Robbie Mitchnick, 21
Commerce student at Queen’s University
The (club’s) portfolio
Mostly shares in more than 30 companies, including Loblaw Cos. Ltd., Suncor Energy Inc., Sierra Wireless Inc., Telus Corp., Goldcorp Inc., Fortis Inc., TransForce Inc., Open Text Corp. and Bank of Nova Scotia.
The Queen’s University Investment Counsel (QUIC) is an investment club for students at that institution. From 2003 to 2010, the club’s mock portfolio outperformed its benchmark by a cumulative 24 per cent. In 2010, a real portfolio was launched and has since outperformed the S&P/TSX composite by 13 per cent. The current value is just over $600,000, up from contributions of $500,000 from the Queen’s School of Business and $40,000 in member contributions.
During the fiscal year recently ended, the club’s CEO was Robbie Mitchnick. He will graduate in June and has accepted a position at the Canada Pension Plan Investment Board.
How the club invests
“We’re a value-investing fund,” Mr. Mitchnick says. “Because we have a long-term, stable source of capital, we are able to be more patient in waiting for value to be realized.”
The club’s chief strategy officer produces a macroeconomic outlook to guide the portfolio managers in each of seven sectors. The outlook also helps the chief investment officer determine the club’s target asset allocation.
At the stock-picking level, the portfolio managers “try to incorporate macro and sector-specific views to find trends the market currently underappreciates,” Mr. Mitchnick notes.
For example, ongoing expansion in Internet capacity from 2G to 4G standards implies substantial growth in data usage, so the club was interested in companies whose market valuations didn’t fully reflect their exposure to data usage (like Telus). Integral to this process are techniques such as “comparables analysis,” where a company’s valuation metrics (for example, the price-earnings multiple) are compared to peers.
They saw that Loblaw Cos. Ltd. had “extremely undervalued real estate assets in time to benefit from the firm’s decision to spin them off.”
Suncor was bought in March of 2012 on the expectation that “uncertainty in the Middle East had the potential to boost crude oil prices.” But no supply shocks emerged and the lack of pipeline capacity became an issue.
“I would say that for investment clubs, the experience of running a mock portfolio is good preparation for investing real money,” Mr. Mitchnick suggests. “It gives you the opportunity to develop the structures, capabilities and credibility required to take on real risk.”
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