Contra Guys: Our picks really panned out in a turbulent year
As we enter our 21st year writing for The Globe and Mail, it is time to look back at our musings this past year or so. We cleaned up, not counting our pick earlier this month, which is too fresh to review.
Let us start with Lifeway Foods Inc. (LWAY-Nasdaq). This family-owned enterprise produces and markets probiotic-based products, but sales had drooped about 25 per cent in the preceding four years. The stock price was at $2 when the article was penned in November, 2019. This past quarter it rebounded and the bottom line that was break-even a year ago bloomed to an EPS of 12 cents. The stock price jumped too, currently trading around $6 as of midday Tuesday.
Next up was Alaska Communications Systems Group Inc. (ALSK-Nasdaq), which traded at $1.80 last December. We pondered a takeover, writing: “Swallowing Alaska Communications at $3, a healthy premium to the current price but still below book value, would only cost an acquisitor about $160-million, not much for an established player in this sector.” Macquarie Capital and GCM Grosvenor must have heard us, ultimately bidding $3.26 a share in a board-approved cash deal, subject to the usual shareholder and regulatory approvals.
Alpha Pro Tech Ltd. (APT-Nasdaq) graced our column three times over the past few years. This company was poised for a massive vault given that their primary business is protective gear like gowns, coveralls, frocks, face masks, etc. The stock spiked from US$6 at the time of the article in January to more than US$40 the following month. It has since declined to north of US$12.
In early March, while attending the annual convention of the Prospectors & Developers Association of Canada, Benj spoke with CEO Juan Gavidia of Orvana Minerals Corp. (ORV-TSX), then trading at 22 cents. Mr. Gavidia outlined a well-rounded plan to enhance their gold plays in Bolivia and Spain. The stock price on this subsidiary of Fabulosa Mines Ltd. has since pushed forward, currently at around 28 cents.
Up next was Nike Inc. (NKE-NYSE), in April, then at US$85. It has jumped far higher since then, store closings be damned, now jogging at around US$142. It is trading around its historical high as people prance around their living rooms or whatever.
In May, despite the pandemic and the way that it was ripping through some nursing homes, Extendicare Inc. (EXE-TSX) was our focus. Just over $6 then, it has gone up more than 10 per cent. That does not include the fat dividend that yielded 8 per cent at the time of the article and continues to pay 4 cents a month.
Vaalco Energy Inc. (EGY-NYSE), a Houston-based oil and gas producer that operates in Equatorial Guinea and the Republic of Gabon was up in mid-June. Trading at $1.20, the stock price has risen largely because of the signing of a deal to almost double their position in the Etame Marin block to 60 per cent. The company knows what it is buying, since it was already the major participant. The current stock price is now around $1.60. Investors here must be wary of geopolitical risk.
We shifted back to the home front with a piece in July on Cameco Corp. (CCO-TSX), then trading around $14.50. The uranium market seems to be recovering and it appears that this leading corporation has the financial wherewithal to potentially thrive again. CCO has won two decisions versus the Canada Revenue Agency, but the latter organization has sought leave to appeal to the Supreme Court. The tax authorities have in their possession $482-million in letters of credit and $303-million of cash that the company would really, really like back. The stock price has climbed to around $16.80.
People who are into card and coin collectibles like Benj could relate to our column on Collectors Universe Inc. (CLCT-Nasdaq). Trading just under US$40 when covered in August, the stock price has since rallied to around US$76. This reminds Benj that he should double-check to make sure that he does not have a Mike Trout rookie card – one sold later that month for a record US$3.9-million.
When Tesla Inc. (TSLA-Nasdaq) revved up our motors in late August, it idled at about US$500. We took two sides on this with Benj saying it was overvalued while Ben feels the company will be a winner over the next decade. Well, in the short run Benj was right, as the stock price plunged quickly to US$330. But then it sped away to the current level of around US$630 after being included in the S&P 500.
In September, we went back to playing small ball with moissanite gem company Charles & Colvard Ltd. (CTHR-Nasdaq). Trading at 80 US cents, our bet is that the new management will make this enterprise shine. Since the article it has offered an early Christmas present, currently sparkling at around US$1.28. The push upward has allowed it to regain compliance with Nasdaq minimum price listing requirements.
Next up was Canadian icon BlackBerry Ltd. (BB-TSX). On the announcement of a deal with Amazon Web Services the stock price leapt above $12, but it could not hold the gain. Currently priced at about $9.47, that is still a long way from the $6.50 where it sat when the article came out in October.
SSR Mining Inc. (SSRM-TSX), was the subject of our column in December, the gold miner that is the product of the merger between Alacer and SSR Mining. It has already made us a huge piece of change. More is expected.
Obviously, we are ecstatic with our picks this year. Next year, time will tell. In the interim, we wish you all a happy, healthy holiday season and the best for a “normal” 2021.
Benj Gallander and Ben Stadelmann are co-editors of Contra the Heard Investment Letter
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Published at Wed, 23 Dec 2020 02:37:08 +0000