4 'Special Situation' Canadian Stock Picks

Disclosure: I own MRD and CMG

WestJet Airlines (WJA-T)- WestJet is the best-in-class airline in Canada. Their balance sheet is exceptional for any company, much less an airline. They have a long term debt to equity of .42 and 1.45 billion in cash. That's almost half the market cap in cash. The nature of the airline industry is very cyclical so I would be cautious at these levels, but we can learn a lot from WestJet about how a best-in-class company almost always outperforms. Their main competition, Air Canada, is bogged down in legacy and pension costs, hampering their ability to effectively compete. WestJet continues to execute on their strategy of being an efficient and well-run company. Airlines are generally shunned by investors, but the numbers don’t lie with WestJet. Personally, I wouldn't think twice to buy on any type of pull back even at these extended levels, but you’ll want to keep a close eye on earnings calls for any cyclical slowdowns.

Cineplex (CGX-T)- Cineplex has a dominate position in movie theaters  essentially a monopoly. Their only competition is from Empire Company who also operates a small chain of movie theatres. Movies are ingrained in our society, and I still believe Cineplex will thrive even with the internet and downloading movies becoming more prominent. Cineplex makes most of their money on high markup confectionery items, which hints at a pricing advantage. With the lack of significant competition and a proven management team, I expect Cineplex to continue to outperform the broader index over time.

Melcor Developments (MRD-T)- There have been several negative headlines the last 6 months regarding the housing industry in Canada. As a result, the valuation of Melcor Developments has been depressed, still trading at 5.5 times earnings and .92 book value. Considering the recent company performance, which has been great, there is a clear disconnect between the valuation and the performance of the business. I think Melcor will be a great pick for 2013 because it should appreciate by a combination of multiple expansion and earnings performance. They recently announced plans to unlock value by spinning off some assets into a REIT – the result is a more focused community developer with more capital. I’m willing to bet housing is in a correction, not a free fall, and Melcor is the cheapest way to play with still some room for serious growth long term.

Computer Modelling Group (CMG-T)- CMG occupies a terrific niche in oil services technology; they make reservoir simulation software for the oil and gas industry. They have a tremendous record of un-interrupted double digit earnings growth over the last 10 years, usually growing over 20% a year. Over the long term, they have rewarded their shareholders handsomely with a combination of dividend growth, special dividends and capital appreciation. They have a world class balance sheet with no long term debt and lots of cash. A decent argument can be made that CMG is expensive, trading at 28 times forward earnings, but I believe it’s worth the premium. There is almost no other company that has consistently performed better over the long term than CMG, yet it still remains under followed and underappreciated.

No More Using Margin, Raised Cash, Transitioning

I haven’t been updating my progress lately because I have not been able to save any money. I ended up quitting my new job realizing it was not for me pretty quickly. Currently, I’m on the lookout for better employment, something new and enjoyable. In the mean time I have started an eBay Store and remain very optimistic on my portfolio and progress. Here’s the link to my store: http://stores.ebay.com/Huffs-Puffs 

Portfolio wise, I did raise some cash to start the eBay store by selling some of my more conservative large cap holdings. The eBay store cost about $4000 to buy inventory and start up. I basically downsized the portfolio, sold some relative losers, kept my winners and focused more on my core strategy which is under appreciated small /mid caps. I also closed out my margin debt balance; now the dividends are coming in as cash, and I’m completely debt free, which feels good.

The positions I parted ways with were Saputo, Tim Hortons and my only materials stock Imperial Metals, taking a small loss on THI and nice profits on SAP, III. I now have no commodity miners or oil and gas producers in my portfolio. I also sold my position In Prism Medical down about 12% -$250 loss (first significant loss in recent memory), and sold SIR Corp for a nice $400 profit.

The performance of the portfolio has been surprisingly awesome, especially lately. Several positions are near all time, or 52 week highs. I have no losers in the portfolio. Most positions are comfortably in the green. My portfolio has untaken profits of about $13 200. Luckily several stocks have been exceeding my expectations including MTY, AD, MRD, KBL, CMG, AP.UN, SNC and WTE. My largest holding, Asian Television Network, has benefitted lately from clarity on growth objectives and some new launches, specifically 25 channels with Cogeco Cable. I’m very confident in the future prospects of these companies and continue to hold all of them.

What I am left with now is a focused small/mid cap, special situations portfolio that I believe is positioned well for long term growth. I will continue to focus on being extremely passive and letting my positions run. I just had a job interview, so hopefully that works out and I’m looking forward to new goals and challenges in 2013.

Thank you to everyone who visits this site and all your emails. I hope we can keep learning together. Please email me at john@riseofamillionaire.com for market chat or just to bounce an idea off me. Good luck to all in 2013.

Margin Account
Company Name	# of Shares	Market Value
Westshore Terminals	135	$3,773.25
Asian Television Network	2750	$9,130.00
Allied Properties REIT	94	$3,215.74
Black Diamond Group	260	$5,712.20
K-Bro Linen	123	$3,688.77
Computer Modelling Group	196	$4,321.80
SNC Lavalin	53	$2,391.89
Bird Construction	204	$3,047.76
New Look Eyeware	100	$939.00
MTY Food Group	125	$3,012.50
Melcor Developments	150	$2,934.00
	Total	$42,166.91
TFSA Account
Company Name	# of Shares	Market Value
New Look Eye Ware	190	$1,784.10
Alaris Royalty	122	$3,128.08
Asian Television Network	469	$1,557.08
MTY Food Group	136	$3,277.60
	Total	$9,746.86
Cash	Total	$375.00
Margin Account	Total	$42,166.91
TFSA Account	Total	$9,746.86
RRSP Mutual Fund (approx)	Total	$800.00
Total Assets		$53,088.77

4 Practical Tips for Passive Investors

1. Avoid opening your broker account daily/regularly – Unless you’re doing research, there’s no reason to open your broker account and look at your positions constantly. As a beginner, this was something I did frequently and it mostly lead to unprofitable, emotionally driven portfolio moves. 

Personally, I found that I would talk myself out of a perfectly fine company, or ‘take profits’/ sell one of my winners, when the best thing to do was nothing. I was more susceptible to market fluctuations. As a passive investor, most of the time the companies you originally selected should still be compelling for the same reasons you chose them in the first place. It’s easy to forget the original reason why you bought a stock when you’re constantly looking at your positions and the profit/ loss column. Always remember the reason that first compelled you to buy a stock; if it has not changed, hold, if it has changed or maybe you were wrong in the first place, then you may think about selling and replacing with a better company. You cannot gain this insight from constantly checking your positions. 

You should always question your positions and continually look for better companies, but having your online broker always open can lead to too many emotional trades. I like to briefly look at a watch list once or twice a day to keep an eye on my positions. Speaking from a passive, long term investor perspective, in my experience, there is no value in watching your positions constantly throughout the trading day.

2. Do way less, but not nothing – As a passive investor, it’s very important to not make too many portfolio moves, but you still have to sometimes. This is a problem that I’m learning the hard way. This year I have essentially made almost no portfolio moves, except buying stocks with new money saved. In hindsight, because of my extreme passive nature, I have missed out on good opportunities. Ideally, as a passive investor, the goal should be to make as little trades as possible without missing out on an opportunity to add a better company to your portfolio. The upside of extreme passivity is low trading fees, but that shouldn't discourage you from selling a less attractive stock for a more attractive stock. So do way less, but not nothing. (I realize ‘not nothing’ is terrible grammar but it seems to uniquely fit my thinking on this subject)

3. Make your own index fund and let it run – I find it helpful to think of investing in this way. If you buy an index fund, basically you are buying every stock on the S&P500 or TSX and holding it for an indefinite period. I like to think of my portfolio in that way. Essentially my portfolio is my own personal index fund of my favorite companies, and for the most part, I plan to hold all the companies for an indefinite period. 

If you buy individual stocks like me, you have the flexibility to switch a company out and add a more attractive one. Most people would think of that portfolio flexibility as a positive, but one just needs to observe how almost all mutual fund managers under perform an index fund over the long term. Hence, that flexibility could be negative. This is why I always recommend a passive, long term approach. For the most part, if you make your own index fund of 10-20 stocks and let it run passively for the long term I’m willing to bet your long term returns would be better than if you were constantly tinkering with your portfolio daily (which seems to be common practice of most investors).

4. Think only very long term (5yrs-forever) – So your favorite company just had a less than great quarter and the stock is beaten down accordingly - don’t worry. As long as you bought the stock for the right reasons in the first place, time will heal your worries and the stock price. 

Time is the friend of a wonderful business. A good illustration of this is Saputo; after a rough quarter earlier this year the stock sold off to below $39. Despite the reason for the weak quarter, you could still have concluded with a good degree of certainty that Saputo still had a leadership position in Canadian dairy and specialty cheese markets (which it did and still does), they still had growth opportunities in international markets and by acquisition (still does). Despite the bad quarter, the original reasons why you would have bought the stock were still intact. That’s why it is so important to think very long term. Since then the stock has advanced to over $50. Short term thinking could have had you sell this stock at fire sale prices, only to see it shrug off temporary shortfalls and continue to rally. Remember, this only applies to phenomenal businesses.

Thoughts on Westshore Terminals Investment Corporation

Disclosure: I own the stock. 

Westshore is the single busiest coal export terminal in North America. They have a good balance sheet, predictable earnings and a dominate leadership position in coal exporting, basically a monopoly. They are uniquely positioned to benefit from macro trends in coal, mainly involving China. They operate in a repulsive business, which I prefer; it's much cooler to invest in alternative energy and biofuels than dirty coal, but they don't make the steady cash like Westshore does. Growth comes from periodic equipment upgrades to handle larger volumes of coal over time - they did 2 upgrades this year which should lead to record volumes moved next year. The macro logic matches the company fundamentals.

Consider Denmark, one of the world leaders in clean energy and environmental conservation, yet over half of their power is still generated from coal burning power plants. There is also China and India which continue to grow and drive consumption on a grand scale. The logical thing would be to think that ‘coal is bad’ because it’s dirty, not good for the environment and has a negative stigma attached to it. However, reality says that coal is still widely used for generating electricity even in the more environmentally friendly countries and it continues to be the most economical means of feeding the power grid. It would be too easy to underestimate Westshore with the “coal is bad” type of approach but good investments tend to prove conventional wisdom wrong.

I would expect solar, wind and alternative sources of energy to become more prominent over the next 20 years, but coal will be there as well over the long term and Westshore Terminals will be a tremendous way to benefit from it.

I believe Westshore Terminals could be that great long term buy and hold stock. I wouldn’t expect any phenomenal returns, but the certainty of the business is what attracts me. No matter what, tomorrow people in China, India or anywhere else where coal is used, are going to turn their lights on, log on to the internet and use the power grid. There are cyclical elements that have to be considered and monitored, such as steel making coal, but all things considered I see there being a need for coal over the next 50-100 years. Westshore is basically an intermediary and benefactor of people turning their lights on every day – the Tollbooth of coal producing electricity.

Could I be wrong? It is possible that there could be a miraculous breakthrough in technology and economic feasibility for solar power. I think solar will be the future, but I don’t see any sudden changes on the horizon especially with the oil/ coal lobbyist contingency. If anything, cleaner forms of energy become a large part of our energy needs over time, along with a portion still coming from coal. There doesn’t even have to be tremendous growth in coal consumption for Westshore to continue to thrive. They are uniquely positioned to benefit from a low growth industry.

I don’t like to focus on numbers. I’m not any good at math. As long as the basic fundamentals are met (good balance sheet, low debt, steady long term earnings), I prefer to think about a business in a logical, objective way. I like to ask myself, ‘Do I think this business will still be thriving in 20 years?’, ‘What makes this business special?’, ‘Do I easily understand how this business will make money over the next 20 years?’ With Westshore, I can confidently answer those questions with a great deal of certainty, which is why I have a position.

Dividend Yield Hunters Beware

There are several variables that should be considered when buying a stock. It’s the job of the investor to do research and add importance or weightings to certain special characteristics of a business. For example, I like to put deep emphasis on earnings growth/outlook and the balance sheet. If a company is losing money or deep in debt compared to shareholders equity, I would exclude from buying. That eliminates some stocks right away. I also pay close attention to the price to earnings ratio as related to the growth rate of the company and the return on equity. I like simple, easy to understand businesses. These types of fundamental measures help me effectively zero in on possible investments that pass the criteria. They work for me, and you should find what works for you.

A challenge for the investor is finding out what is really important to whether a stock will be a good investment and putting emphasis on those factors when searching for prospective buys.

I observe frequently investors stressing the importance of yield too much. It’s not that I am anti dividends. I love dividends and a majority of my positions happen to pay dividends. But it is a mistake for the enterprising investor to have strict guidelines for dividends and limit stock holdings to say ‘only stocks that yield more than 5%.’ For example, if you come across a business that has great double digit growth, terrific niche products/brand, room for expansion and great balance sheet, but simply disregard the stock because it ‘only yields 1.2%’, that behavior can leave a lot of good opportunities on the table.

In Canada, there were plenty of opportunities that would have been overlooked if you had a strict dividend rule like the above or were just too dividend oriented in your stock analysis. Some of these include, Dollarama, Lululemon, Alimentation Couche-Tard, MTY Food Group, Tim Hortons, CGI Group.

I am writing this as a first hand offender, as I myself have disregarded some of the above names because of the thirst for yield. I suppose this article is about admitting a mistake and learning from it, which we should all do as investors.

Something should be said about the individual needs of each investor. It makes sense to be yield focused if you plan to retire in 5-10 years. In certain situations buying for yield can be a terrific investment strategy; for instance, if you have a large sum of capital and want to invest it to live off the income. Or maybe you just want to have a more conservative, yield oriented approach because that makes you comfortable; all valid reasons and there are many other situations where yield is good.

However, as an enterprising stock picker with long term capital appreciation in mind, all businesses that can be understood, regardless of the dividend yield should be considered as a possible investment. My recommendation would be to focus more on the fundamentals and think of the yield as a nice bonus – the cherry on top of a wonderful business. It’s more difficult to be successful in stocks if you are overlooking wonderful businesses because of the yield, or lack thereof.

3 Things You Need to Know as a Poor Investor

As a poor investor, there are 3 very simple things you can do to make yourself a better investor right now. You may already practice them, but it's still worth exploring and will be particularly helpful for new investors on a budget.

Saving money is insanely important. You have to learn how to manage your finances and save money. I hear frequently people talking about increasing your income – that’s fantastic and worth pursuing, but the reality is 80% of the people out there are making lower/middle class income. That’s not necessarily a bad thing; a friend of mine is a hairdresser and she loves her job and is very happy with the present situation, yet she makes only 20k a year. If you can save money well, you have more freedom to chase your goals, whatever they may be. Whether it’s starting a business, investing in stocks or just wanting security and certainty, you can greatly increase your chances of success by managing your money well and saving. 

Saving money starts with making independent decisions for the betterment of your financial future. It's about realizing that if you give up small luxuries now, it can lead to huge financial gain in the future. It's learning that material things do not add fulfillment and enlightenment to one's life. It's about getting healthier and eliminating health/wealth destructive practices like excessive drinking, smoking and spending. Saving money is something most people cannot do, so take pride in knowing that your going against the grain and taking control of your future.

Secondly, you need to be aware that you can get rich over time by diligently investing small amounts of money periodically. It’s basic math. For example, say you invest $50 per week for the long term in a stock index fund. If you can do that, and are lucky enough to get the normal 10% average annual return from stocks, after 30 years you would have about $456 000 dollars. That figure increases the more you save. Think of how easy you spend $50 dollars. With small tweaks in your lifestyle, most people can save that money even on a lower class income.

Third, as a poor investor you need to minimize fees and commissions for your investments. Instead of investing in mutual funds (high fees), consider exchange traded funds or picking stocks (if you are willing to do a little work). This means you need to open a brokerage account to purchase your investments. For poor investors, I recommend online discount broker Interactive Brokers – they have some of the lowest fees around and an easy to use trading platform. I would also stay away as much as possible from the big 5 banks if you are Canadian. There are way better options out there and their fees are just laughable - $20-$30 a trade and $15/month for a checking account!? It's absolutely ridiculous and should be avoided.

By saving and investing small amounts periodically in low fee exchange traded funds, as well as using a no frills broker with low fees, even a person making income below the poverty level can have a meaningful investing plan.

Saved $1000, Bought MRD, PM. Sold ARX, some SAP. Added to MTY, BCI

I made a calculated decision to get smaller in my portfolio, so I sold some blue chips (Arc Resources, Saputo) and added new small cap names, as well as added to some of my existing smaller holdings.

With the $2000 in cash I had from liquidating my mutual funds, I started a position in Prism Medical. Prism is an exciting company with a leadership position in a terrific niche – medical equipment for the mobility disadvantaged. Last year they moved their manufacturing facilities to the US closer to their growth markets and made investments to operate more efficiently. This year, earnings are on pace for double digit growth and my hope is they can continue to grow the business in the 10-15% range for years to come. If this happens, Prism is a very cheap stock currently. It trades at 9 times earnings, 5 times cash flow, has a 5% yield and a solid balance sheet. If they can execute their growth plans and gain some appreciation from institutional investors, the stock could be much higher in the coming years. It currently has no analyst coverage. The stock also has great defensive characteristics as their business is not correlated to economic activity; during the financial crisis the stock was essentially flat when most stocks plummeted. Thanks to Chris Cashflow for uncovering this little gem.

I added 2 $500 deposits to my TFSA since last update. With those funds and funds generated from selling ARX and SAP, I added to MTY, BCI and started a position in Melcor Developments MRD.

Melcor Developments is a play on real estate in the western provinces of Canada. Since moving to Alberta a month ago, I have been pleasantly surprised with the amount of economic activity and the general feeling of economic prosperity. As a land development company mainly in Alberta, Melcor seemed like a good way to gain exposure to the economic activity. The fundamentals are compelling as well. Trades at 5 times earnings, has a good balance sheet and are on pace for solid growth this year. Thanks to David the Grouch for insight on this one.

Selling Arc Resources and some of my position in Saputo was more about my views on where I want my portfolio to be, rather than selling because I think their bad companies. I want to focus more on underfollowed small cap stocks instead of blue chip dividend payers. From my perspective, these underfollowed names have more room to grow and are generally better deals because of their underappreciated nature. If these stocks go up in the future, it will be because the business is executing, not because of a public recommendation or that the stock is mentioned in lots of articles as a ‘solid blue chip’.

The best thing that can happen with these underfollowed stocks is they themselves become blue chips over time. My hope is that getting in before the main stream investors, while these stocks are relatively unknown, will be very profitable.

I doubled my position in MTY as well. This stock just looks plain cheap for a high growth company. They have proven in the past they can execute and continue to do so. Net income so far this year is up over 30%, yet the stock trades at 15 times forward earnings. When comparing to other names with similar growth like Lululemon, which trades at 33 times forward earnings, MTY is an easy buy for the long term, even at these extended levels.

Margin Account
Company Name	# of Shares	Market Value
Westshore Terminals	135	$3,739.50
Saputo	69	$2,831.07
Asian Television Network	2750	$8,030.00
Allied Properties REIT	94	$2,979.80
Imperial Metals	316	$4,079.56
Black Diamond Group	260	$5,733.00
K-Bro Linen	123	$3,548.55
Computer Modelling Group	196	$3,606.40
SNC Lavalin	53	$2,010.29
Bird Construction	204	$2,958.00
New Look Eyeware	100	$924.00
Tim Hortons	30	$1,509.90
MTY Food Group	125	$2,406.25
Melcor Developments	150	$2,287.50
	Total	$46,643.82
TFSA Account
Company Name	# of Shares	Market Value
New Look Eye Ware	190	$1,755.60
SIR Corp	105	$1,396.30
Alaris Royalty	122	$2,885.30
Asian Television Network	469	$1,369.48
Tim Hortons	10	$503.30
Prism Medical	325	$1,982.50
MTY Food Group	136	$2,618.00
	Total	$12,510.68
Margin Amount (approx)	Total	$4,600.00
Margin Account	Total	$45,054.56
TFSA Account	Total	$12,510.68
RRSP Mutual Fund (approx)	Total	$800.00
Total Invested Assets		$59,954.50

How To Buy and Hold The Right Stocks

I am a big proponent of passive, buy and hold investing. One of the best quotes that sums up my approach to passive investing is from Warren Buffett, “Wall Street makes money on activity; you make your money off of inactivity.” It makes sense – Wall Street wouldn’t want people to stop trading, they would lose out on their fees and commissions. The investor that makes 20 orders a year is essentially worthless to a broker, as opposed to the trader who makes over 1000 orders a year. No wonder these online brokers always advertise ‘open your ‘trading’ account’, it’s never ‘open your long term passive investing account.’ They make loads of money off of retail investor in this way.

Passive, long term investing is the most rational approach to buying stocks for the retail investor because you save so much on fees. You also benefit mentally from a low maintenance portfolio management style that doesn’t require a lot of time inputting orders every day. As a long term investor, most of your time should be spent hunting around index listings for more phenomenal companies and doing research on Sedar.com.

The best buy and hold stocks have 3 fundamental characteristics that make them ideal for the long term investor.

1. Consistency of Earnings- When purchasing stocks to buy and hold for long periods of time, consistency of profits is an important thing to consider. If the business is making money one quarter and losing money the next, there should be no attempt to buy and hold. Consistency of earnings is a sign of stability and quality in the business. Usually these companies pay and grow their dividend over time. A good way to measure consistency of earnings is look at the income statement during the last few recessions. Did net income tumble dramatically from pre-recession levels? If net income was the same or kept growing during the recession, you may have found a good buy and hold stock candidate.

2. Room for Growth- Companies must have a clear plan for growth and operate in a big enough market to execute that growth over the long term. Pay close attention to market capitalization; a fantastic 300 million dollar corporation is probably more likely to outperform over the long term then a fantastic 50 billion dollar corporation. That’s not to say that a large company can’t be a terrific investment - just look at Warren Buffett’s Coca Cola investment. He bought in the late 80s when the whole company was worth about 10 billion, now the company is worth over 170 billion. Paying close attention to market capitalization helps you to know what to expect from a stock. For example, I don’t buy Colgate Palmolive expecting it to be a 5-bagger over the next 10 years. Because it is so big and sells into mature markets, you expect Colgate to give you slow and steady performance in good and bad markets, not explosive growth.

3. Special Intrinsic Characteristics- Intrinsic value is a well-known idea among value investors but it’s hard to identify and define. There is not one simple formula that defines intrinsic value; it is instead a combination of several special characteristics that ultimately produces intrinsic value within a business. These characteristics include a monopoly, a niche market, a unique business model, pricing power, brand power, reoccurring revenues, special management. Many times a company will have 2 or 3 of these characteristics making them more special than your average stock and usually worth a buy. These characteristics are all part of the ‘financial moat’ that all fantastic businesses have. Searching for intrinsic value in names that are relatively underfollowed can be very rewarding for the long term investor. Getting in before the big institutional money is why I am a fan of underappreciated and under followed small cap stocks.

If you can find special stocks with an intrinsic value, that have steady earnings and room for growth, then these are the best stocks to buy and hold for an indefinite period. This is summed up by Buffett in another of his quotes, “Time is the friend of the wonderful business, but time is the enemy of a terrible business.” When you buy wonderful businesses with a financial moat and room for growth, time is on your side.

Rise of a Millionaire Portfolio Update: Added to AD, Bought THI

With the new job and steadier income, I decided to increase my margin balance to $5000. I added Tim Hortons to my portfolio buying 10 shares in my TFSA and 30 shares in my broker account. I have long wanted to buy Tim Hortons but for reasons unknown was never able to pull the trigger. It’s been that annoying winner that I should have bought along with Lululemon and many others.

To me the stock is fairly valued given its future growth prospects and 30% return on equity. It’s an above average company with an average valuation. On top of that, every Tim Hortons I drive by on the way to work is lined up the wazoo and I don’t even start work during rush hour. Probably not the best reason for investing, but I find these simple, less technical methods of stock evaluation can be helpful and profitable. Just ask anyone who bought Lululemon 5 years ago because their wife or girlfriend loved the yoga pants – simple yet effective.

I also made a somewhat counter intuitive buy, increasing my position in Alaris Royalty. Alaris has been on a fantastic run since I purchased shares. Instead of adding to something that may have pulled back in my portfolio, I decided I would add to one of my winners. I also consulted the charts for this buy, noticing that the stock broke key levels of resistance on record volume about a month ago. I expect the stock to continue grinding to new all-time highs, although I realize I could be wrong and am willing to hold for the long term if the price pulls back. Alaris has a unique niche business model in private equity financing and in my opinion is one of the best small companies in Canada.

I still have about $2000 of cash on hand which will be put to work in the next coming days and weeks.

The performance of my portfolio has been sluggish, as I somewhat expected after such a great run at the end of last year. It’s been in a narrow trading range for some time now – in my opinion a normal consolidation. However, the portfolio is still benefiting from being relatively underweight commodities. Some stocks have been surprisingly awesome like K Bro Linen, MTY Group and Allied Properties, while others have been mildly disappointing like Imperial Metals and Asian Television Network. I expected consolidation in Imperial and ATN after fantastic runs, but Imperials correction was stomach churning and Asian Television Network has pulled back more than I expected. My long term belief and conviction in both names is still fully intact. Consequently, Imperial has been on a resurgence of late and I would expect ATN to have a relatively good 2013.

Margin Account
Company Name	# of Shares	Market Value
Westshore Terminals	135	$3,499.20
Saputo	129	$5,651.49
Asian Television Network	2750	$6,847.50
Allied Properties REIT	94	$2,951.60
Imperial Metals	316	$3,608.72
Black Diamond Group	260	$5,395.00
K-Bro Linen	123	$3,528.87
Computer Modelling Group	196	$3,567.20
SNC Lavalin	53	$1,958.35
Bird Construction	204	$2,829.48
New Look Eyeware	100	$925.00
Tim Hortons	30	$1,513.50
Arc Resources	119	$2,778.65
	Total	$45,054.56
TFSA Account
Company Name	# of Shares	Market Value
New Look Eye Ware	135	$1,248.75
SIR Corp	105	$1,384.95
Alaris Royalty	122	$2,904.82
Asian Television Network	469	$1,167.81
Tim Hortons	10	$504.50
Coast Wholesale Appliances	5	$20.50
MTY Food Group	109	$2,169.10
	Total	$9,400.08
Cash on Hand (approx)	Total	$2,100.00
Margin Amount (approx)	Total	$5,000.00
Margin Account	Total	$45,054.56
TFSA Account	Total	$9,400.08
RRSP Mutual Fund (approx)	Total	$800.00
Total Invested Assets		$57,354.56

Rise of a Millionaire Portfolio Update: Sold CHL.A and BYD.UN, Bought BCI

After a nice 2 week vacation and a sudden career change, I’m back to focused saving and investing. The good news is I will be making slightly more money than I was at my old job, but at the expense of an increase in fixed costs. My savings levels will probably be similar to what they have been since the blogs inception. I now live in Calgary Alberta where I landed an entry level position in the transportation and shipping industry. The last month has been tremendous and exciting; I could not have predicted what happen.

Maybe it was the different air but even on vacation, I had to make a rare move in my portfolio. It was made out of a realization that I wanted a full position in one of my favorite new stocks. I sold 2 cyclical companies that were doing well for me – booked +20% gains on both. They were Canadian Helicopters Group - HNZ Group and Boyd Group Income Fund. I still believe these companies are above average businesses but I needed to free up cash to add to New Look Eyeware, a stock I could imagine holding through any environment. I also pickup up 5 shares of Coast Wholesale Appliances, a cheap cyclical with an 11.3% yield currently. This makes it easier to follow and the broker I have makes these small buys economically feasible for me. I may do this with other stocks I want to own, but don’t have the money to buy. I generally hate selling stocks to raise cash with any regularity.

New Look Eye Ware fits the bill of being an underfollowed company with great fundamentals for steady growth and an exceptional track record. It trades at a fair multiple though not cheap, and currently has a dividend yield of 6.5%. The balance sheet is easily managed and they are focused on steady growth, opening a hand full of stores each year. Revenues at New Look are very solid mostly coming from employment group benefit plans and other types of insurers. They easily made money during the financial crisis and continued to focus on improving their business long after.

Another big investment move I made over the last month was selling out all of my non registered mutual funds. Good bye high MERs! I’m due for a cash inflow any day of about $3600 which I plan to put to work over the coming weeks. Currently I have a small RRSP mutual fund worth about $800 dollars – I’m just going to leave that.

You can expect more posts in the coming weeks of all my new buys and portfolio updates.

Quote: New Look Eyeware

Margin Account
Company Name	# of Shares	Market Value
Westshore Terminals	135	$3,516.75
Saputo	129	$5,674.71
Asian Television Network	2750	$7,177.50
Allied Properties REIT	94	$2,937.50
Imperial Metals	316	$2,881.92
Black Diamond Group	260	$5,454.80
K-Bro Linen	123	$3,413.25
Computer Modelling Group	196	$3,561.32
SNC Lavalin	53	$1,982.73
Bird Construction	204	$2,884.56
New Look Eyeware	100	$923.00
Arc Resources	119	$2,814.35
	Total	$43,222.39
TFSA Account
Company Name	# of Shares	Market Value
New Look Eye Ware	44	$1,246.05
SIR Corp	105	$1,386.10
Alaris Royalty	80	$1,896.00
Asian Television Network	469	$1,224.09
Coast Wholesale Appliances	5	$18.50
MTY Food Group	109	$2,124.31
	Total	$7,895.05
Cash on Hand (approx)	Total	$3,600.00
Margin Amount (approx)	Total	$3,500.00
Margin Account	Total	$43,222.39
TFSA Account	Total	$7,895.05
RRSP Mutual Fund (approx)	Total	$800.00
Total Invested Assets		$55,517.44