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Benj Gallander and Ben Stadelmann are co-editors of Contra the Heard Investment Letter

In our November column about FLEX Ltd. (FLEX-Q), the longest investment in our portfolio at more than a decade, the focus was on patience. We also touched on Cambridge, Ont.-based ATS Automation Tooling Systems Inc. (ATA-TSX), the second oldest, and a company that we wrote about almost exactly six years ago. If we had our druthers, this enterprise would have exited our holdings and only be seen through a happy retrospective while gazing through the rear-view mirror. Alas, not the case.

When our toes were dipped into this company, it was primarily because of the excitement surrounding the burgeoning field of solar and their Photowatt subsidiary. Evidently joining this sector's excitement proved foolhardy and the bankruptcy of this organization was soon declared, leading to writedowns tallying more than $100-million. Fortunately ATS had other operations to keep it afloat that were doing quite well. Nothing, however, has proved good enough to create a bridge between our average purchase price of $7.06 and the initial sell target of $22.24. The stock has never gotten close, with its best run recently, which currently has it trading around $17.50. Might ATS's time have finally arrived?

The past quarterly results were excellent. Revenue was up 17 per cent year over year to $278-million. Profit was around $15-million. The forward looking numbers were superb with the backlog up 9 per cent, to $689-million.

ATS does not have a crystal clean balance sheet. There is long-term debt of $306-million, but that is not heavy given the $308-million in the bank, revenue tally and un-utilized credit of $644-million. There is sufficient firepower for potential acquisitions.

ATS has moved up handsomely in the past six months from just more than $12. While we have zero desire to add to our current position, this entity might hold appeal for momentum players. While the stock price of just less than $40 achieved after the millennium seems like forbidden candy, achieving our initial sell target seems quite reasonable, especially if markets continue their upward trajectory. This also happens to be the kind of sizable corporation that attracts institutions, stock-brokerage firms and mutual funds at around the current price point, potentially driving the valuation higher.

It is fair to say that the majority of investors who pick individual stocks do not have the stomach for decade-plus hold times, but if gains are stellar, that can prove particularly tax efficient. Years ago, the average that businesses stayed in the portfolio was about 3.5 years, but a decade plus is not unusual. If ATS and Flex are finally sold, the next-longest holding is a relative youngster from 2010, General Electric. At this point, the endgame of a sale for that stock on a big winning note seems very distant. We're prepared for a lengthy soap opera.

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