We are dedicated to sharing our investment experience, with our readers. Some of the following questions and answers will help you to understand us better. If you have further questions or comments, please contact us.
Contra is published quarterly in mid-January, mid-April, mid-July and mid-October. The January issue is 20 pages; the rest are 16. Subscribers also receive our email bulletins — we issue between 20 and 35 in a typical year. Most of these are sent out when we buy or sell a stock.
No. At Contra the Heard we do not invest for anyone but ourselves.
You should have enough to set up a diversified portfolio from the outset.
Whether you choose to buy the stocks listed as Buys in Contra, or others, is your decision. We discuss which ones we have bought and why. We also report when we sell stocks and the rationale behind each decision. In each quarterly update we provide a breakdown of the President’s Portfolio and Vice-President’s Portfolio. Within the President’s Portfolio, Benj divides stocks into two categories: Buys and Holds. Within the Vice-President’s Portfolio, Ben provides subscribers with a buy limit to distinguish between those stocks which are a hold and those which are a buy. We always suggest that readers analyze our buy list first and assess whether our stock purchases make sense, both from a stock purchase viewpoint and specifically to their own portfolios before they buy. We do make mistakes, and unfortunately, we always will.
A one-year Contra subscription costs $680 per year. This amount is reduced for two- and three-year subscriptions and can be less upon renewal. At $680 annually the cost of a subscription is similar to investing approximately $60,000 in a mutual fund with a 1.1% MER or $120,000 in an ETF with a 0.6% MER.
Whenever a stock joins or leaves one or both of our portfolios, an email release is sent out before markets open the next day, unless technology gets in the way. We also send out a release when there is a takeover on a Contra stock and explain what we are planning to do.
On the centrespread of each issue of Contra, we list every stock that is in one of our two portfolios. Those in the President’s Portfolio indicate the year acquired, the purchase price and our target price for the initial sell. These stocks are divided into two categories: Buys and Holds. Buys are stocks we are still willing to purchase today. Holds are those with which we are sitting tight and hoping they will appreciate in value. Stocks in the Vice-President’s Portfolio are evaluated in a different fashion. For these, you’ll find a Buy Limit and a Target Range. If a stock is trading below the Buy Limit, it is judged to be a good value; above that price, it is considered a fair value. Once a position enters the Target Range, it is carefully reviewed with an eye towards making an exit.
Most years, at least one holding in the Contra portfolio has been taken over by a suitor. One year, six positions were cashed in this way. Since takeovers almost always are completed at a lovely premium to our purchase prices, they have augmented our investment returns. Our original portfolio, now known as the President’s Portfolio, normally comprises 15 to 25 stocks, so we are quite proud of this record. The takeovers are, in reality, a confirmation of our investment style: buying out-of-favour companies which later return to popularity.
If you are not receiving the advice from the broker, why pay for their services? Discount brokers save you oodles of cash, which ultimately increases your financial return.
Never. We consider this a loser’s game. We cannot count the number of times our stock selections have swooned downwards and we would have been sold out of our position. It is better to make a decision on when to sell stocks, rather than let the market dictate the transaction. Similarly, we do not use “at the market” orders, preferring to keep closer control over how much our stocks cost and what we get paid for them.
We will buy stocks on the TSX or any of the US exchanges, although it is rare that we buy on the OTC or pink sheets. We do not buy TSX Venture Exchange stocks for Contra.
That depends. If the price has moved up to the point where it no longer seems like a good purchase, we remove it from the list. Also, if the corporate fundamentals have deteriorated, it is often switched to a Hold.
Besides this website, another place to look is Benj’s book The Contrarian Investor’s 13: How to Earn Superior Returns in the Stock Market.
When we added the second portfolio in January 2010, it meant we’d be discussing more companies. And as our editor/typesetter can attest, you’d be amazed at how quickly you can fill up 16 to 20 pages! To make room, something had to give, and the commentaries were chosen to get the axe. However, for those wishing to review our various thoughts — and even a few predictions — over the years, we like to think the past commentaries offer some perspective. For more recent insights, we continue to post our Contra Guys columns from The Globe and Mail on the website.
They used to, on the less liquid stocks. But we have tweaked our system, and now our subscribers generally know not to jump on positions. The impact, therefore, over the past few years has been negligible. In fact, in the vast majority of cases, the positions subsequently trade below our procurement price. And after we sell, virtually all trade above the price we received.
We strongly believe that investors have alternatives to mutual funds that have the potential of generating superior returns. Mutual funds do have their advantages, but there are also several inherent disadvantages, which explain why about 90 percent of funds fail to even keep up with the overall market. And why they lag our returns substantially.