Dan Stringer is a certified public accountant, working as a controller with an aerospace company.
Dan Stringer
Occupation
Certified public accountant, working as a controller with an aerospace company.
The portfolio
Includes shares in Automodular Corp., Wi-LAN Inc. and Central Fund of Canada Ltd.; also owns put options on securities.
The investor
When Dan Stringer started investing 25 years ago, he and his grandfather would talk about their portfolios and financial markets. "Now I do the same thing with my dad and brother," he says.
How he invests
One could say there are three parts to Mr. Stringer's portfolio. They have the potential to deliver positive returns regardless of market direction while hedging against "black swan" events, notably the risk that policy-makers fail in their attempts to resolve the problems facing the global economy.
First, he invests in small-capitalization companies that have strong balance sheets and growth. If one can tolerate the volatility, they have the potential to deliver returns better than the broad market over the longer run.
One of his largest positions is Automodular Corp., which could see a spike in share price if a pending lawsuit goes in its favour. Plus, there is downside protection due to the fact the company's shares trade below the value of cash on its balance sheet.
Another pick is Wi-LAN Inc., which has a "tremendous catalogue of intellectual property" that it is monetizing through licensing deals. With cash balances equal to 70 per cent of market capitalization, Mr. Stringer feels the market is undervaluing Wi-LAN's ability to grow by signing more licensing deals.
Second, Mr. Stringer gives his portfolio a chance to earn positive returns in bear markets. He bets against companies with too much debt or declining/negative cash flow by purchasing put options (the right to sell a stock at a specific price) on their shares.
He prefers put options over selling shares short because the loss is limited to the amount invested in the put.
Third, to hedge his portfolio against "black swan" events, he owns units in the Central Fund of Canada Ltd. It's a closed-end fund that holds gold and silver bullion. This is better than investing in gold and silver miners because there is no company-specific risk, such as cost overruns.
Best move
Sharing investment ideas with kin and others.
Worst move
Investing on margin when he was in university.
Advice
"I believe small-cap investing gives you the best chance for outsized gains … however, my approach will not be for everyone."
Want to be in Me and My Money? Contact Larry MacDonald at mccolumn@yahoo.com or his website.