Investor Andrew McElroy.
Andrew McElroy
Occupation
Full-time trader and consultant to a family-trading office
The portfolio
"I am of the opinion the rally in equities is in its last stages, so my portfolio of stocks is quite minimal and I tend to take shorter-term trades," Mr. McElroy said. His current holdings include: Valeant Pharmaceuticals International Inc., Nike Inc., Starbucks Corp. and gold.
The investor
Mr. McElroy began investing in penny stocks after the financial crash of 2008. Within a year or so, he switched to buying the shares of less chancy companies. In 2013, he quit his job to become a full-time trader.
How he invests
Mr. McElroy relies more on technical analysis of stock prices and trading volumes than fundamental analysis of companies. In brief, he rides trends in stocks and exits when the trend is over.
All timeframes are of interest, from day trades to momentum plays of several quarters. Tipranks.com reports that his picks since 2009 have been right 64 per cent of the time.
An ideal trade is when he can "identify what is driving a market or particular stock and short-term sentiment takes it lower to an unfair price." For example, certain oil-and-gas stocks correlate to the prices of their commodities and when company- specific worries cause a divergence, he sees an opportunity to buy. He initially bought drug company Valeant Pharmaceuticals at $11 (on the New York Stock Exchange), and bought more as the price fell further to build a "decent position."
Although the company's "massive debt will be an issue for a long time," Mr. McElroy said there is "an opportunity to profit as … Valeant attempts a turnaround in the next 2 to 3 years."
When the company's troubles started more than a year ago, "the main fear was that Valeant would go bankrupt and this caused the share price to fall too much," he said. "I never thought the company would go bankrupt, as I have studied a lot of companies and they almost always manage to stage a recovery by re-financing debt and selling assets."
Best move
His best investment in the past year was buying Bank of America at $12.50 [on the NYSE] just after the Brexit vote last year, and then selling around $25.
Worst move
It was trading penny stocks, a sector where he feels performance has more to do with luck – good or bad.
Advice
"The most successful investors seem to specialize with a particular method," Mr. McElroy observes. "They do one thing and they do it better than anyone else. Find your niche and focus on it."
Special to The Globe and Mail
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