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Investor smooths volatility with non-cyclical stocks

Since graduating from the University of Waterloo, Robin Speziale, 28, has been carving out a career for himself as an author of investing and personal-finance books.

Robin Speziale

Occupation

Author

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The portfolio

Includes shares in Starbucks Corp., Loblaw Cos. Ltd., Alimentation Couche-Tard Inc., Luxottica Group SpA, Yum Brands Inc., Rogers Communications Inc., CCL Industries Inc., BlackBerry Ltd., McDonald's Corp. and Nike Inc.

The investor

Since graduating from the University of Waterloo, Robin Speziale, 28, has been carving out a career for himself as an author of investing and personal-finance books. His third book, Market Masters, is to be released by ECW Press on Feb. 16. It's a collection of interviews with top investors in Canada. Mr. Speziale was interviewed for Me and My Money in October, 2010. His portfolio in that column has returned 70 per cent to the end of 2015, he reports. This performance was better than the Canadian stock market and matched the S&P 500.

How he invests

He invests mainly in global, consumer-franchise companies with competitive advantages and able managers. Their brands enjoy a favourable image among consumers as a result of long exposure to aspects of its products, service and advertising – resulting in a high degree of pricing power in the marketplace. For this reason, these companies have "cash flows that are more sustainable and can be projected with greater certainty into the future."

When analyzing companies, Mr. Speziale focuses on their return on equity, return on invested capital and profit margins. High readings on these metrics tell him that a company truly has a strong business and can defend, or advance, its market position.

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"I allocate more capital to high-conviction positions, and reserve a portion of my portfolio to higher growth, small-cap and mid-cap stocks," he adds. They can sometimes lead to outsized gains.

Mr. Speziale also integrates risk management into his portfolio. One way he does this is by having positions in 25 to 30 companies. And most have consumer products that make them, in varying degrees, non-cyclical in nature.

For example, he "built a sizable position in Rogers Communications" last year to help stabilize his portfolio since "telecoms are generally consistent performers through business cycles." This has worked out well during the sell-off in stocks over the past few months: Rogers' stock has "gained close to 10 per cent."

Best move

"Buying shares of Starbucks in 2008 when many were bearish on the company. It's up 700 per cent since then."

Worst move

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"Dollar-cost averaging … Cheap stocks can get cheaper. There must be a clear catalyst to the upside."

Advice

Mr. Speziale has plenty of advice to pass on in his books. Of note are the more than two dozen interviews of leading Canadian investors in Market Masters.

Want to be in Me and My Money? Contact Larry MacDonald at mccolumn@yahoo.com or his website.

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