It is time for our annual report card, evaluating our picks for 2023. Without further ado, we present Ben and Benj’s selections, followed by Phil’s.
Our first stock choice in January was Telefónica SA (TEF-N), then trading at US$3.90. It’s up a smidge. Nothing very exciting here, especially for the 5,000 employees who are looking at losing their jobs. Yuck. The good thing is that the fat dividend of about 7.5 per cent continues to be paid. It remains a buy.
Next up was Companhia Energética de Minas Gerais SA (CIG-N), then around US$2. This Brazilian-based energy company has moved up modestly since then. It also remains on our buy list.
In March, Benj attended the Prospectors & Developers Association of Canada Conference (PDAC) and had lunch with Allen Palmiere and Alberto Reyes, the chief executive officer and chief operating officer of Gold Resource Corp. (GORO-A). The meal was yummy, but the stock has been indigestible, putting on a horrible performance. Though Mr. Palmiere talked a good game, more noteworthy was his refusal to buy any shares himself. Currently it trades around 33 US cents, about half of what it was. A strategic review is now under way with one likely outcome being a sale of the company. Holding and hoping.
Our article on Berkshire Hathaway Inc. (BRK-B-N) began, “Sometimes in life – as in investing – one must strike quickly or miss out on an opportunity.” That is how Benj felt when he decided to take his two lads to the enterprise’s AGM this year. Fortunately, he did, as that was the last one to see Charlie Munger in the flesh. Over all, we were fairly agnostic on investing here. The stock has moved up about 15 per cent since.
Aegon Ltd. (AEG-N), a Dutch-based company that specializes in insurance, pensions, retirement and asset management, is up about 25 per cent since the piece. We still like it and feel that at least a double could be in store.
In June a decision was made to avoid purchasing Indigo Books and Music Inc. (IDG-T) when it was trading right around where it is now. It would not be surprising to see a turnaround now that Heather Reisman has returned as CEO. With mega-rich hubby Gerald Schwartz in her corner, they can feed the mill for a long time to give the company time to recover. We keep kicking the tires but are not putting cash down.
In July, hope sprang eternal with Laurentian Bank (LB-T), which we had previously acquired. When it suggested it was looking to be acquired, the stock popped, and our purchases looked mighty sexy. Ultimately, they weren’t, as no offer arrived and the “For Sale” sign was taken down, with the stock then diving. Currently we’re underwater. Still, our belief is that the stock will move up handily at some point while we consume the fat dividend. The enterprise did cut the payout before, and though we do not think that is likely to happen soon, it is not out of the question by any means.
Big kahuna General Electric Co. (GE-N) followed in August. Then at around US$113, it has ticked higher to US$124. The dividend has jumped eightfold to a quarterly 32 US cents since 2021. Perhaps our optimism is misplaced, but a double from here seems reasonable to us.
AT&T Inc. (T-N) was at the forefront after GE. Ben opined that he couldn’t think of another stock in his 40-plus years of investing experience that matched the volcano of verbiage spewed about the firm, with bears and bulls both being vociferous in their views. The stock has gone up about 15 per cent since the article.
Meanwhile, Phil MacKellar’s first article in January was on Bed, Bath and Beyond, in which he stated the retailer “could be headed for bankruptcy.” It was. Kaput. Shorts made out like bandits.
He was much more optimistic about French company Orange SA (ORAN-N), which was his top dividend pick of the year. While the payout has been a fat 8 per cent or so, the stock price has been pretty flat since the article was published. Alas, this name has been a disappointment to us for years.
On a shinier note, after Agnico Eagle Mines Ltd. (AEM-T) and Pan American Silver Corp. (PAAS-T) took over Yamana, he decided to hold the two suitors. Agnico is up about 10 per cent since then, with PAAS down about 10 per cent. Call it a wash. Both are being held for the possibility of further upside.
Major Drilling Group International Inc. (MDI-T) is down about 5 per cent since the May article but has since recorded its best annual results in more than a decade. Currently around $9, the hope is it will pop to the initial sell range of $15.50 to $18 and be sold.
RioCan REIT (REI-UN-T) was suggested as a buy, with population growth being key to its future success. Capital appreciation and a beefy dividend were the predicted rewards. While the payout has been constant, the stock price has still not moved upward. It remains a buy.
Phil crossed the ocean to invest in Greece via ETF (GREK-N). It is down a tad to US$37 since the July article. He feels it can power over US$50, given the low valuations and improving economic prospects.
There are more recent picks, but those are too fresh for this article.
So over all a pretty mixed bag in terms of results. Alas, it was not like 2020, when our score was perfect. Maybe we were smarter back then.
Whatever the case may be, we will celebrate this holiday season and new year recognizing that life is not only about investing. We hope you and yours have a lot to cheer for in 2024. Catch you then.
Benj Gallander and Ben Stadelmann are co-editors of the Contra the Heard Investment Letter.