On first inspection, I notice the ominous hump on the bear’s back that resembles a chart of the rise and fall of Nortel Networks and a queasy feeling comes over me.
As one might have guessed from the sickly state of the stock market, the Bear, that dirty rotten scoundrel who has been mercilessly stomping on our portfolio, is indeed a grizzly.
Yet, on closer inspection, the Bear doesn’t appear to be particularly threatening. This may explain why the stock market has been grinding away the kids’ college fund like a dentist drilling a cavity. With the anesthetic, you don’t feel a thing until you click on your portfolio balance and find another missing 0.
“You seem like a decent fellow, Teddy,” I say in meeting the Bear for the interview, a world exclusive.
“Rule No. 1, don’t call me Teddy,” growls the Bear, cranky as the Dow Jones in the clutches of the bear. “I only agreed to give the Business Edge an exclusive interview because I felt sorry for you. I’ve been watching your portfolio. Call me Ted.”
“ Ted, when can we expect you to make a graceful retreat so we can resume our favourite pastime – watching stocks go to the moon?”
“I won’t leave until you show some respect. Stop punching me in the snout. If you fight the bear, you lose.”
“OK, we get the message. It’s your game. Tell us what you want.”
“I want the bulls to come clean, admit defeat. Everybody roll over. Play dead. Then, the messy business is over in a jiffy. Nobody gets hurt bad. Ted takes a hike. And tell the bulls – Abby Joseph Cohen and all the tech analysts – I’m sick to death of leaving claw marks on the backs of their victims.”
“And if we don’t co-operate, Ted? You figure on staying a while?”
“Let me just say that there’s been too much bull around here. This is a big job. And you folks have been getting on my nerves!”
“What’d we do, Ted?”
“Look at E-bay. Still trading at $52.95, a multiple of 177.7 times earnings. Shame. Shame. I don’t particularly enjoy taking the kids’ college fund, but you guys laid out the welcome mat. Greed brought me here. Fear will send me away.”
“Please tell me, Ted, when can we expect the long-awaited market-cleansing, the capitulation, so we can find the bottom?”
“Nobody knows. Nobody should care. You should be investing in companies, not stocks. Do your homework. I’m just a simple bear, but I’m no Boo Boo. I happen to know that the compound annual growth rate of the S&P 500 index from 1982 to 1999 was 22.4 per cent. If that index gained nothing over the next seven years, it would still match the market’s historic 11-per-cent growth rate for the period from 1982 to 2008. And you think I’ve got no business on the street?”
“You seem smarter than the average bear, Ted. Where’d you go to school?”
“My great grandpa, Ted Sr., taught me the Great Game. He was the most famous bear. Maybe you heard of him. Grandpa ‘Crash.’ Yup, he was there on Wall Street in ’29.”
PRO'S THREE STARS
Doug Cooper of Taurus Capital continues to favour BW Technologies (BWT-TSE), of Calgary.
His other picks are Mad Catz Interactive (GTR-TSE) and Magnifoam Technology (MTG-TSE).
“All three companies have strong balance sheets,” says the Toronto-based analyst, who specializes in manufacturing and industrial products.
BWT has just announced quarterly earnings of $687,000 (12 cents per share), a 137-per-cent gain over the same period last year. Cooper made BW one of his top picks in March when it was trading at $8.75. Its recent price is $10.60 (year range, $5.50-$11) and Cooper has raised his 12-month target price to $17.50.
Mad Catz (recent price, $2.29, year range, .50-$3.04) gets a 12-month target of $5. The company, which recently changed its name from GTR Group, manufactures video-game equipment. It will soon be trading under a new ticker symbol – MCZ.
Cooper’s 12-month target on Magnifoam is $6. The stock recently traded at $4.10 (year range, $2.15-$4.90).
“The main reason we like them is because they’re basically the exclusive provider of thermal acoustic insulation to Bombardier and they’re basically the No. 1 provider of thermal acoustic insulation to the business jet market.”
Cooper continues to recommend another winner from his previous picks, CFM Majestic (CFM-TSE), but is concerned about the viability of a disastrous choice, Fantom Technologies (FTM-TSE).
Fantom, a manufacturer of vacuum cleaners and a new home water-filtering product, Calypso, recently crashed to nine cents from a $1 range and was recommended by Cooper in March at $6.50.
Cooper’s Record: -22.1 per cent (BW Technologies +21.1 per cent, CFM Majestic +11.4 per cent, Fantom Technologies -98.3 per cent).
HOT ALBERTA STOCK: Anderson Exploration
AXL-TSE $39.71 Up $13.31 (+50.4%) on 112,109,300 shares (for week ending Sept. 7)
Leave it to a wily oilpatch baron to hit a gusher for shareholders when they least expect it. With analysts and investors sour on natural-gas weight companies, 70-year-old J.C. Anderson engineered the biggest deal of his life, selling the Calgary company he founded 33 years ago to Oklahoma-based Devon Energy for $5.3 billion. That represented a 50-per-cent premium for shareholders. Take a bow, J.C.
COLD ALBERTA STOCK: Axia NetMedia
AXX-TSE $1.16 Down 34 cents (-22.7%) on 118,600 shares (for week ending Sept. 7)
Ouch! Another week, another few hundred punch-drunk tech stocks testing new lows. Axia certainly wasn't alone, but the Calgary outfit took the nasty upper cut to the chin in the week prior to releasing its financials. Axia, the brainchild of former oilpatch executive Art Price, creates and manages e-learning content and networks, which was a big deal 19 months ago when the stock rocketed to $18.