What are we looking for?
It’s been more than a year since we created a Canadian portfolio inspired by the stock-picking methodology of Warren Buffett. With markets taking it on the chin because of rising interest rates, let’s see how the portfolio is holding up.
We used Validea Canada’s “Patient Investor” screen, which is based on the book Buffettology by Mr. Buffett’s former daughter-in-law, Mary Buffett. Globe Investor has a joint venture with Validea.ca, a premium Canadian stock screen service. You can try it here.
The 11 stocks in the table are those that scored highest as of May 23, 2012, based on the book’s interpretation of Mr. Buffett’s strategy. We allocated a hypothetical $10,000 to each stock.
More on Buffett’s methodology
Mr. Buffett aims to buy great businesses at “fair” prices and often holds stocks for long periods. He summed up his investing philosophy in his 1996 letter to Berkshire shareholders: “Your goal as an investor should simply be to purchase, at a rational price, a part interest in an easily understandable business whose earnings are virtually certain to be materially higher five, 10 and 20 years from now.
“Over time, you will find only a few companies that meet these standards – so when you see one that qualifies, you should buy a meaningful amount of stock. You must also resist the temptation to stray from your guidelines: If you aren’t willing to own a stock for 10 years, don’t even think about owning it for 10 minutes.”
From May 23, 2012, through June 12, 2013, nine of the 11 stocks rose, led by a 46.8-per-cent advance for convenience store operator Alimentation Couche-Tard. Over all, the portfolio gained 18 per cent (all figures exclude dividends).
That’s pretty good, particularly when compared with the S&P/TSX composite index’s gain of 4.7 per cent over the same period. Remember that a stock screen is only a first step in investing. Be sure to do your own research before buying any security. We’ll check back in a few months to see how the portfolio is faring.
Validea Canada's 'Patient Investor' Screen
|Bank of Nova Scotia||BNS-T||193.50||56.47|
|Computer Modelling Group||CMG-T||588.24||23.01|
|Home Capital Group||HCG-T||229.31||52.84|
|MTY Food Group||MTY-T||583.09||23.97|
|National Bank of Canada||NA-T||136.58||74.87|
Prices as of June 12. Returns are from May 23, 2012, to June 12, 2013. Source: Globe Investor, Validea.ca
|Bank of Nova Scotia||BNS-T||193.50||56.47||10,926.86||10,000.00||926.86||9.3||8.4|
|Computer Modelling Group||CMG-T||588.24||23.01||13,535.29||10,000.00||3,535.29||35.4||10.4|
|Home Capital Group||HCG-T||229.31||52.84||12,116.49||10,000.00||2,116.49||21.2||9.3|
|MTY Food Group||MTY-T||583.09||23.97||13,976.68||10,000.00||3,976.68||39.8||10.8|
|National Bank of Canada||NA-T||136.58||74.87||10,225.35||10,000.00||225.35||2.3||7.9|
|WaterFurnace Renewable Energy||WFI-T||617.28||20.25||12,500.00||10,000.00||2,500.00||25||9.6|
|Total $ Stocks||129,755.40||110,000.00||19,755.40||18||100|
- Alimentation Couche-Tard Inc$58.010.00(0.00%)
- Bank of Nova Scotia$56.800.00(0.00%)
- Computer Modelling Group Ltd$8.800.00(0.00%)
- Home Capital Group Inc$28.520.00(0.00%)
- MCAN Mortgage Corp$12.300.00(0.00%)
- MTY Food Group Inc.$29.900.00(0.00%)
- Metro Inc$41.090.00(0.00%)
- National Bank of Canada$39.830.00(0.00%)
- Saputo Inc$36.930.00(0.00%)
- Updated February 5 3:52 PM EST. Delayed by at least 15 minutes.