Newsletter February 15, 2006
InvestorsFriend Inc. Newsletter February 15, 2006
In this month’s newsletter we feature three new articles for you.
The first article has the following, hopefully interesting title.
This article is based on fundamental investment math. The article explains why recurrent earnings are so highly valued and why one-time earnings events may be given very little value in the market. To access the short article, click the link above.
Another article that was recently added to the Site will help you understand dual class shares. Many large Canadian corporation have voting and non-voting shares and in some cases both share types trade on the exchange. This article will help you understand the pros and cons of each class and can help you decide which class to buy.
A third article that was recently added to the Site explains the concept of a Value Trap and can help you avoid such traps.
Insider Trading and Insider Holdings:
One technique in picking stocks is to look for stocks where insiders of the company are buying stocks (or at least holding substantial stock and not selling) and avoid those that where insiders are selling stock.
The securities regulators in Canada provide a Web Site at www.sedi.com where this information can be access for each company. The Site can be difficult to navigate. Therefore I am providing some links and instructions that will take you directly to some of the more useful parts of the SEDI website.
LINK TO INSIDER TRADING REPORTS
For insider trading reports, click the link above and then choose “issuer name” and enter the name of the company. It will normally be appropriate to enter a range of dates such as the last six months. Then scroll down to “Equity” and click “select all”. Then scroll to the bottom and clock “search” and your report will be generated.
LINK TO INSIDER HOLDING REPORTS
For Insider holdings reports, click the link above, then choose view summary reports, then choose “insider information by issuer”, then enter the company name. It is not necessary to choose a date range since the default is to show all insiders as of today.
Our Performance in 2005 was very good. Our Strong Buys were up 30%, our model portfolio was up 35% and the owner of InvestorsFriend Inc. achieved a 33% return on his personal portfolio. Of course, the overall Canadian stock market also did well in 2005. But most mutual funds did nowhere close to 30% in 2005. I recently came a cross a list of the performance “Indices” for of 31 categories of Canadian mutual funds in 2005. The figures were from Morningstar. These figures are the performance benchmarks (averages) for the funds in each category. In only 1 of those categories did the average mutual fund earn over 30%. That was the Natural Resource Category with a stunning 45%. The next best was Emerging Markets Equity at 28.6%. After that the numbers dropped off dramatically and many had single digit returns. In fact while 6 of the 31 were above 20%, 13 of the 31 were below 10%. In that context our performance was extremely good, better than all but 1 of the 31 “indices”. And note that we had essentially zero oil, gas or Natural Resource exposure (save a small amount of energy exposure in the model portfolio). Conventional wisdom is that you had to be in energy and resources to get anywhere in 2005. We beg to differ.
You can check the latest performance of our stock ratings here.
Access to our stock ratings:
You can access our latest stock picks immediately for just $10.70 including tax. Now is a particularly good time to subscribe to these stock ratings since we are just at the beginning of the process of updating our stock reports for the calendar 2005 earnings reports.