E: This is the reason for the spark...I think this is what you were refering to.
And I agree..
(read to the bottom)
Regards,
CanMan17
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Fund zeros in on little known firms
Diversified portfolio includes uranium
ANGELA BARNES
Wednesday, April 18, 2007
Fund manager Roger Dent is having no trouble finding stock opportunities in the microcap section of the market.
"There have always been interesting opportunities in the [microcap] marketplace, and we continue to feel that way," said the manager of the Mavrix Strategic Small Cap Fund and two other funds. In searching for stock picks, Mr. Dent indicated he goes further than other managers who say they search for undiscovered opportunities.
"We are truly investing in many situations where we will be the only institutional investor or one of a very small number of institutional investors," he said. Also, the companies are unusual in that they generally are not yet followed by analysts and they don't give formal guidance to the market on their outlooks. When it comes to selections, he zeros in on those firms where he thinks there are corporate events in the near-term horizon that will cause other people to take a look at the stock.
The fund's portfolio is a diversified one, with some technology issues, some manufacturers and some resource issues.
The portfolio currently has only limited representation in the energy sector. Commodity prices are a key factor with that sector "and we don't think the commodity price is going to cause a lot of excitement in the market over the next three to six months," he said, adding that "we will look at the energy space more actively as we move into the 2007-2008 heating season."
However, the fund has holdings in the uranium group, where the emphasis -- as with oil and gas issues -- is on exploration plays.
The $25-million fund has set a hot pace already this year -- up 26.36 per cent year to date -- continuing a trend that saw it return 27.29 per cent in the 12 months ended March 31, 40.29 per cent annualized over the last three years and 15.75 per cent annually since inception in late 1996.
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Hammond Power
Hammond Power Solutions Inc. (HPS.A-TSX), which makes transformers and related products for the electrical industry, "has been delivering some really impressive earnings growth over the last two years, despite the fact that they had to deal with the strengthening dollar," Mr. Dent said. The Guelph, Ont.-based firm also was hit by rising commodity prices as transformers are major users of copper. He said the firm has been gaining market share and expanding into the wind turbine market and expects Hammond will show a share profit of about $1, which gives it a price/earnings multiple of 11.5 on the current price on the TSX of $11.49.
Blue Note Mining
Montreal-based Blue Note Mining Inc. (BN-TSX-VEN), another stock pick, is in the final stages of restarting a mine in New Brunswick that has been out of production since the mid-1990s, Mr. Dent said. It should be producing zinc in about three months, he said. The move from non-producer to producer should cause a change in the way the market looks at the company and attract more analyst coverage, he said. "Blue Note is one of the more interesting metal stories in Canada over the course of the next three to six months," he added. Blue Note shares ended yesterday at 43.5 cents on the TSX Venture Exchange.
Nuvo Network
Back in early 2000, shares of Nuvo Network Management Inc. (NVO-TSX-VEN) were changing hands at close to $24; now they are trading at 29 cents. And the current price is even significantly lower than the levels of 2003 and 2004, which suggests to Mr. Dent that the stock is off the market's radar screen. Yet "the business has really started to perform quite nicely," he said. It made a profit in the last two quarters and "it has a significant business backlog that we think will cause earnings to improve as the year unfolds," he added. He thinks that the stock, which he calls "very inexpensive," will attract more attention as it continues to show a profit.
2007 The Globe and Mail. All rights reserved.