Don Mackenzie
Don Mackenzie
Occupation
Retired school teacher
The portfolio
Holdings include Constellation Software Inc., Alimentation Couche-Tard Inc., CCL Industries Inc. and Norbord Inc.
The investor
Don Mackenzie's pension plan and solid performing rental property anchor his retirement income – and let him be more adventurous with his investment portfolio. The result: his average annual return (on a net basis) is 14.4 per cent since becoming a do-it-yourself investor in 2002.
How he invests
Let's start with a caveat. As Mr. Mackenzie warns, his approach is not for everybody.
For one thing, he holds only stocks. For another, he borrows money through a margin account to finance about half the purchase costs.
But this risk-taking has worked out well in the current bull market. The net value of his portfolio is now $500,000 (beware, though, of mixing leverage with bear markets).
It didn't take a lot of intensive research. "Very often, my picks are based on the top picks made by outperforming mutual funds that have a low portfolio turnover," he notes.
Also of help was a preference for companies where management has "the biggest influence on profits." This kept him out of "oil, gold and commodities in general."
For example, he likes convenience-store chain Alimentation Couche-Tard Inc. because management has a good record for making acquisitions. The company is also positioned to benefit from the extra spending power consumers should get from lower energy prices.
Nearly all of his holdings are Canadian stocks with a large international presence. This way, Mr. Mackenzie optimizes his Canadian dividend tax credits without too great a sacrifice in foreign diversification.
Best move
His best move was adding 50 per cent to his holding of Paladin Labs Inc. three days before it doubled on a takeover offer (after enjoying a 50 per cent gain during the previous year).
Worst move
"One of my worst trades was trying to capture the 'well documented' seasonal swings of the TSX capped energy index."
Advice
"Take it slow while you gain experience. Use model portfolios and track your sell decisions. Once you have confidence and a plan which works for you, ignore the market noise."
Want to share your strategies? E-mail mccolumn@yahoo.com