Many investors call themselves contrarian investors. Few make the grade.

In the throes of a bear market, many so-called contrarians lose their way and wind up out to lunch, grazing with the investing herd.

But when Josef Schachter describes himself as a contrarian investor, you’d better believe him. His bow-tie hints at contrarian. His track record proves it.

When the masses were avoiding Nortel Networks (NT-TSX) like a rabid skunk, Schachter, president of Calgary investment firm Schachter Asset Management, was merrily extolling the virtues of Canada’s most hated stock.

Schachter’s die-hard faith in Nortel is one of the reasons why he has emerged as the Business Edge top stock picker in the past year, with his picks up 69.7 per cent in our second annual review of the Pro’s 3 Stars column.

Overall, the Edge’s picks gained 29 per cent, decisively outperforming the TSX index, up 20.6 per cent in the past year.

Schachter’s gutsy contrarian call was Nortel, a repeat pick last December at $2.83 – he had also picked it the previous year at $1.66.

The stock charged 112.7 per cent, but that wasn’t his only home run.

Schachter scored even better with unheralded oil and gas junior Defiant Energy (DEF-TSX), which gushed from $1.60 to $3.85 for a 140.6 per cent gain.

His other four picks were also winners: Canadian Superior Energy (SNG-TSX), up +84.6 per cent; Vaquero Energy (VAQ-TSX), up 66.7 per cent; Belair Energy, up 11.1 per cent (when merged with Purcell Energy); and Calpine Energy (CPN-NYSE), up 2.3 per cent.

“I’m a value, contrarian investor,” says the 53-year-old Schachter, whose two-year record with his Edge picks is +69.6 per cent.

“I picked Nortel because it was apparent to me that the balance sheet was stabilizing and I’ve learned you can’t follow the herd.

“Defiant was definitely a growth story and value situation as it was trading at half the cash-flow multiple of other companies. I’m an accountant by background and, to me, the numbers have to make sense or I can’t sleep at night.”

Schachter has cooled his heels on Nortel, saying the stock’s bull run is “probably 70-80 per cent complete,” but he still sees value in Defiant Energy, 25-per-cent shy of his $4.80 target (for Schachter’s latest picks, see Pro's 3 Stars).

Two other regular contributors among the Edge’s pros boasted gains of 50 per cent or more (based on prices through Oct. 17).

Danny Deadlock of the MicroCap.com Newsletter is up 64.2 per cent and claimed the year’s biggest winner with Tellium Inc. (TELM-Nasdaq), up 194.6 per cent.

Wayne Deans of Vancouver-based Deans Knight Capital Management is up 62.9 per cent and has the best two-year record of 79 per cent and the best pick with Cinram International (CRW-TSX), up 533.3 per cent.

Deans’ consistency over two years is extraordinary as even the best of money managers tend to have off years.

Calgary’s Martin Ferguson, of Mawer Investment Management, was the previous year’s top performer with a 12.5-per-cent gain in the face of a brutal bear market. But Ferguson’s Edge selections in the past year are up only a modest 7.5 per cent.

Only one of our pros, Garey Aitken of Calgary-based Bissett Investment Management, had a losing record, at -3.7 per cent.

In a market that looks overbought in the eyes of most of our experts, even a staunch contrarian like Schachter will have his work cut out in unearthing the diamonds in the rough.

Pro’s 3 Stars Annual Review (NOV./02-OCT./03):
Overall Stock-Picking Record
+29% (based on prices through Oct. 17). Record since stock-picking column began two years ago is +32.2%

TOP 10 PROS:
1. Josef Schachter, Schachter Asset Management, Calgary +69.7%
2. Danny Deadlock, MicroCap.com Newsletter, Hanna, AB +64.2%
3. Wayne Deans, Deans Knight Capital Management, Vancouver +62.9%
4. Randy Oliver/Evan Spiropoulos, Hesperian Capital, Calgary +57.5%
5. Mark Stevens, Watermark Capital, Vancouver +51.6%
6. John Ing, Maison Placements, Toronto +29.4% (resources specialist)
7. Gord Currie, Canaccord Capital (energy specialist), Calgary +27.9%
8. Gene Vollendorf, Savoy Capital Management, Calgary +27%
9. Peter Linder, DeltaOne Capital (energy specialist), Calgary +26%
10. Ross Healy, Strategic Analysis, Toronto +24.4%

* First star: Tellium (TELM-Nasdaq) +194.6% (.56-$1.56), by Danny Deadlock, MicroCap.com Newsletter
* Fallen star: Bonavista Energy Trust (BNP.UN-TSX) -48.8% ($34-$17.40), by Jean-Francois Tardif, Sprott Asset Management



HOT STOCK: CERTICOM CORP.
CIC-TSX $3.13
Up $1.59 (+103.2%) on 4,453,500 shares (for week ending Oct. 24).
Mississauga wireless security provider Certicom knows a thing or two about keeping things under wraps. A monster news release on a $25-million U.S. contract with the National Security Agency in Maryland caught just about everyone by surprise. There was no pre-announcement run on the stock but, once it resumed trading after the news, the stock more than doubled in one afternoon on more than four million shares.



HOT STOCK: AUTOMODULAR CORPORATION
AM-TSX $3.17
Down $1.08 (-25.4%) on 34,400 shares (for week ending Oct. 24).
If you’re still a shareholder of Toronto auto parts assembler Automodular and somehow missed the news, turn the page. Read Grant McKenzie’s humour column. Automodular wasn’t joking when it announced a fourth-quarter break-even in earnings (the company earned 7 cents in the year-ago quarter) and said it was axing the fourth-quarter dividend. Scary stuff!