When 2 buy? Mavrix vs N RiversHi everyone:
One says “time to buy now”, the other is waiting.
Mavrix - Time to Buy is Now
We don’t hear a lot about/from Mavrix Funds, who were, I believe the first institutional buyer of VSI. As a little memory refresher, here’s a news item from less than 3 months ago:
Globe says VendTek puts Dent in profit
Wednesday November 07 2007 - In the News
The Globe and Mail reports in its Wednesday edition that relative value manager Roger Dent looks for hidden gems and is good at spotting those that are ready to move. Andrew Allentuck, writing special to The Globe, says that among his winners is VendTek Systems. Mr. Dent, 46, started his career in corporate finance at Wood Gundy and eventually became a small-cap hunter for Mavrix Fund Management in Toronto. His Mavrix Strategic Small Cap Fund produced a 35.9-per-cent return for the 12 months ended Sept. 30, and beat every other Canadian-focused, small- to mid-cap fund from 2003 to 2006. His method: value stock picking. "I have spent 15 years building a network of contacts," Mr. Dent says, noting the usual value measures of price-to-earnings and price-to-sales do not work well when companies are in early stages. VendTek Systems is a Vancouver company that operates electronic systems for merchants to load time on prepaid cellphone cards. Bought at 25 cents, the shares closed Tuesday at $1.07.
© 2007 Canjex Publishing Ltd.
In one of his newsletters THIS week, Dent noted, amongst other things, that the Venture market has been in a bear trend since April, compared to the TSX.
“The bear phase in the Venture, now at close to 10 months, is the longest in the last 5 years. We see both fundamental reasons and technical reasons for investors to think that this bear phase may be coming to an end. We see many cheap stocks in the marketplace. We expect, on the whole, good company-specific news and we think that the big picture news has already been discounted into share prices. We are also seeing nascent buying again coming into the small caps. Time to buy, I think. “
Northern Rivers -- Waiting a Bit
You’ve got to admire Hugh Cleland. Although his innovation funds averaged about a 33% return over 3-5 years, he publicly berates himself for having a flat year in 2007 after making a 97% gain in 2006. That kind of honesty is pretty rare…plus he congratulates his partner for doing so well. Kind of reminds me of Obama and Edwards. Oh, but I digress….:)
In his newsletter dated January 21, Hugh Cleland from Northern Rivers made the following commentary:
"I am preparing to invest more of my money in my funds at the end of February or March. With last week’s dramatic 4%-6% declines in the major equity indices now putting the Dow and S&P 500 each down about 15% from their all-time highs (that were hit as recently as October 9th!!), the times we are now in appear much more akin to 1990-91 than any kind of ‘soft’ or ‘bumpy-landing’ scenario. The unwinding of the 1988-1990 real estate bubble and S&L crisis has some reasonable parallels to today: the resulting recession led to a scary 20% decline in the S&P 500 from the all-time highs on July 16th 1990 to the bear market low on October 11th 1990. (It is remarkable that a nine month recession was priced into the markets in a matter of three months!)”
“Interestingly, many internal market measures are now showing readings as extreme as those that occurred in October 2002 and October 1990. The “bright side” of such extreme measures is that they occurred at the bottom of the past two major bear markets; the “bright side” of seeing 1990 as a template for the current declines would mean that we are ¾ of the way through the declines, and that the worst should be priced in sometime between the end of January and the beginning of March. As such, I am preparing my personal affairs to be able to invest more in the funds I run at the end of February or March.”
Of course, we don’t know if he includes VSI here. NR is already the largest shareholder of VSI, the year-end report will be out in a few weeks, and it’s going to be favourable. So who knows?
Will we find out?
Both these funds buy on the open market, so it's almost impossible to tell when they are buying.
Does "time to buy" mean NOW or in a month from now...? That seems to be the big question. With VSI, there's the extra consideration of year-end numbers release coming up. It's a tough decision.
Gladys7