 septembre 2015

About excitement (EDIT)

One of the things that make me the most angry about human nature is when I see that Jason Donville says that company X is his top pick and the day after, a bunch of brainless assholes buy without any reflexion. I was like that about one or two years ago. It reminds me how a brainless asshole I was back then. Now, I'm much more mature (36 years old instead of 34).

At least, these people follow Jason Donville you may say. Yeah, you're right, they don't follow some fucking technical analyst who's saying that he sees some fucking pattern in a curve. Some fucking shape of a cunt. 

Some people keep asking me what I think about two stocks in which Donville seems to have a lot of convinction: CRH medical and Patient Home Monitoring.

I've written about Patient Home Monitoring before. So I won't write a lot about it, but let's just write down some important information.

Patient Home Monitoring (PHM.V)
Market cap: 225 million$
EPS last quarter:  -0,06$
EPS 2015 estimates: -0,02$
EPS 2016 estimates: 0,11$ (which seems pretty optimistic)
Actual PE ratio: Negative earnings. Fuck the PE ratio.
Forward PE ratio: 6 (for very optimistic analysts. How could a small cap go from -0,02$ to 0,11$ within a year?)

CRH medical (CRH.TO)
Market cap: 328 million$
EPS last quarter: -0,01$
EPS 2015 estimates: 0,11$
EPS 2016 estimates:  0,20$
Actual PE ratio: Negative earnings. Fuck the PE ratio.
Forward PE ratio: 25 (for very optimistic analysts. How could a small cap go from 0,11$ to 0,20$ within a year?)

Big point: The track record is small for these two companies. More, activity in these companies is pretty recent (about one year). Before, nothing seemed to happen. So, they still have to prove that they can acquire other companies in an accretive way. THEY'RE ABSOLUTELY NOT IN THE SAME LEAGUE AS COUCHE-TARD, CGI OR CONSTELLATION SOFTWARE.

Let's compare with Callidus Capital, a financial company which I like but which is new on the stock market (so, the track record is small there too). Take note that the market doesn't like Callidus because it lends money to distressed companies. However, management is buying back a lot of stock recently and they initiated a 5.5% dividend too.

Callidus Capital (CBL.TO)
Market cap: 603 million$
EPS last quarter: 0,36$
Actual PE ratio: 9
Forward PE ratio: 6,6

I don't see a lot of downside possible with Callidus and I can see that management believes in the stock. The street seems to loathe Callidus at the moment. But I'd buy it before CRH and PHM even if Jason Donville has said that he didn't like Callidus the last time he was on TV (some months before, he said he liked it though..., it looks like he doesn't always take the time to analyze everything he is talking about, just like you and me).

samedi 19 septembre 2015

Portfolio review - september 19th

A lot of selling and buying has been made in the Penetrator portfolio in the last days of august. I was disapointed with the results of some of my companies, I saw other opportunities and I added to my position in some cases.

I sold all my shares of Mallinckrodt, Dorman Products and Cipher Pharma. I initiated a position in Allergan and Chicago Bridge and Iron. I bought more shares of a lot of companies. It's been a while since there was so much activity in the porfolio. In fact, I'm not sure there ever was so much activity in my portfolio.

At the moment, I think there's a lot of stocks that look attractive. Home Capital Goup is still pretty cheap, Callidus Capital is dirty cheap (and the last results were good, such as the 5% dividend recently initiated). I still believe a lot in Valeant and Corcordia Healthcare (they made a huge acquisition recently). In the US, Portfolio recovery, Gilead, Allergan and Chicago Bridge and Iron are cheap. Dollar Tree and Ross Stores are a more expensive, but their price is more fair now than it was a month ago.

Here's the Penetrator Portfolio:

Canadian stocks:

Valeant: 15,1%
Constellation Software: 10,8%
CGI Group: 8,7%
Alimentation Couche-Tard:  7,4%
Home Capital Group: 6,8%
Concordia Healthcare: 6,5%
Nobilis Health: 4%
Knight Therapeutics: 3,8%
Callidus Capital: 2,8%

US stocks: 

Portfolio Recovery and associates: 8,4%
Gilead: 8,3%
Allergan: 5,3%
Chicago Bridge and Iron: 3,8%
Dollar Tree: 3,6%
Ross Stores: 3,6%

Cash: 1,1%

mercredi 9 septembre 2015

About some emails and comments

Since I've written my email adress at the right of this blog, some people have sent me some email, asking me what were my thoughts about this or this company. I've also recieved some comments on this blog, asking what was my opinion about a particular stock.

In the world of investment, the game is simple: be confident and act like you are the best at making great picks. In other words, say directly: "It's a good stock! Buy it!" or "Don't touch that with a ten foot pole!". You'll look great and you'll convince people that your homeworks have been made.

I can't do that. I would feel like a fucking peddler if I did that. I'm not a fucking expert. I'm not sure about my own choices, how could I tell my opinion about stocks which I don't own and which I don't follow closely (I don't even follow that closely some of my own stocks...).

I can see that a lot of people aren't that sure about their investment choices. It looks like some people need to be reassured when they write me a message. I understand that. But I don't feel qualified to hug you and tell you that you made a great decision.

Let's look at this recent email that I've recieved.


I like your blog.



What does Donville Kent think about FOSL? RoE seems high (>20%). CEO doesn't take cash compensation and owns 10%. Has grown EPS at a very good rate for the past 10 years. Market thinks watches will go out of fashion.



1- I don't have an opinion about Fossil (FOSL). Well, I have a tiny opinion, but I've never been interested in that company. I may have an opinion about maybe 100 companies. Other than that, I don't follow everything out there.
2- How the fuck could I know what is the opinion of Donville Kent about FOSL!?!? I've never read anything about that company from the mouth of Jason Donville. Maybe he has an opinion, but I'm not his agent or a relative. I don't even know his opinion about Google, Apple or any other US blue chip. He doesn't talk about american stock, so I just know what is written on www.stockchase.com. I don't represent anybody else than myself and sometimes, I'm not even comfortable to represent myself.
3- Your email says a lot of what I look when I check a company (ROE, EPS growth, insider positions...). You have a part of the answer with these metrics. Except for that, it's a question of moat and I don't really think that Fossil has a big moat, but I may be wrong. I'm not a fashion guy.

In retrospect:
PLEASE, DON'T BELIEVE EVERYTHING JASON DONVILLE OR ANY OTHER ANALYST SAYS ABOUT STOCKS. THEY COMMIT MISTAKES SOMETIMES. THEY MAY EVEN HAVE AN ACCOUNT ON ASHLEY MADISON. 

You surely would have liked to read something else, but one of the greatest quotes in the history of humanity is that one from "Thus spoke Zarathustra" (Friedrich Nietzsche): "I wouldn't want to be part of any group that would want me as their leader. Leave me now and I'll be back only when you will all be gone".

It's not the exact words, but the idea is something like that. 

In my opinion, it means that nobody deserves to be blindly followed. 

samedi 5 septembre 2015

The importance of dividends

The first book about investing that I've read was the one from Stephen Jarislowsky. I really liked that book, but as time goes, I can see how it was just an average book.

One of the quotes that had the more resonance for me was the line where Jarislowsky says that he choses to buy stock of companies that offer a dividend because every employee of the company gets a salary. Shareholders should have a salary too. In fact, they're the ones that take all the risk, it's obvious that they should be paid!

That idea became essential for me. How could I choose a company that wouldn't bring me any appreciation and no dividend?

You buy companies that don't offer a dividend? You haven't understand how investment works!

Me, I understand. So, I choose to invest in excellent dividend companies like Yellow Pages.

Eventually, I read a lot of things written or said by great investors. Like that famous Warren Buffett's quote where he says that if a company can reinvest 1$ in a way that produces more than 1$ of profit for the company, that company shouldn't pay a dividend. In other words, a company that invests in itself with great results shouldn't give away it's money.

The words of Jarislowsky were so much printed in my brain that I wasn't sure that Buffett gave such a good advice.

But now, with more experience, I can see that the words of Buffett were right. Dividends are good, but not in every circumstances. 

Constellation Software is a notable exception, but except for that, my best performers pay either a small dividend or no dividend at all. Here's a small list of good growth companies, in Canada and USA. You'll see that most of them don't give away a lot of their money. In other words, they surely can manage their money better than you will do if you recieve a dividend from them.

Couche-Tard (small payout ratio)
Stella Jones (small payout ratio)
Concordia Healthcare (small payout ratio)
Dollarama (small payout ratio)
Gilead (small payout ratio)
TJX (small payout ratio)
Ross Stores (small payout ratio)
CGI Group
Berkshire Hathaway
Dollar Tree
Portfolio Recovery and associates
Valeant
Allergan
Celgene
Jazz Pharma

The list could go on and on. I know that there's a lot of exceptions that people could bring. But, in general, a good grower will continue to grow better without giving any of it's money.

So, if you compare a big bank (for example: Royal Bank) and a middle cap pharma (Concordia Healthcare), you have the choice:

10% annual appreciation with a 3-4% dividend (RY.TO)
or
50% appreciation without a dividend (CXR.TO)

Final words: Once upon a time, dividends were on my checklist before buying anything. They're not there anymore.

lundi 31 août 2015

The day of great bargains

A week ago, I was somewhere in Utah, on my way to the fucking Antelope Canyon (beautiful place run by motherfuckers) and I was completely shocked by what I saw on the stock market. Almost all my companies were down a lot. What was happening? Did a meteor hit the earth? Did some new German fascist invaded Poland? It was a super-panic caused by nothing very exceptional: slowing growth in China.

I was shocked and excited. Richelieu Hardware (RCH.TO) was down like fuck. Allergan (AGN) was down a lot too. In fact, dozens of great companies were down 5, 10, 15%. I wanted to buy everything. But FUCK, I had already spend almost all my money left on friday, on a day that I thought was full of bargains. Such a fucking vicious fate. All I achieved to buy was a few shares of Concordia Healthcare at around 84$.

I'm still angry about that day. Such a day happens once every 2 or 3 years. And it passed right in front of me while I only had an Iphone on hand, in a place where I didn't have a lot of time to do some transactions.

Lesson learned: Fuck those trips in a foreign country. You better stay at home and watch stock markets every day. And even if you stay at home, don't stay away from you computer for too long.

For instance, if you're having a big crap, keep your computer on your knees. You'll never get rich otherwise.

vendredi 21 août 2015

There is blood on the streets: buy!

Ok, there's not really blood on the streets now, but a lot of things are on sale.

I have to say that I've been buying a lot of things recently. In fact, I have almost not any liquidities left at this moment.

For my portfolio, I've bought more shares of:

Home Capital Group;
CGI Group;
Concordia Healtcare;
Portfolio Recovery and Associates;
Allergan;
Chicago Bridge and Iron (massive bargain on that one, it's an initial purchase for me).

And now, I'm flying to Las Vegas to get a car and see some desert scenery and american national parks. If you're around Antelope Canyon in the next few days, let's set a meeting there.

mercredi 19 août 2015

small caps VS LARGE CAPS

Before, a great company was, for me, a company with a big name. A blue chip.

Then, a great company became a company that had a great track record (rear view mirror).

Then, I became intelligent like those apes at the beginning of 2001: A Space Odissey. I learned how to break something with a bone. A great company was now a company that satisfied a check list: high ROE, good growth, little debt, low beta, etc...

Around the time I became intelligent, I heard about the performance of small caps VS large caps. I've read a lot of times that small caps performed better than large caps.

Then, very recently (today), I've realised that it wasn't true at all. I've got a lot of examples of small caps that did well for a little while and then came with very disappointing earnings because of bad decisions, problems with integration of a business recently bought or simply the fact that managing growth is a challenge not so easy to achieve. I've got much more examples of small caps turning bad than examples of small caps turning well.

In fact, I'd almost recommend anybody to sell half of their position in a small cap if they got a 50% yield or above in a short period (less than a year). Otherwise, the odds are high that the stock price will go down and you'll lose a good chunk of your profit. For those familiar with canadian stocks, it happened with Biosyent, Cipher, Delphi Energy, Autocanada, Badger Daylighting, Rifco, Avigilon, and all those on the venture that I've written about before.

Many would say that it's easier for a small cap to grow than for a large cap. It seems true at first glance, but I think that it's easier to grow constantly for a middle or large cap than for a small cap. Small caps are less constant for sure. I haven't got any fucking universitary research on hand to say those things, sadly.

You've got some pretty aggresive medium and large cap stocks out there like Valeant, Gilead and Allergan. You've got Apple and Constellation Software. You've got O'Reilly (pretty expensive however). Please note that the guys at Sequoia once said that they prefered middle cap stocks because the results were usually the best with them.

I take a look at all my small caps holdings and the small caps I've owned before and it's not there that I've made most of my money. So, if you give me the choice between Valeant (VRX) and Biosyent (RX.V), I wouldn't hesitate a second to choose Valeant.

mardi 11 août 2015

About market reactions (DORM and PRAA)

Every long time investor knows that market reactions can be strange.

Sometimes, a company acquires another one and the acquirer goes a lot lower even if it's a very good acquisition.

Sometimes, a company has bad results and the stock price goes up. Sometimes, the results are good and the stock price goes down.

I have two recent examples:

Dorman Products (DORM) recently released it's results. Analysts were expecting 70 cents EPS and the results were 65 cents EPS. The company also missed the expectations about revenue. The growth with comparable quarter last year was anemic. In the following days, the stock price went up more than 10%.

Portfolio recovery and associates (PRAA) released it's results yesterday. The EPS and revenue were under expectations but were nonetheless good in my opinion. Analysts were expecting 1,15$ EPS and the company got 1,06$ EPS. The EPS for comparable quarter last year were 74 cents. So, EPS are up 43%. Return on equity is also pretty good at 23,5. Today, shares are down 10%.

Both companies didn't meet analysts expectations and one is up 10%, the other one is down 10%. The one that is up has anemic growth and the one that is down has good growth.

Pretty wierd.

I sold all of my Dorman shares because I was tired of such low growth and excuses about their ERP system issues. I would however be tempted to buy more PRAA shares because the price of the stock is very low for such a good growth and good ROE (a 24 ROE with a 10-12 forward PE is equivalent to ROE/PE = 2, which is very good).


samedi 8 août 2015

Patient Home Monitoring (PHM.V): I stay away

There's a lot of things that I don't understand in the stock market. Why Gilead isn't going up after such good results? Why is Amazon so expensive? Why Bruce Berkowitz keeps buying that fucking Sears Holding?

And why Jason Donville, the king of analysts in Canada, has made bad top pick suggestions such as:

Pulse Seismic (PSD)
Directcash payments (DCI)
Delphi Energy (DEE)
Rifco (RFC.V)
Biosyent (RX.V) at 10,25$ (it was pretty expensive back then)

And now, what about Patient Home Monitoring (PHM.V) which is one of the new darling stocks of Jason Donville?

I've always been reluctant about that stock. First, it's on the Venture stock exchange, a stock exchange on which I've only had bad experiences (LOY, MCR, NCI, RFC). That fucking exchange is full of crappy businesses that can only achieve 2 or 3 good quarters and then fall in an abyss of shit. I'm out of there, maybe forever.

But I'll try to pass over my disdain of the venture to push a little further on PHM.

That company is trying to consolidate the market of services to people who need home monitoring (sick people). I agree, it's a nice sector.

That company is buying everything at a phenomenal rate which is something that works for some companies (like Valeant, for instance). But for a small business, I don't know.

On april 28th 2015, they released their fucking results and they had 0,0079$ EPS. FUCK, that's not even 1 cent EPS.

The most important point for me is: even if they buy everything in sight, they haven't proved yet that they can integrate so many businesses in an accretive way. Some analysts expect that EPS for 2015 will be around 2 cents and that EPS will be around 11 cents in 2016. What? Multiply the EPS by 5.5 in only a year???? Who is able to do that!?!?

And more, there has been a lot of insider selling recently, which is something I dislike. Two executives sold more than 13 millions shares at 1,36$ (result: more than 18 millions $).

I've sold my position in United Therapeutics (UTHR) because of that (the transgender CEO is constantly selling shares). It turned that I didn't do such a good move because the stock went from 100$ to about 165$ after my selling (it however went from 50$ to 100$ between my buying and my selling).

But well, for PHM, if they think that their fucking incredible acquisition rate is accretive to earnings, why do they sell their shares? What a bunch of cocksuckers. I can't respect such management.

I may be wrong, but there's a lot of other businesses that do things the way I like it and I'd rather look there. That's why I'm staying away of PHM, whatever anybody thinks about that company.

samedi 1 août 2015

Some US stocks to watch (that I don't own)

The stock market is pretty high. It's hard to find something attractive. You have to use a screener to find interesting things... and even if you do, you won't find a lot of stocks at interesting prices.

Even if I consider that my 15 stocks are enough for my portfolio, I'm always looking elsewhere to find prettier girls to fuck. So, I'm always reading, or taking a look at my impressive watch list. And sometimes, I use a screener. There's a screener on Google Finance but I prefer the one that is avalaible on Value Line. Here's some of the metrics I use to build my screener (I use some other metrics too, but not as important as these):

PE: under 20 (at least, the forward PE should be under 20)
ROE: over 20
EPS growth per year for the last 5 years: over 15%
Projected EPS growth per year for the next 5 years: over 15% (Value Line guys are conservative, they usually underestimate growth so, if they estimate a 15% growth, it'll probably be higher)
Long term debt/Capital: Maximum 50%.

That screening should extract companies that:
  • achieve high growth year over year;
  • possess a certain moat;
  • are not too pricey
  • don't have a high level of debt. 
Usually, when you find a cheap stock with a high ROE, it's because that stock is related to resources, which is not a very good thing. Just take a look at the fucking TSX since the beginning of the year. Canada is so much related to resources that our fucking index is stalling or regressing when oil price drops. Fuck us!

Here's some US companies that seem interesting to me. I don't own shares of any of these companies but I could buy some stocks one day. Maybe soon. Maybe later. Maybe never.

1- Chicago Bridge and Iron (CBI)
Not my type of stock (services to the consumers in the energy infrastructure), but some superinvestors bought shares of this company in the last month. The metrics are pretty good for a company in this industry and the price is dirty cheap. Please note that Warren Buffet is an investor of this company. I like this stock because it's cheap and because some great investors are behind it.

Beta: 2,1
Forward PE: 9
ROE: 22
EPS growth last 5 years: 23%
Dividend: 0,5%
Market Cap: 5,6B$
Superinvestors in: Arnold Van Den Berg, David Einhorn, Robert Torray, David Tepper, Francis Chou, Warren Buffett, Thomas Russo (7 people)

2- Union Pacific (UNP)
One of the best railroad managers out there. Maybe the best. I like railroads companies because barriers to entry are pretty high and viability of the business is almost guaranteed. However, becoming rich by owning a railroad company is an utopy. Aim at a 10-15% yield for the long term and it should be achievable. I like this stock because it's maybe the best railroad stock in America and because it's the cheapest of all the best railroad stocks at the moment.

Beta: 1
Forward PE: 15
ROE: 24
EPS growth last 5 years: 25%
Dividend: 2,3%
Market cap: 85 B$
Superinvestors in: David Winters, Lee Ainslie, Thomas Russo (3 people)

3- Biogen (BIIB):
Do I have to repeat once again that I love biotech/healthcare stocks? Biogen has always been pricey but recently, the price took a nice dive (21% down in the last month) because of a cut in the outlook. That company is full of cash and they may announce an acquisition in the next year because they can buy a lot of things. I think it's my favorite pick in this list because of the high ROE and because of the sector.

Beta: 0,9
Forward PE: 18
ROE: 32
EPS growth last 5 years: 30%
Dividend: 0%
Market Cap: 75 B$
Superinvestors in: Nobody

4- Mylan (MYL):
Like Biogen, Mylan's share price took a nice dive too (about 18% down in the last month) because people were so sad that it wasn't bought by Teva. Teva instead bought generics from Allergan. Snif snif. It's so fucking sad. Just take a look at the growth of earnings in the recent years and you'll find some relief. Like all the major biotechs, they'll probably acquire something else or be acquired by a bigger company (why not Valeant?). I like this company for the EPS growth and for the sector but the ROE is a little low for me.

Beta: 1,2
Forward PE: 12
ROE: 14
EPS growth last 5 years: 52%
Dividend: 0%
Market Cap: 27 B$
Superinvestors in: Thomas Russo (1 people)

5- Zoetis (ZTS):
Zoetis is the most expensive suggestion of this list but Bill Ackman is a big owner of that one. When Bill Ackman is around, activism is in sight. Take note that Ackman has bought for about 75 M$ of this stock in the beginning of july at a price of 48$ per share, which is about the actual price of the shares. I like this stock for the very high ROE and for the superinvestors who are behind it (Bill Ackman and Robert Goldfarb are among my favorite investors). However, the price is high and the growth is so-so.

Beta: 0,9
Forward PE: 26
ROE: 50
EPS growth last 5 years: (ZTS doesn't have a long track record. EPS are growing about 10% per year for the last years)
Dividend: 0,7%
Market Cap: 25 B$
Superinvestors in: Bill Ackman, William Fries, Robert Olstein, Robert Goldfarb/David Poppe (4 people/institutions)

jeudi 23 juillet 2015

Portfolio review - july 23th 2015

The Penetrator Portfolio is up about 20% this year, which is pretty good given the fact that the performance of the S&P/TSX has been flat so far.

What are the big winners of my portfolio since the beginning of the year? Let's see:

Nobilis Health is up 143% (precision: I didn't have shares of NHC at the beginning of the year).
Concordia Healthcare is up 120%.
Valeant is up 88%.
Constellation Software is up 65%.

The other stocks didn't do bad (except for Home Capital Group and Callidus Capital) but they didn't achieve such a spectacular performance.

On this day, Valeant released excellent results. The stock has been up about 6% today and it may continue to go up in the next few weeks. Given the rate of acquisitions and the gift Michael Pearson has for integration, I'm pretty sure that Valeant will be a 400$ stock at the end of the year (330$ today).

The next days will bring us a lot of results and the picture of my portfolio may change a lot.

Ok now, here's my portfolio.

Canadian stocks:

Valeant (healthcare): 14,7%
Constellation Software (information services): 9,8%
CGI Group (consulting services): 7%
Couche-Tard (convenience stores): 6,7%
Concordia Healthcare (healthcare): 5,7%
Cipher Pharma (healthcare): 4,4%
Nobilis Health (healthcare): 4%
Home Capital Group (financial services): 3,2%
Knight Therapeutics (healthcare): 2,7%
Callidus Capital (financial services): 2%

US stocks:

Mallinckrodt (healthcare): 9%
Portfolio recovery and associates (financial services): 8%
Gilead (healthcare): 7,9%
Dollar Tree (1$ stores): 4%
Ross Stores (cheap clothes): 3,6%
Dorman Products (auto parts): 2,6%

Cash: 4,8%

mardi 14 juillet 2015

Home Capital is sinking... and I don't wanna swim

Have you seen the incredible drop of Home Capital since yesterday? It's been pretty spectacular: about 23% down since monday morning.

Why? The company has announced that the earnings would be flat since last quarter and would be a little down since same quarter a year ago. About 2% down which is not too scary. The sales are a little more scary because, even if earnings look flat, the sales are down a lot.

The growth at Home Capital seems to have stopped. When will it resumes? Surely not at short term. It worries the market and it worries me a bit, but it's still a great company and the metrics are good.

What do we have now? A company for which:

Average ROE last 5 years: 25
Actual PE ratio: 7,6
Bottom PE ratio last 5 years: 9
Actual Dividend: 2,7%
Price to book value: 1,6 times (which is very low for such a great business)

It looks a bit like IBM: High ratio PE/ROE, high dividend (on a relative point of view), very well managed business that has a long history of rewarding shareholders. And I don't see how it could get much lower from here. Few large companies have such a low PE ratio.

It may be the time for the company to buy back massive amount of stocks or to be bought.

Should you buy? I don't know (I never really know). For the short term, forget it. For the long term, it may be an excellent moment to get some shares and a nice dividend which may grow along the way (your 2,7% dividend may easily become a 4% dividend in about 5 years).

The company still aims at about a 10% earning growth each year which is a nice growth for such a low price.

Check it out. 

dimanche 12 juillet 2015

The nightmare is over

Did you ever have a boss who disliked you and most of the people with whom he worked?

That was my case until recently and I was so upset that I thought very seriously about retirement or any kind of reorientation. I didn't feel safe at all because that guy moved everyone around him. In about a year, he moved about 50 people and he said some nasty things to me about others and some other nasty things about myself to me directly.

Like: "Out of ten, I'd give you 4/10 for your intellectual capacities or 3/10 for your team management. "

That was pretty fucked up: the guy who didn't know what was the name of the members of The Beatles saying to me that I lack intelligence (OK, knowledge and intelligence aren't the same) or the guy who couldn't get along with anybody telling me that I couldn't manage a team.

I'm pretty happy to have gotten a better job with nice people. I'm still a little upset about all the things he said to me. But well, I'm back to a more normal attitude: I still want to retire as soon as possible, but my mind is way lighter now. In other words, I can breathe easier now.


mardi 30 juin 2015

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.

samedi 20 juin 2015

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.

mardi 16 juin 2015

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!

vendredi 12 juin 2015

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.