Skip to main content

Hayden Cole, 33

Occupation

Consultant engineer

Story continues below advertisement

The portfolio

Includes long positions in Lindsay Corp., Senomyx Inc. and Apple Inc.; short positions in Veeva Systems Inc., Zillow Inc. and Caterpillar Inc.

The investor

Hayden Cole often puts his engineering knowledge to work when making portfolio decisions. "Many of my investments are either technology or industrial firms because those are the areas in which I have direct experience," Mr. Cole says.

How he invests

"I'm a value investor at heart," he adds. "My focus is on bottom-up, in-depth research of companies."

A recent buy was Lindsay Corp., one of the two largest companies in the duopolistic mechanized-irrigation industry. Its stock was cheap due "to a cyclical downturn in agricultural commodity prices" and high adoption rate in the U.S. market. "But long-term prospects are still good given the low penetration of mechanized irrigation in emerging countries."

Story continues below advertisement

When equity markets are expensive, he'll look for short positions to hedge his portfolio. "I tend to short stocks with the opposite characteristics that I look for in longs – some combination of extreme overvaluation, a flawed business model, secularly challenged industries or dubious accounting."

His short sale on Zillow reflects a belief the online real-estate firm "has a business that doesn't scale" – a big jump in marketing expenditures recently boosted revenues but not profits. Its stock is also trading at a very high valuation of "20 times sales."

As for shorting construction-equipment supplier Caterpillar, it's vulnerable to a slowdown in the Chinese construction market, and the unwinding of the decade-long boom in commodity prices.

Best move

Since he initiated his short position on Veeva Systems (a provider of client relationship software used by sales forces in the life-sciences industry), the stock is down nearly 50 per cent. Pharmaceutical companies are consolidating and cutting back on their marketing departments.

Worst move

Story continues below advertisement

He bought a Chinese steel processor when it was "insanely cheap and had great margins and return on capital." But its pricing power was not based on a competitive edge, just a transitory supply shortage.

Advice

"Without a tangible edge over the average market participant, you are not going to outperform the market over the long term. That edge might be superior resources or technology, insight into particular areas, or a unique methodology for finding mispriced assets."

Want to share your strategies? E-mail mccolumn@yahoo.com

Report an error Editorial code of conduct
Tickers mentioned in this story
Unchecking box will stop auto data updates
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

Read our community guidelines here

Discussion loading ...

Cannabis pro newsletter