Founder of I.A. Michael Investment Counsel Ltd.
HOW I WOULD INVEST A $100,000 WINDFALL: We think both the Canadian stock market and the economy will saw-tooth their way upwards. Given that, we want to buy deep-value stocks—they should pay a dividend and trade below or slightly above book value. I would buy five Canadian common stocks, and put 20% each in Canam Group, Daylight Energy, Equitable Group, Genworth MI Canada and WestJet. I want common stock with yields that are at or better than what I can get in money markets like T-bills, but with good capital-gain potential.
BEST INVESTMENT: Fortress Paper—it’s a supplier of Euro bank-notes, passports and non-woven wallpaper. I bought it in June, 2007, at $8 a share...and it recently hit a peak of over $48.
WHAT KEEPS ME AWAKE AT NIGHT: When managing mutual funds, people have the right to take their money back at virtually a moment’s notice. But you are trying to make long-term decisions. ...That is the greatest fear of most portfolio managers—particularly for us, because we are deep-value investors. We are very contrarian and we buy stocks that people do not like.
ADVICE FOR INVESTORS: Patience, patience, patience. If you are going to find and analyze stocks that are fundamentally attractive, don’t give up after only one month. We were wrong for over a year on Fortress Paper, our biggest win of all time. If you don’t have the patience and can’t sleep at night, put money in T-bills or go to the bank. Investing is not for everyone.
