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TD Securities analyst Tim James’s calls on Air Canada and Magellan Aerospace landed him a StarMine Analyst Award. (Darren Calabrese For The Globe and Mail)
TD Securities analyst Tim James’s calls on Air Canada and Magellan Aerospace landed him a StarMine Analyst Award. (Darren Calabrese For The Globe and Mail)

A winning stock-picker's key to success: Be a contrarian Add to ...

Recognizing when a stock has bottomed out is at least half the battle in timing the market. That’s the skill Tim James credits for winning him the title of Canada’s top stock picker in 2013.

“To the extent that market bottoms are typically characterized by overly negative sentiment, I think I can recognize that,” Mr. James said. “The market tends to have a tough time appropriately discounting uncertainty and assigns the worst possible outcome to situations.”

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Mr. James, an analyst at TD Securities, claimed the top spot in this year’s StarMine Analyst Awards. StarMine, a unit of Thomson Reuters Corp., scores equity analysts based on their recommendations for the companies they cover.

Each analyst is ranked based on the return his or her buy and sell ratings would generate in a theoretical portfolio. Mr. James, who covers the transportation and aerospace industries, beat his industry benchmark by the widest margin, generating an excess return of 23.6 per cent last year.

His best call of the year was changing his rating on Air Canada’s stock to a “buy” from a “hold” in June.

At the time, the stock was trading at about $2.25, and was still bitterly regarded by investors who got burned throughout the company’s rocky history.

“Airlines and Air Canada in particular had a reputation for being poor investments. Many investors had taken them right off the radar screen,” Mr. James said.

He rattles off a litany of disaster and misfortune that engulfed airlines over a decade: the terrorist attacks of Sept. 11, 2001; the SARS outbreak; oil prices spiking to higher than $140 (U.S.) a barrel; the 2008-09 financial meltdown.

On top of all that, Air Canada investors had to go through creditor protection, volatile financial results, liquidity problems and labour issues.

But successfully predicting the rebound of a stock or an industry requires a short memory – at least to a certain extent – Mr. James said. Investors need to allow for at least the possibility of a recovery.

“I make sure I’m not looking back too much to the boom-to-bust these airlines and aviation businesses went through. I believe it’s somewhat of a new era going forward.”

The industry in general has done a better job of mitigating risk and establishing sustainable profitability, he explained. At the start of 2013, airline stock valuations were only beginning to reflect that improvement.

Air Canada in particular, Mr. James said, had been making much progress in cutting costs and deleveraging by the beginning of last year. An Air Canada investor day last June – the company’s first since emerging from creditor protection in 2004 – convinced Mr. James of the stock’s immediate potential.

“There was an extreme undervaluation and very negative sentiment. Put all those things together and you’re set up for a very nice year.”

From June until the end of the year, Air Canada stock rose by 225 per cent.

A knack for anticipating a rally also came in handy last year regarding Magellan Aerospace Corp., another stock he covers. The Mississauga-based component supplier’s stock had traded sideways for years, but the company was quietly growing its earnings and bringing down its debt.

Going into 2013, Magellan was trading at a very low valuation relative to pretty much any metric, Mr. James said. “I thought this is something that small-cap investors could really take to over the course of 2013.”

He rated the stock a “buy” in March, after which share price increased by 135 per cent by the end of the year.

With regards to the other half of timing the market – calling a peak and anticipating a downturn – Mr. James echoes conventional wisdom that the sell decision is more difficult than the buy decision. He has greater facility diagnosing the dips, he admits. “I find that part easier than knowing when to sell a stock or knowing when to downgrade a stock.”

Follow on Twitter: @tshufelt

THOMSON REUTERS STARMINE ANALYST AWARDS 2014 -
TOP BROKERS

RankBrokerTotal
Number of
Awards
1RBC Capital Markets13
1TD Securities13
3Canaccord Genuity9


THOMSON REUTERS STARMINE ANALYST AWARDS 2014 -
OVERALL STOCK PICKERS

RankAnalystBrokerOverall
Excess
Return
Primary
Coverage
Industries
1James, TimTD Securities23.6%Transport. & Aerospace
2Mersereau, JeremyNational Bank Financial18.9%Chemicals & Utilities
3Catellier, Robert *Macquarie Equities Research17.7%Oil, Gas & Consumable Fuels; Chemicals & Utilities
4Posner, HaranRBC Capital Markets16.8%Media
5Galappatthige, AravindaCanaccord Genuity15.7%Media; Diversified Industrials
6Cabrera, OscarBofA Merrill Lynch Global Research13.5%Metals & Mining; Oil, Gas & Consumable Fuels
7Fenwick, JeffCormark Securities13.2%Financial Services; Retail; Insurance
8Penner, ScottTD Securities12.7%Software & IT Services; IT Equipment
9Linsdell, NeilIndustrial Alliance Securities11.2%Retail; Diversified Industrials
10Shine, AdamNational Bank Financial10.1%Media; Telecommunication Services


THOMSON REUTERS STARMINE ANALYST AWARDS 2014 -
INDUSTRY STOCK PICKERS

RankIndustryAnalystBroker
1Auto ComponentsSklar, PeterBMO Capital Markets
Auto ComponentsThere is only one winner in this industry.
1BanksSmith, Brad *Stonecap Securities
2BanksAiken, JohnBarclays
3BanksLederer, OhadVeritas Investment Research
1Chemicals & UtilitiesAkman, MatthewScotiabank GBM
2Chemicals & UtilitiesNg, NelsonRBC Capital Markets
3Chemicals & UtilitiesMcIlveen, JohnJacob Securities
Consumer FinanceThere are no winners in this industry.
Diversified Consumer ServicesThere are no winners in this industry.
1Diversified IndustrialsJames, TimTD Securities
2Diversified IndustrialsElford, SaraCanaccord Genuity
3Diversified IndustrialsHughes, SarahCormark Securities
1Energy Equipment & ServicesLo, KevinFirstEnergy Capital Corp
2Energy Equipment & ServicesGarman, ToddCormark Securities
3Energy Equipment & ServicesSawatzky, JasonAltaCorp Capital
1Financial ServicesKwan, GeoffreyRBC Capital Markets
2Financial ServicesHardie, PhilScotiabank GBM
3Financial ServicesFenwick, JeffCormark Securities
Food & BeveragesThere are no winners in this industry.
1Health CareGibbs, LennoxTD Securities
Health CareThere is only one winner in this industry.
Hotels, Restaurants & LeisureThere are no winners in this industry.
Household ProductsThere are no winners in this industry.
1InsuranceMihelic, Darko **Cormark Securities
2InsuranceAiken, JohnBarclays
3InsuranceDechaine, Gabriel *Credit Suisse
1IT EquipmentTse, RichardCormark Securities
2IT EquipmentPenner, ScottTD Securities
3IT EquipmentThompson, KrisNational Bank Financial
1MediaGalappatthige, AravindaCanaccord Genuity
2MediaPosner, HaranRBC Capital Markets
3MediaShine, AdamNational Bank Financial
1Metals & MiningLampard, GaryCanaccord Genuity
2Metals & MiningWoolley, JeffParadigm Capital
3Metals & MiningCharles, DavidDundee Securities Corporation
1Oil, Gas & Consumable FuelsFitzmartyn, RobertFirstEnergy Capital Corp
2Oil, Gas & Consumable FuelsEllison, ChadDundee Securities Corporation
3Oil, Gas & Consumable FuelsCatellier, Robert *Macquarie Equities Research
1Paper & Forest ProductsLaprade, BenoîtScotiabank GBM
2Paper & Forest ProductsAtkinson, Stephen ***BMO Capital Markets
3Paper & Forest ProductsQuinn, PaulRBC Capital Markets
Personal ProductsThere are no winners in this industry.
1Real Estate (including REITs)Saric, MarioScotiabank GBM
Real Estate (including REITs)There is only one winner in this industry.
1RetailDley, DerekCanaccord Genuity
2RetailPetrie, MarkCIBC World Markets
3RetailAelst, Michael VanTD Securities
1Software & IT ServicesLeung, GabrielParadigm Capital
2Software & IT ServicesPenner, ScottTD Securities
3Software & IT ServicesSangha, PardeepPI Financial Corp.
1Telecom ServicesCampbell, GlenBofA Merrill Lynch Global Research
2Telecom ServicesShine, AdamNational Bank Financial
3Telecom ServicesMoore, ColinCredit Suisse


THOMSON REUTERS STARMINE ANALYST AWARDS 2014 -
OVERALL EARNINGS ESTIMATORS

RankAnalystBrokerPrimary Coverage Industries
1Rollins, DanRBC Capital MarketsMetals & Mining
2McLeish, GregGMP SecuritiesDiversified Industrials; Energy Equipment & Services; Metals & Mining
3Murphy, MattUBSMetals & Mining
4Misra, ParetoshMorgan StanleyMetals & Mining
5Tyerman, DavidCanaccord GenuityDiversified Industrials; Auto Components
6Westra, FredIndustrial Alliance SecuritiesFinancial Services
7Kirst, CarlBMO Capital MarketsOil, Gas & Consumable Fuels
8Newman, BillMackie Research CapitalOil, Gas & Consumable Fuels
9Piper, NathanRBC Capital MarketsOil, Gas & Consumable Fuels
10Shreedhar, VishalNational Bank FinancialRetail


THOMSON REUTERS STARMINE ANALYST AWARDS 2014 -
INDUSTRY EARNINGS ESTIMATORS

RankIndustryAnalystBroker
Auto ComponentsThere are no winners in this industry.
1BanksAiken, JohnBarclays
2BanksTheriault, SteveBofA Merrill Lynch Global Research
3BanksMalhotra, Sumit **Macquarie Equities Research
1Chemicals & UtilitiesPham, BenBMO Capital Markets
2Chemicals & UtilitiesSteuart, SeanTD Securities
3Chemicals & UtilitiesEzergailis, LindaTD Securities
Consumer FinanceThere are no winners in this industry.
Diversified Consumer ServicesThere are no winners in this industry.
1Diversified IndustrialsTyerman, DavidCanaccord Genuity
2Diversified IndustrialsMcLeish, GregGMP Securities
3Diversified IndustrialsCherniavsky, BenRaymond James
1Energy Equipment & ServicesBradford, AndrewRaymond James
2Energy Equipment & ServicesMa, Roy *PI Financial Corp.
3Energy Equipment & ServicesMartin, JeffPeters & Co. Limited
1Financial ServicesKwan, GeoffreyRBC Capital Markets
2Financial ServicesFenwick, JeffCormark Securities
3Financial ServicesSeanor, Adam ***M Partners Inc.
Food & BeveragesThere are no winners in this industry.
1Health CareRidgeway, AlanParadigm Capital
2Health CareMiehm, DouglasRBC Capital Markets
3Health CareFlint, Philippa ****Bloom Burton & Co.
Hotels, Restaurants & LeisureThere are no winners in this industry.
Household ProductsThere are no winners in this industry.
1InsuranceAiken, JohnBarclays
2InsuranceSedran, RobertCIBC World Markets
3InsuranceHardie, PhilScotiabank GBM
1IT EquipmentCoupland, ToddCIBC World Markets
2IT EquipmentYoung, RobertCanaccord Genuity
IT EquipmentThere are only two winners in this industry.
1MediaGalappatthige, AravindaCanaccord Genuity
2MediaMcFadgen, DavidCormark Securities
3MediaMoore, ColinCredit Suisse
1Metals & MiningRollins, DanRBC Capital Markets
2Metals & MiningMurphy, MattUBS
3Metals & MiningMisra, ParetoshMorgan Stanley
1Oil, Gas & Consumable FuelsKirst, CarlBMO Capital Markets
2Oil, Gas & Consumable FuelsNewman, BillMackie Research Capital
3Oil, Gas & Consumable FuelsPiper, NathanRBC Capital Markets
1Paper & Forest ProductsAtkinson, Stephen *BMO Capital Markets
2Paper & Forest ProductsLaprade, BenoîtScotiabank GBM
3Paper & Forest ProductsSwetlishoff, DarylRaymond James
Personal ProductsThere are no winners in this industry.
1Real Estate (including REITs)Downey, NeilRBC Capital Markets
2Real Estate (including REITs)Kelcher, JonathanTD Securities
3Real Estate (including REITs)Abrams, BrendonM Partners Inc.
1RetailShreedhar, VishalNational Bank Financial
2RetailNattel, IreneRBC Capital Markets
3RetailAelst, Michael VanTD Securities
1Software & IT ServicesSteep, PaulScotiabank GBM
2Software & IT ServicesPenner, ScottTD Securities
3Software & IT ServicesPrice, StephanieCIBC World Markets
1Telecom ServicesCasey, TimBMO Capital Markets
2Telecom ServicesYaghi, MaherDesjardins Securities
3Telecom ServicesValentini, VinceTD Securities

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