Includes shares in Berkshire Hathaway Inc. and Leon's Furniture Ltd.
Justin Leon is an avid fan of legendary value investor Warren Buffett. This year, he made the pilgrimage to the annual meeting of Mr. Buffett's company, Berkshire Hathaway Inc., and found "it was well worth getting up at 4:30 a.m. to secure a good seat."
How he invests
Mr. Leon strives, like his hero Mr. Buffett, to buy "wonderful businesses at fair prices" and then hold them forever. Similarly, he believes diversification is not essential since good investing ideas are rather scarce, and adding lower conviction stocks tends to dilute returns.
Shares in Berkshire Hathaway were purchased after reading Mr. Buffett's 2013 letter to shareholders and sensing that "he believed Berkshire was relatively undervalued." Moreover, Mr. Leon felt reasonably certain "that 20 years from now, people would continue to consume Coca-Cola, Heinz Ketchup [and other brands held in the Berkshire portfolio]."
Leon's Furniture Ltd. is a family business that has been in operation for more than a century (Mr. Leon is related to the family). "The main catalyst that influenced my investment was the 2013 purchase of The Brick Ltd.," says Mr. Leon. The Brick was Leon's Furniture's largest competitor and it "had a number of inefficiencies that could be corrected through various synergies." The combined entity has greater buying power, too.
The dividend, currently yielding 2.8 per cent, has been raised by more than 10 per cent annually over the past decade. Special dividends have also been handed out.
Management controls 67 per cent of the outstanding shares, which gives them an incentive to maximize shareholder value. Yet the shares are often undervalued because they are thinly traded and therefore don't attract much interest on the part of Bay Street and institutional buyers.
Buying Berkshire Hathaway stock, which has provided "a hefty return thus far."
Acting on a tip to buy Poseidon Concepts Corp. (later delisted due to accounting errors).
"Focus on buying quality businesses at discount prices."