It’s a bear market in baseball, where superhero Barry Bonds is stomping on home plate, and on Todd McFarlane’s $3-million investment in genuine cowhide, having socked the historic record-breaking home run No. 71, and then adding Nos. 72 and 73.
With one mighty swing by Bonds, the comic-book tycoon McFarlane, a Calgary native who created the Spawn comics, became even more famous for one of the most comical investments in history.
In 1999, McFarlane, his boyhood dream to play in the major leagues long since dashed, paid a stunning $3.05 million US for the baseball that Mark McGwire hit for his 70th home run and the honour (he thought) of going through life as owner of a treasured souvenir reminiscent of the most famous record in sports.
And you don’t have to swat the flamboyant McFarlane over the head with a catcher’s mitt to get him to confess to having spent the most foolish money in sports-memorabilia history. Which now unfortunately looks even more foolish.
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Days before Bonds tarnished the McGwire cowhide, the wealthy Scottsdale, Ariz., artist and part owner of the Edmonton Oilers came clean in an interview with USA Today.
“What happens (if Bonds ties or breaks the record of 70 homers) is that my ball becomes worth about $3.50 and I become the biggest idiot in the world,” said McFarlane, a master of the overstatement. (The ball may still be worth about $1 million US).
As Bonds’ No. 71 soared into neverneverland, sacking the charismatic comic-book king, it conjured up images of another investment gone bad – book4golf.com. Welcome to the club, Todd.
You think you’ve got it tough, pal?
Bonds crushed your investment with one clean swing of Canadian lumber produced by the Ottawa-based Original Maple Bat Company.
You could have done worse.
Instead of spending your pocket money on that ball in 1999, you could’ve bought $3 million US in book4golf.com stock when it was ‘on sale’ at $2 and watched its slow and tortuous descent to four cents.
Somehow, watching Bonds scamper around the bases, you knew that McFarlane was formulating a game plan to recoup his losses within moments of the home run.
The marketing whiz-kid recently cracked in an interview with the New York Post: “Maybe we can sell eight million Bonds action figures and get some of my money back.”
In fact, the McFarlane Toy Company does own the rights to a Barry Bonds action figure.
And the McFarlane PR machine has been working overtime lately dramatizing the entrepreneur’s longest summer, that of a man with a prized baseball being mercilessly stalked by a superhero in flannels.
You don’t become a comic-book tycoon like McFarlane by allowing a shot to your pocketbook and ego to weaken your resolve.
You can bet your Spawn comic collection that the enterprising McFarlane will dust himself off and find a way to capitalize on his folly.
So there should be hope for us all, perhaps even a beleaguered book4golf.com shareholder.
Say, anybody know when that Canadian maple bat company that made the bat that smashed the ball that mashed the McFarlane ball will come out with an initial public offering?
PRO'S THREE STARS
Bill MacLachlan, partner and managing director with Calgary-based Mawer Investment Management, covets BW Technologies (BWT-TSE), a small-cap Calgary company, as one of his top picks.
BW (recent price $9.50, year range $5.50-$11) has flourished in the bear market.
“Earnings grew over 100 per cent last year and the company is trading at a very low (price-earnings) multiple of 12 times next year’s earnings per share given their continued growth potential,” says MacLachlan.
BW manufactures gas-detection instruments. Its markets are primarily industrial. “BW has low-cost portable equipment that is among the best value in the world and their clients recognize it,” says MacLachlan.
MacLachlan’s other choices are Bombardier (BBD.A-TSE) and Concert Industries (CNG-TSE).
MacLachlan believes that Bombardier (recent price $12.45, year range $10.73-$26.35) has been over-sold in the aftermath of the U.S. tragedy.
“The stock was crushed by the Sept. 11 fallout over regional jet orders,” McLachlan says of the airplane manufacturer that boasts a forward price-earnings ratio of 15.
“Yes, the financial health of the airline industry is dismal, but Bombardier is not a one-trick pony. It is also a world leader in rapid transit and trains. It is arguably Canada’s best-run company and I have no doubt they will take the necessary steps to refocus and continue the kind of growth that has made their stock a stellar long-term performer.”
Concert (recent price $7.90, year range $5.20-$8.70) manufactures non-woven air-laid absorbent fabrics used in feminine hygiene items, diapers, medical supplies and filtration applications.
“These are as close to recession-proof products as you get,” says MacLachlan. “Valuations are reasonable, given the new plant in Gatineau (Que.) should boost earnings in 2002-2003.”
Concert and BW are in Mawer’s small-cap New Canada Fund and Bombardier is in the large-cap Canadian Equity Fund.
MacLachlan is banking on a V-shaped (ie. sharper, shorter) recession opposed to a U-shaped recession.
“One should never underestimate the ability of a free, open society to adapt, rebuild and renew,” MacLachlan writes in Mawer’s quarterly report.
MacLACHLAN’S RECORD: -13.5 per cent (previous picks – Molson +45.6 per cent, Regional Cablesystems -14.0 per cent based on takeover price, Rogers Cantel -56.8 per cent, Royal Bank -4.5 per cent, ShawCor -29.4 per cent, Slater Steel -22.4 per cent).
* SAGE ADVICE: “Money is like manure. Either you spread it around or it smells.” — late oil billionaire J. Paul Getty.
HOT ALBERTA STOCK: WESTMINSTER RESOURCES
WML-TSE $2.03
Up 71 cents (+53.8%) on 350,200 shares (for week ending Oct. 5) Westminster, which had been beaten down near its year low by plunging natural gas prices, spiked sharply but its price still pales in comparison to a year high of $5.80. The Calgary-based gas-exploration company is focused on properties in Western Canada and the East Lost Hills project in California.
COLD ALBERTA STOCK: RIGHTSMARKET
RTS-CDNX 11 Cents
Down two cents (-15.4%) on 363,100 shares (for week ending Oct. 5) The market continues to leave grizzly bear tracks on a host of penny tech stocks on the Canadian Venture Exchange. Calgary-based RightsMarket, a digital rights management company, has had its share price pounded more than most, down from a year high of $1.16 and to within a penny of its year low.
