Saturday, December 29, 2012

December 2012 - Starting List

The current list of stocks selected by the method is as follows:

Ticker Name Industry
AAH Aastra Technologies Ltd Communications & Networking
GDL Goodfellow Inc Forest & Wood Products
BBL.A Brampton Brick Ltd Construction Materials
PFB PFB Corporation Commodity Chemicals
ALC Algoma Central Corp Marine Freight & Logistics
VCM Vecima Networks Inc Communications & Networking

To track the portfolio, I will take a sum of $10,000 and divide it such that $1000 is invested in each stock (or as close as possible). There are only 6 stocks selected by the initial screen, meaning $4000 will remain in "cash" and will be used to purchase new stocks in future quarters, if appropriate. 

Performance will be tracked on a Google spreadsheet, so it can be viewed at any time and will always be up to date. I'll do the initial "buys" on Dec 31 sometime during the day, and the starting price will reflect the ask price at the time I check it. Once a quarter I'll update the buy/sell list here on the blog.

Interestingly, Aastra & Vecima seem to be very similar businesses, both of them making communications technology for businesses. And Goodfellow, Brampton Brick, and PFB are all involved in construction. So it's not a very diversified portfolio, but such are the hazards of value investing. 

Sunday, February 5, 2012

Introduction

I came across the American Association of Individual Investors (AAII) Shadow Stocks portfolio in late 2011. This is a stock-picking method that focuses on smaller stocks with the potential to grow big. They call them "shadow stocks" because they're in the shadows of the stock market, and most investors don't pay attention to them. I was very interested in it, as they claim that it has an annual return of 18% over the past 10 years (vs 2.5% for the S&P 500). I read the rules of how they determine the stocks, and noticed that one of the rules was that no foreign stocks should be purchased.

Being Canadian, if I were to follow their rules to the letter, I cannot look at their stock picks at all, since by definition all of them will be foreign. I therefore decided to follow their rules and come up with my own list of shadow stocks for the Canadian market, which I will be tracking on this website.

I'll start in December 2012, with a hypothetical $10,000 invested in 10 stocks. I will update the performance on a monthly basis, and review the portfolio quarterly.