Decade of Daddy Mirror Fund
As promised (See prior post “Kevin O’Leary is a rock star” June 30-08), just like the Decade of Daddy Fund™, we are going to invest $40 million over the next while. Unlike Kevin O’Leary, we’re not going to charge 1.5% to do it (given we aren’t licenced to give investment advice to individual investors, you should naturally get it for free). Here goes. Today we’re going to put out almost $15 million, but I’d welcome your views about how we should “invest” the funds:
Security – Price – Position – $ amount
BMO – $41.56 – 65,000 – $2,701,400
Bristol Myers – $20.81 – 50,000 – $1,052,466
CDN Oil Sands – $53.96 – 40,000 – $2,158,400
CIBC – $55.46 – 25,000 – $1,386,500
Duke – $17.42 – 75,000 – $1,321,525
Eli Lilly – $46.32 – 25,000 – $1,171,317
Merck – $38.55 – 40,000 – $1,559,733
MKS – $1.41 – 650,000 – $916,500
Spectra Energy – $28.45 – 45,000 – $1,294,973
Teranet – $8.64 – 125,000 – $1,080,000
Total invested – $14,642,813 (or 36.6% of the Mirror Fund)
MRM
For a defensive play in these uncertain times, I’m liking K-Bro Linen Income Fund (KBL.UN-TSX). Cleaning hospital bedding/sheeting is about as safe as it gets, plus a 9.5% yield looking attractive. The only caveat is the company’s exposure to oil (transportation costs) and natural gas (industrial dryers). I’m not sure how much they can pass through.
Also I like Marsulex (MLX-TSX), which is in a great industry (industrial environmental products and compliance), extremely strong management, and a 4.5% dividend yield. This is a Torquest Partners (technically it was a Harrowston company) portfolio company, which is built to make money in any type of business environment.
If you plan on having a “mirror fund”; shouldn’t you have a “mirror investment strategy”?
Your picks are all North America. Is it too much effort to pick stocks outside of N/A? KO says he’ll pick stocks in Asia, Europe, Emerging Markets, etc… I can’t wait to see your picks!
Going over the prospectus, KO says he will only invest in companies over $1billion of market cap. I took a look at MKS, as the name didn’t sound familiar… it has a market cap of roughly 75 millions (are you an insider trying to push the price up?…)
On another side note, if trying to run a “mirror fund”; shouldn’t you run it as if you would actually manage it? You might want to take another look at your position in MKS… 650,000 shares @ 1.41 for trade date 02/07/08… really??? Look at the trading activity; its 3-month daily trading volume is 42,364 shares a day. Assuming you don’t want to buy more than 10% of the daily volume in order to not impact/move the market, it would take you what, over 150 trading days to build your position? More than half a year! Even on your trade date of 02/07/08, the volume was only 24,123 shares. You think you could have bought 650,000 shares at the same price of 1.41 (low of the day)? Not only do you provide free “valuable” investment advice, you must also be one of the best trader, EVER!
Best of luck.
RS
Richard
OK. Point taken. But MKS has had several large volume days of late and I think on a day like today that I could’ve found a fill for the order. Over 600,000 share straded one day in May, and another 1.4 million shares traded one day in March, as did 400,000 on another day. Big blocks can be had, you just have to bid for them it would appear. And yes, as per my disclosure at the bottom of the June 30th post, I do own MKS and BMO.
But we also do our homework, so I don’t think the MKS play as a high yielding stock is off base. But, if others agree with you then I’ll take it out.
To be clear, I didn’t promise to mirror all of KO’s strategies (ie. the $1B minimum market cap). I promised to mirror the concept of buying dividend paying stocks with the potential to also benefit from capital appreciation. What was it called again? Getting paid while you wait?
I do think it is just ludicrous for a Toronto/Montreal based firm with $40 million at work to pretend to pick unique stocks in India, China or the Middle East, for example. Reading a Merril Lynch equity research report or running a Bloomberg screen and then pulling the trigger doesn’t count as proprietary research.
Equally crazy is the idea of putting 20% into illiquid private deals, as I wrote in the original post. But, to emulate KO I intend to do some of that by investing in our own fund – a privately held institutional LP vehicle that pays a yield, plus some upside.
The good news is that you appear to be one of KO’s new Unitholders. Nice to make your acquaintance. As you’ll come to find, we welcome criticism and alternative opinions. I wish you success in this investment of yours; of course we want you to make money on it. If I (and our reader ideas) can even come close to matching the Decade of Daddy Fund’s performance, having spent about 5 minutes thinking about the portfolio, than the point will have been made, won’t it?
If not, then you were right to invest with Canada’s Simon Cowell and will have the added benefit of saying “see, I told you so” should that tickle your fancy.
In any event, I appreciate the comment and sincerely hope your faith is rewarded.
MRM
Mark,
Thanks for the reply. I always appreciate when a blog editor takes time to answer his/her readers’ comments/posts.
There might be something I am missing, but doesn’t it look like you’re only taking a personal shot at KO? I mean, “Reading a Merril Lynch equity research report or running a Bloomberg screen and then pulling the trigger doesn’t count as proprietary research.”, did KO tell you that this was his investment process?
If you really wanted to criticize investment fund or recent IPO’s or recent closed-end fund, wouldn’t you have taken a look at the recent COXE Fund? I guess you wouldn’t want to bad-mouth a fund put on the market & ran by BMO (which you say you own).
Richard
Richard
I haven’t discussed any of this with the Decade of Daddy Fund managers. I also don’t expect them to visit 15 different foreign steel mills before investing in one or another. With a couple of staff and a modest mgmt fee to cover travel expenses, they just can’t replicate what Fidelity can do.
As for Don Coxe, I haven’t looked at his plan in detail. He does have 36 years of institutional investing experience under his belt, of course. According to the prospectus, Mr. Coxe has consistently been named as a top portfolio strategist by Brendan Wood International; and was ranked number one in the 2007 survey.
KO’s claim to fame appears to be the multi-billion sale of TLC to Mattel; a deal which promptly went to zero within a few months of closing. And then there is the investment insight that can be seen on CBC’s The Dragon’s Den.
As for KO’s convictions…after some gentle teasing in the blogoshpere, KO ditched the “GET PAID WHILE YOU WAIT” investment strategy that was disclosed in the prelim prospectus in favour of “value investing”. Not something that the world was crying out for more of.
Coxe has a clear vision about the commodity markets according to his filings; something retail investors have a hard time replicating in their own portfolios. How can you and I play corn, oil, gas and platinum each and every day in retail-sized trades?
KO plans to buy and hold Manitoba Tel and some international ADRs. Something that we all can do at the click of a button.
That’s why one raised $297.5 million and the other cobbled together $40 million (including the President’s list). There’s nothing personal in that analysis. As KO himself might parrot: “the market has spoken”.
MRM
Mark,
With reference to “How can you and I play corn, oil, gas and platinum each and every day in retail-sized trades?”, isn’t there enough oil&gas stocks in Canada alone for Canadian retail investors? It seems you haven’t look at his plan at all, since you seemed to have missed the fact that he would invest in stocks, not commodities directly (futures). How hard is it to find oil&gas or corn stocks in Canada, or the US, for retail investors? You tell me… If a retail investor is bullish on commodities, why not simply go with a Powershares or an iShares? Less fees with 100% of the sector exposure. Regarding Coxe’s 36 years of investment experience, he is actually a strategist at BMO, and consultant to the fund, not an institutional investor. Having read few of his articles in the past, he typically focuses on the “big picture”, or asset classes, not underlying stocks.
Richard
Richard
I didn’t lead the Coxe Fund, so don’t be cross at me for his fundraising success or his strategy. You sound like someone who can’t believe Coxe could raise $300 million when O’Leary was only able to get $40 million during the same fundraising roadshow window.
Fair enough, but the market has spoken.
MRM
The anti-spam word of the day…is “cat-fight”
Whew… gloves off and whatnot…
I’ll just put all of my 15 melons into Sealy Posturepedic thank you.
Disclosure: I like melons.