The Straight Talk Blog

From time to time, we intend to make postings to our Straight Talk Blog when we have something important to say. All three partners will be contributing authors. We'll alert you by e-mail when we make a new posting.
We'd be delighted to hear back from you, so please feel free to send us your comments in the form provided.
Best regards,
Rob, Rupel and Richard

 

January 2012


The Dragon in Your Heathbridge Portfolio
Jan 26, 2012 3:41 PM
Heathbridge Capital Management

This week marked the beginning of the Year of the Dragon in the Chinese calendar, the most auspicious and powerful of their twelve signs, one associated with high energy, respect and prosperity. So far in 2012, these attributes also apply to your portfolio.

As of yesterday, our average 3-ranked equity accounts (regular equity accounts) were up 6% since the beginning of the year and our 4-ranked equity accounts (our “businessman’s risk" accounts) were up 10%. This compares with around 5% for both the Canadian market (S&P/TSX) and the US market (S&P 500 in C$). We know it is early days and storm clouds remain in Europe but our companies continue to march ahead.

The strong start to the year has been fueled by the laggards of 2011 that we highlighted in our year end quiz, including Magna and Life Technologies, both up over 25%. The dramatic outperformance of the 4-ranked accounts was largely due to the 130% increase in the share price of Gennum after a takeover announcement Monday evening (January 23). Gennum was also a name in the Heathbridge Checkmark Equity Pooled Fund. We sold the shares to lock in the gain and eliminate any deal risk.

Perhaps the greatest service that an investment manager can offer to its clients is to persuade them to stay the course. Our last blogs were sent in August and September, urging calm and recommending that investment positions be held. Since those times, equity account values have increased by 10 to 15 percent.

It can never be said for certainty that the worst is over and we will undoubtedly have further ebbs and flows in the pricing environment for stocks. However, we like the investments you own and are confident that these securities will eventually provide you with good returns.

Feel free to call with any questions you may have.