Brent Larsen
Brent Larsen
Occupation
Entrepreneur
Portfolio
Imaflex Inc., International Road Dynamics Inc., New Look Vision Group Inc., Tecsys Inc., IWG Technologies Inc., Canadian Apartment Properties REIT, American Hotel Income Properties REIT, and Artis REIT.
The investor
Brent Larsen is the owner and operator of two Halifax-based companies. One sells refurbished food-processing equipment and the other sells Omega Crunch, a topping for salads, yogurt and cereal. Prior to becoming an entrepreneur, he researched and analyzed small-capitalization stocks at investment advisory firm KeyStone Financial Publishing Corp., from 1998 to 2005.
How he invests
With his background in small-cap stocks, Mr. Larsen not surprisingly has a preference for this asset class. He looks for underfollowed companies with low price-to-earnings ratios, improving profitability, little debt, shareholder-friendly executives and a potential for attracting coverage by brokerage analysts or buying by fund managers.
In a Me and My Money column profiling Mr. Larsen in April, 2014, his portfolio was entirely in small-cap stocks. If one had held all the stocks until now, the average annualized return would be about 3-per-cent better than the iShares S&P/TSX Small Cap Index exchange-traded fund, according to Mr. Larsen's figures.
Now entering his 40s, Mr. Larsen has shifted more than a third of his portfolio into real estate investment trusts (REITs) that provide "solid" monthly income. "They balance the higher-risk small caps," he explains.
His portfolio remains concentrated in fewer than 10 holdings. Like billionaire Warren Buffett, Mr. Larsen feels that diversification is unnecessary if an investor has extensive experience and does his or her homework. Wide diversification tends to drag investment returns down to the market average.
Imaflex Inc. stock was purchased within the past three months. Revenue for this Canadian manufacturer of polyethylene films jumped to $60-million in fiscal 2015. Profit margins also improved. The company recently launched some new offerings, notably "a new fruit tree product that helps protect against pests." Meanwhile, its older business lines remain profitable.
International Road Dynamics Inc. has produced consistent growth over the past six quarters, yet trades at just 12 times last year's earnings. They are a leader in designing hardware and software products for traffic-control systems.
Best move
New Look Vision Group Inc., a provider of eye-care products and services, has risen more than 250 per cent over the past 30 months.
Worst move
It's still his investment in the shares of Loewen Group, a funeral-home chain that went bankrupt in 1996.
Advice
"My advice is to not fall in love with your stocks and hold on too long," Mr. Larsen says. Be prepared to sell if the company's performance shows signs of deterioration, or management fails to follow through on what they say, he adds.
Special to The Globe and Mail
Want to be in Me and My Money? Contact Larry MacDonald at mccolumn@yahoo.com or his website