Lazy Portfolio for Canadians

50% Index Fund (General Diversification)
- 15% Donville Fund (High ROE Companies)
- 15% ABC Funds 150K min
15% Sprott Fund (Energy Sector)
10% Chou Funds (Deep Value companies)
10% Frontier Street (Hedge or tactical equity class)
10% Hand picks
5% Gold

Canadian Gurus - March '12

Red = consensus of 2 or more gurus

Green = top pick(s) for that guru

Irvin Michael, ABC Funds

Summary: typically an optimist, he claims to be a disciplined value investor. He has a particular focus on Oil, Gas and Mining companies, which make up 1/2 of several of his funds. It is easy to obtain information about his investments and rationale, because he goes into a lot of detail explaining it and makes his thoughts available on his website.
Picks: 
Daylight Energy, Savanah Energy, Flint Energy Services, Legacy were some of his PAST top picks and all have done extremely well.
• Rona $9.73.  He currently believes that RONA is undervalued because it is below tangible book value, and Rona is refocused. 
• Angle Energy $6.15. ABC recently got into this one. Nuttall calls it a "fantastically" run company & a BUY.
• Twin Butte Energy $2.10.  A high dividend which Nuttall believes is sustainable due to low payout ratio. Nuttall likes the company but doesn't see a lot of growth (i.e. a good yield play)

Norman Rothery, Rothery Report

• Summary: I don't think he has any assets under management (other than his own), as he makes some fees from the report he sells. He provides a lot of detailed rationale for his value picks in his Rothery Report, and has a phenomenal track record for that portfolio (33% annualized). I tend to scrutinize his picks and can find 1-3 per year that I like, often they have to have consensus with another guru
• Picks: 
• Unsure. I stopped paying for the report last year, so I'm not sure what his latest picks are. 

Eric Sprott, Sprott Assett Mgmt

Summary: He is a perma-bear with an excellent track record. But he is mainly in cash & precious metals right now.
Picks: 
Cash & Gold are the top held investments in all of his portfolios right now
SIlver. He calls silver the "investment of the decade". Prob worth owning some.
• Glentel $5.45. This is the top stock holding in their Small Cap Fund & is also one of the top 4 picks for Donville/Kent. Stockchase has a lot of "TOP PICK" ratings for this one.

Eric Nuttall, Sprott Assett Mgmt

Summary: he's works with Eric on Sprott's Energy portfolio. 
picks: 
• Angle Energy $6.58. A top pick. Also held by ABC Funds and Lemarche
• Trican Well Services $20.00 . Top holding
• Legacy Oil & Gas  $13.73. A top pick. Also held by ABC Funds
• Painted Pony Petroleum $7.55. A top pick.

Norm Lamarche, Frontier Street Funds

• Summary: introduced to us by Bob Thompson 
• picks: 
• Angle Energy $8.25. A top pick. Also held by ABC Funds and Nuttall
• Trican Well Services $14.28. Top holding

• Angle Energy
• $6.15 - ABC, $6.58 - Sprott Energy, $8.25 - Frontier Street
• Trican Well Services
• ~$20.00 - Sprott Energy, $14.28 - Frontier Street

Managers that beat the street consistently

1. Warren Buffett (Berkshire Hathaway)
2. Frank Mersch (Front St Canadian Hedge)

3. David Tepper (Appaloosa Investment LP I)

4. Westport Asset Management (Westport Fund)

5. Norm Lamarche (Front Street Special Opportunities)

6. Bruce Berkowitz (Fairholme Fund)

7. Chuck Royce (Premier Fund)

8. Jean Marie Eveillard (First Eagle Global Fund)

9. Daniel Loeb (Master Fund)

10. David Einhorn (Greenlight Re)

11. Arnold Schneider (Schneider Small Cap Value Fund)

12. Eric Sprott (Sprott Canadian Equity)

13. James Barrow (Vanguard Selected Value Fund)

14. Kevin MacLean (Sentry Precious Metals Growth)

Guys who its hard to find historical results for but its probably safe to say they've consistently outperformed the markets: Seth Klarman, George Soros, and Jim Rogers.

red = canadian

Add the following names as individuals to read/listen to:

Marc Faber

Felix Zulauf
Meryl Witmer

Charlie Munger

Seth Klarman

Mohnish Pabrai

Bill Gross

Ray Dalio

Mohamed El Erian

David Rosenberg

Nouriel Roubini

Nassim Taleb

Michael Burry

George Soros

Jim Rogers

Joel Greenblatt

Bob Farrell

Eric Nuttall

Hank Cunningham

Li Kuan Yew

Mark Carney, Julie Dixon, Jim Flaherty, Ed Clark, Craig Alexander, Christine Lagarde

Value Investor's Stock Screener

• Above Average Company
• 20%+ ROE. Five years+ indicates likely competitive advantage
• Note: the avg company has an ROE of 11%
• Price
• We want to pay a fair price, not an unreasonable multiple the market is willing to pay
• P/E < 15
• P/B < 1.5
• Margin of Safety
• Current ratio > 2
• Total debt to equity in the most recent quarter < 50Margin of Safety
• Psychology
• Recency Bias
• Opportunities for confirmation bias

Link to Google Finance stock screener (U.S. companies) http://bit.ly/mqInmI

Raving Fans - Ken Blanchard

"Raving fans - a revolutionary approach to customer service" was written in the early 90s and it's principles resonate today. Satisfied customers just are not enough. What an organization should aim to do is knock the socks off their customers, to create “Raving Fans.” These Raving Fans become some of your best marketing tools. They go out and tell others how great you are. Satisfied fans, on the other hand, will jump ship as soon as a competitor provides them with better service. According to the authors, there are three secrets to creating Raving Fans.

1.  "Decide on what you want" - When you decide what you want for your business, you must create a vision of perfection centered on the customer & promote that vision throughout your organization.

2. "Discover what the customer wants" - Ask your customers what they want, then re-align your vision. A customers vision will likely only focus on one or two areas - you need to fill in the gaps. A customer who says the service you provide them is "fine" is relaying a concerning message. Essentially, it means they aren't ecstatic about your business. On the other hand, you can't look after every need or every whim of your customer, so  sometimes it is best to be frank and send your customer elsewhere (to another competitor). Service leaders perform in a well-defined window – they do what they choose – what is in their vision – and they do it very well. Finally, a business should tie its' employees raises and promotions to customer service. If you don't look after your people they won't look after your customers.

3.  "Deliver plus 1%" - Once you've discovered what the customer wants then - deliver plus one percent.  In order to not get overwhelmed at creating a fantastic customer service from scratch you aim to improve by one percent per week. Over time this will compound. Delivering consistently is crucial because it takes time to build a relationship with a customer and establish credibility.  Don't offer too much service initially, first be consistent at what you offer. To be consistent you have to have systems and training programs to implement your systems.  A system is a predetermined way to achieve a result.  

Margin of Safety – Seth Klarman

Chapter 1 – “Where most investors stumble”

There is nothing esoteric about value investing. It is simply the process of determining the value underlying a security and then buying it at a considerable discount from that value. It is really that simple. The greatest challenge is maintaining the req­uisite patience and discipline to buy only when prices are attractive and to sell when they are not, avoiding the short-term performance frenzy that engulfs most market participants.

To be continued…. stay tuned!

Reasons to avoid mutual funds

The saying “80% of fund managers can’t beat the index” has some merit. Here are a few reasons why you should be prudent when considering mutual funds:

1) “Migrating Managers“: when a fund manager seems to have the Midas touch, every fund company wants to poach him/her.
2) “Asset Elephantiasis“: when a fund earns high returns, investors take notice and pour hundreds of millions in in a matter of weeks. That leaves the manager with few choices – all of them bad: a) keep the money safe, but investors will complain b) buy already owned stocks, but they have prob already made their gains and will become dangerously undervalued c) buy new stocks that he didn't like well enough to own already.

3) Expenses: it costs more to trade stocks in very large blocks than in small ones. With fewer buyers and sellers, it’s hard to make a match.
4) Fees: once a fund becomes successful, the managers don’t want to rock the boat. This is contrary to how how they made the fund successful, and now they just want to enjoy the lucrative fees.
5) Fees: Mgmt fees and loads.

If you do really want a managed fund, these are the things to look for: their managers are the biggest shareholders, they are cheap, they dare to be different, they usually close the door to new investors, they don’t advertise. Consider Index funds & ETFs.