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  A look at the winners in our 2002 portfolio

BENJ GALLANDER and BEN STADELMANN

Friday, January 3, 2003

Once again, the Contra portfolio had a banner year. How did we do it? By following our time-honoured strategy of buying unloved companies, waiting patiently for the herd to recognize their value, riding the party balloons, and then jumping off the bandwagon before the crowd.

In 2001-02, gold was on our buy list and Richmont Mines was featured twice in our column, in June and September 2001. We wrote, "If you believe that gold has a future, this firm is a screaming buy."

It was, and our purchase at $1.81 was dumped last spring at our target of $4.60. As happens more often than not, we sold early, as the firm now trades at $5.95. That's called "leaving something on the table for the next guy," or so we tell ourselves.

Another gold outfit, Claude Resources (not written about in this column), was also a huge winner for us. Purchased in December 2001 at 51 cents, all but nine percent of our holding was sold at $1.54 and $2.24.

One of our older favourites, furniture retailer Bombay Company, was first mentioned in July 2000 at $2.80 (U.S.). Starting the year at a lowly $2.26, it finally began to wax positive, jumping to $5. We're sitting with this one as it rests well below our target of $7.69.

OfficeMax was featured in December 2000. Trading then at $1.62 (U.S.), the company's stock finished 2001 at $4.50. In 2002, momentum stalled somewhat, but finishing the year at $5 is better than a kick in the rump. Our target price of $13.44 remains distant but eminently achievable.

Last March, we suggested that Clairvest Group was a good early RRSP move at $5.44. This merchant bank ended 2002 at $6.81. The book value is more than $8.50. This stock remains a good one to hold, and the dividend is appreciated.

There were some corporations with "Avoid" stickers all over them. Air Canada was dissed at $5.34, and although it was aloft for a while, the company reached limited altitude, finishing the year at $4.75. We also suggested shunning Nortel Networks last spring at $2.85 when many were calling the bottom. It ended 2002 at $2.52 (and note that there was a ilittlei trip to $.67 in the interim.

Of course, the Contra portfolio also had some losers. Only two firms in the portfolio, however, lost more than 10 percent of their value. Weill be discussing these, along with some other errors along the way, when we report the year-end numbers in our next column.


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