George Karaphillis
George Karaphillis, 55
Occupation: Director of the MBA in community economic development program at Cape Breton University.
Portfolio: BCE Inc., CIBC, Encana Corp., Enbridge Inc., Onex Corp., Rogers Communications, Research In Motion, National Bank of Greece, Hellenic Telecom Organization SA.
A search for yield
George Karaphillis is a big believer in growth stocks, but he's been moving more toward investments that have a yield. Saying he's becoming a bit more risk-averse, "There are quite a few stocks that offer very good yields combined with growth potential."
To combine the two, he looks for stocks where the price-to-earnings ratio is less than the growth rate, known as the stocks' PEG ratio.
Where he's finding opportunities
Just a couple of weeks back, amid the daily headlines about Greece's financial crisis, he bought shares in Athens-based telecommunications company Hellenic Telecom. And, in what I'd call a pointedly contrarian move, he picked up shares in National Bank of Greece, which has fallen from a high of over $8 (U.S.) to last close at $2.61. Not only was the P/E ratio appealing, he notes that last year the Economist said that the best run banks in Europe were the Greek banks. He also likes the growth prospects thanks to the bank's expansion plans. "They're doing well in Bulgaria and Romania, and they own the second-biggest bank in Turkey, and are adding 50 new branches there."
His ETFs
Why does he like exchange-traded funds? "We teach finance here," he notes. "The fees on regular mutual funds are too high, and as a group, they underperform the market, and it's too difficult to find a good one." He recently picked up an American junk bond ETF, iShares iBoxx High Yield Corporate Bond ETF (HYG-N). "The yield is very good," he says. "And because it's a basket of bonds I don't think the risk is that high, and I think the units will appreciate because right now the bonds are very cheap as there's a big gap between corporate bonds and Treasuries."
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His tax-favoured favourite
Nova Scotia has its own spin on the tax-favoured labour-sponsored funds, called community economic development fund. "Any community group can put out an IPO [initial public offering]after registering with the securities regulators," he says.
The fund he's invested in focuses on mortgages, which gives him some safety, and the tax break combined with a dividend of 3 per cent gives him the equivalent of an annualized 10-per-cent return.
Best Move
Mr. Karaphillis' best returns have come thanks to oil stocks, along with Enbridge and natural gas producer EnCana. "EnCana has got brilliant management and they're very nimble," he says. "They know how to strategize, and know how to hedge and do contracts."
Worst Move
The only good thing he has to say about 01 Communique Laboratory Inc. is that it has a cool stock symbol, ONE. Founded in 1992, the company had technology for controlling PCs remotely over the Internet. "In those days BlackBerrys and smart phones weren't all that good, and the only choice was to go to a cyber café." He thought the company had a bright future, "But the space got congested, and other companies had better technology and better marketers." He paid $6.80 a share, and the stock last traded at 18 cents.
Advice
"New research says that stocks that have dividends have basically outperformed any other category of stocks over time."
Special to The Globe and Mail
Want to share your strategies? Email tony.martin@sympatico.ca