(Every week, Business Edge columnist Gyle Konotopetz profiles the top three stock picks of one of Canada’s most accomplished investment pros.)

FEATURED PRO: Gene Vollendorf is president and CEO of Savoy Capital Management (www.savoycapital.ca).

Savoy Capital, founded in late 2000, is a Calgary-based investment firm focused on fundamental research in the Canadian marketplace.

The Gladiator LP Fund, the company’s flagship fund, a long/short hedge fund, has generated a 19.6-per-cent compound annual return over the past two years.

Vollendorf’s Perspective: “The geopolitical environment has created uncertainty in the capital markets and has temporarily paralysed investors from making investment decisions. Often these uncertain times create great buying opportunities in small-cap and mid-cap names that have solid fundamentals: good balance sheets, proven management teams and secular growth stories. “I think the current environment is a great time to be investing in good companies at great valuations. Fear and greed drive markets but shrewd investors capitalize on these emotions by sticking to sound investment principles.”




FIRST STAR
* Rockwater Capital Corporation (RCC-TSX)
* Recent Price: $1.00.
* 52-Week Range: .32-$1.58.
* Snapshot: Rockwater is an emerging Canadian independent brokerage firm with national, retail and institutional distribution. Its wholly owned subsidiary is First Associates Investments.
* CEO: William Packham.
* Head Office: Toronto (seven employees).
* Vital Stats: Revenue (last 12 mos), $2.4 million; Profit/Loss (last 12 mos), $2.2 million loss; Market Cap, $102.4 million; Shares Outstanding, 102.4 million.
n Vollendorf’s View: “Rockwater was formed by the proven former management team at Midland Walwyn and just acquired Yorkton Securities’ private client business. It is well positioned in the fragmented and
beaten-down brokerage sector.
“Growing book value at over 20 per cent per year, it has a secular, balanced growth strategy focused on organic productivity growth and acquisitions. The company has an expected one-year return of 30 per cent and is trading at two times 2003 book value.”
* Savoy’s Risk Rating: Medium.
* Web watch: www.rockwater.ca



SECOND STAR
* Speedware Corporation (SPW-TSX).
* Recent Price: $1.50.
* 52-Week Range: .70-$1.65.
* Snapshot: Speedware provides applications development technologies, business intelligence software and wireless Internet solutions through a distribution network spanning 35 countries.
* CEO: Jean-Pierre Theoret.
* Head Office: St. Laurent, Que. (190 employees).
* Vital Stats: Current Price/Earnings Ratio, 7.9; Revenue (last 12 mos), $15.2 million; Profit (last 12 mos), $2.2
million; Market Cap, $25.89 million; Shares Outstanding, 17.26 million.
* Vollendorf’s View: “Managed by shrewd operators, Speedware is a cash-cow, legacy software business that has a strong balance sheet. The company is backed by sophisticated software acquirers who intend to acquire similar cash-cow software businesses at beaten- down evaluations in the current anemic software industry.
“The company has access to capital and is extremely disciplined in making accretive acquisitions. Its expected one-year return is 50 per cent and it trades at a price/earnings multiple of 6.8 times (projected) 2003 earnings per share.”
* Savoy’s Risk Rating: Medium.
* Web watch: www.speedware.com



THIRD STAR
* Cinram International (CRW-TSX)
* Recent Price: $9.10.
* 52-Week Range: $5.31-$11.25.
* Snapshot: Cinram is one of the world’s largest manufacturers and distributors of multimedia products such as VHS video cassettes, CDs, DVDs and audio cassettes for the movie, music and software industries.
* CEO: Isidore Philosophe.
* Head Office: Scarborough, Ont. (3,000 employees).
* Vital Stats: Current Price/Earnings Ratio, 11.0; Revenue (last 12 mos), $851.9 million; 5-Yr Revenue Growth, 10.5%; Profit (last 12 mos), $45.8
million; Market Cap, $499.01 million; Shares Outstanding, 54.84 million; Dividend Yield, 0.88%.
* Vollendorf’s View: “The company is in the midst of transitioning its product mix from VHS and CD to DVD, a media form that has greater potential than VHS.
“The company has no debt and represents good value with an expected one-year rate of return of 33 per cent and is trading at a price/earnings multiple of nine times (projected) 2003 earnings per share.”
* Savoy’s Risk Rating: Medium.
* Web watch: www.cinram.com
* Disclosure: The featured stocks are held in the Gladiator LP Fund.