Matthew Smith began working in the investment industry in 2000. Now he is a consultant and manages his family’s investment portfolio.
Matthew Smith
Occupation
Financial consultant
The portfolio
Includes shares in BHP Billiton Ltd., Commonwealth Bank of Australia, Amcor Ltd. and Canadian Western Bank.
The investor
Matthew Smith began working in the investment industry in 2000. While at two of Australia's largest mutual funds, he analyzed Australian, Canadian and U.S. stocks. Now he is a consultant and manages his family's investment portfolio.
How he invests
"I like to take a thematic, top-down approach focused on macroeconomic conditions and secular trends," Mr. Smith says. "But I have been known to take a contrarian, value-oriented approach when market conditions offer such opportunities."
One of his contrarian picks is Alberta-based Canadian Western Bank (CWB). It will be adversely impacted by the collapse in oil prices but he feels the 45-per-cent tumble in its shares over the past year exaggerates the pain.
Mr. Smith values CWB at $29 a share, more than 25 per cent above the market price (at the time he was interviewed). To get this number, he estimates growth in tangible book value over the next 10 years assuming return on equity and economic growth average about a third less than previous years .
With nearly 85 per cent of its loan portfolio made up of commercial loans, CWB is one of the least-exposed banks to a housing meltdown. The regularly increased dividend is funded with just 30 per cent of net income, and yields nearly 3 per cent.
Best move
It was buying quality Australian banks at the height of the 2008 and 2009 financial crisis. They have more than doubled while paying a dividend of about 5 per cent.
Worst move
"After making some quick profits in the Internet bubble, I lost a considerable sum as the bubble burst."
Advice
"Ignore the sensationalistic headlines …. The secret to successful investing is knowledge, an ability to ignore the day-to-day gyrations of the market, combined with patience, patience and more patience."
Want to be in Me and My Money? Contact Larry MacDonald at mccolumn@yahoo.com