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Me and My Money

Equity analyst takes a contrarian view Add to ...

Philip MacKellar, 25

Occupation

Equity analyst and business development consultant

The portfolio

Bank of Commerce Holdings, Deswell Industries Inc., Gannett Co. Inc., General Electric, North American Saving Bank, Jean Coutu Group, Sun Life, Torstar.

The investor

After studying geography and history with a commerce minor, Philip MacKellar became a financial adviser, but found the job less than ideal. “I was given 200 clients, and then you were supposed to make your own clients through friends and family,” he says. “I was learning stuff and making money, but I found the job depressing because I couldn’t sell products I believed in and would buy myself. What I was selling wasn’t exceptionally bad, just industry standard.”

His day job

Today, Mr. MacKellar works as an equity analyst for the contrarian investing newsletter, Contra the Herd, as well as being involved in business development for a B.C. company making backpacks and travel organizers from recycled materials.

His strategy

Mr. MacKellar calls himself a contrarian investor. While similar to value investing, he says a major difference is that he takes investor sentiment into account. “I look for investments where the sentiment is downright negative or has been so negative for so long that people have forgotten about it and nobody is following it when good news comes.”

His screening process

He starts with companies that have been around for 10 years or longer. “Companies have a good chance of surviving a downturn if they have survived one in the past. And that longer-term history also gives you an idea of how high the stock can go.” He also sticks to companies that make sense to him. “If, after looking at it for an hour, I don’t understand it, it’s probably not something I should be investing in.”





Best move

Buying Jean Coutu Group early last December for $9.18 a share. “At the time there was a lot of concern in the pharmaceutical industry that they wouldn’t be allowed by the provinces of Ontario and Quebec to price products for as much as they had been, so the stocks got hit. My thinking was there are still a lot of people who are going to buy drugs and need prescriptions in the future.” The shares last closed Friday at $12.73.

Worst move

In 2005, Mr. MacKellar began trading on paper and then in 2007 started using a real account with real money. “My timing was horrible because the market peaked two months later,” he says. “Looking back, it shows that I’d been sucked in by the crowd. The higher things went, the more confidence I had, and the more I confused brains with bull markets.”

Advice

“Think critically about the headlines. Question the mentality of the market at any one time. Common knowledge can be quite damaging. If everybody believes gold will go up and up and up, and everybody has made that trade, then there is risk there.”



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