Canadian Weekly Dividend Report

AGF Management.............(AGF.B) Annual dividend increased by 25.0% from $0.80 to $1.00
Boyd Group Income Fund....(BYD.UN) Annual distribution increased by 11.1% from $0.18 to $0.20
Easyhome Ltd..................(EH) Annual dividend increased by 21.4% from $0.28 to $0.34
Westshore Terminal Incm Fd(WTE.UN) Annual distribution of $1.12 declared

Timer Update

Just a quick note to point out that both my Canadian and US timers remain short.

Weekly Canadian Dividend Report

Boralex Power Income Fund.(BPT.UN) Annual distribution of $0.70 declared
Chartwell Seniors Housing.(CSH.UN) Annual distribution of $0.74 declared
North West Company Fund...(NWF.UN) Annual distribution increased by 18.5% from $1.08 to $1.28
Transcontinental Inc.......(TCL.A) Annual dividend increased by 14.3% from $0.28 to $0.32
ZCL Composites Inc...........(ZCL) Annual dividend increased by 20% from $0.10 to $0.12

Watch List

To use an oft quoted cliche, what a difference a day makes. My US stock timer is very close to going long. If the US stock market is strong again tomorrow, I will consider buying some of the following stocks:

Business Service: CAP
Chemical: KOP
Computer: ACN
Container: UFPT
Electronic: TSM
Personal: ZEP
Retail: BIG
Software: JDAS, TIBX
Steels: AKS, AP, SID, SIM
Telecomm: AMX


My Canadian timer isn't as close to turning positive so I am not so inclined to add to my Canadian stock holdings. That being said, the following stocks are on my watchlist:

Electronic: CLS
Food: VT
Investment Trust: EIT.UN
Petroleum Services: SES

Weekend Update

Both of my timers (Canadian and US) are still short and I don't plan on purchasing any stocks or long ETF's until the timers give long signals.

My Canadian timer went short on 03/11/08 and the S&P/TSX is down 4.3% since then. My US timer went short on 03/04/08 and the Nasdaq is down 0.1% since then.

There is no shortage of prognosticators putting forth their views on whether the stock market has more downside left or if we are about to enter a rally. I don't pretend to have an ability to forecast the future direction of the stock markets but my thoughts are in agreement with this piece written by Michael Panzer at Seeking Alpha and this one written by Jim Jubak at MSN Money.

A number of market commentators are of the opinion that the S&P500 has to break through the 1400 level before we can be comfortable that we are in a rally. The S&P500 would have to go up by 5.3% from last Thursday's close to hit 1400.



My only US holdings are RWM, PSQ and DBC.

Weekly Canadian Dividend Report

Canadian Tire..............(CTC.A) Annual dividend increased by 13.5% from $0.74 to $0.84
Constellation Software.......(CSU) Annual dividend increased by 20% from $0.15 to $0.18
Fording Canadian Coal Trust..(FDG.UN) Annual distribution decreased by 5.7% from $2.12 to $2.00
Stella-Jones Inc..............(SJ) Annual dividend increased by 14.3% from $0.28 to $0.32

Interesting Reads

The Economist - Trillion Dollar Baby

Globe and Mail - Stacking The Odds In Your Favour

Globe and Mail - How To Tell If It's a Bad Patch or Bad Advice

Globe and Mail - New Bond ETFs a Rung Higher Than Funds

Globe and Mail - The Price Is Right with ETF's


National Post - Active Mutual Funds Lagged Index Funds in 2007


The Star - How Well Do You Know Your Financial Adviser

Seeking Alpha - Help in Selecting ETF's


Can You Afford To Invest in Mutual Funds

LCC Put Option

Fortunately for me, US Airways (LCC) has hit a rough patch lately allowing me to sell my June $10.00 puts today for $2.17. I made 81% before commissions in eight days. Too bad I can't do that more often!

Canadian Stock Returns by Market Cap

Data as of March 07, 2008.  Returns are the median for the market capitalization category.

 

Market Capitalization	13 Week Price Change (%)	26 Week Price Change (%)
$50M to $150M	-5.3	-13.3
$150M to $500M	-5.7	-12.5
$500M to $1B	-5.1	-8.2
$1B to $2B	-4.3	-5.1
> 2B$	-7.2	-5.6

Canadian Weekly Dividend Report

Aecon Group Inc..............(ARE) Annual dividend increased by 42.9% from $0.14 to $0.20
Bonterra Energy Income Fnd(BNE.UN) Annual distribution increased by 4.5% from $2.64 to $2.76
CCL Industries Inc.........(CCL.B) Annual dividend increased by 16.7% from $0.48 to $0.56
Guardian Capital Group.....(GCG.A) Annual dividend increased by 11.1% from $0.135 to $0.15
SNC-Lavalin Group............(SNC) Annual dividend increased by 33.3% from $0.36 to $0.48
Superior Plus Income Fund.(SPF.UN) Annual distribution increased by 3.8% from $1.56 to $1.62

McCoy Corp Revisited

On February 28, I wrote about McCoy Corp here. When I ran my searches this weekend, McCoy was the only stock to pass my most successful screen. Looking at the financials of McCoy impressed me so much that I decided to compare it against all other Canadian stocks. I ran a screen in which I filtered for stocks which 1. had increased revenue every year for the past five years, 2. had increased earnings every year for the past five years, 3. have an interim revenue growth rate exceeding 20%, 4. have an interim earnings per share growth rate exceeding 20%, 5. have positive earnings, 6. have a P/E ratio less than 10 and 7. have a P/S ratio less than 2. Out of the 983 stocks in my database, only two stocks met all these criteria: Orvana Minerals (ORV) and McCoy Corp (MCB).

McCoy is currently paying a 3.7% dividend and has a RiskGrade of 288. Orvana doesn't pay a dividend and has a RiskGrade of 261.

McCoy's stock price has declined recently perhaps reflecting the financial results for the three months ended September 30 plus the increasing Canadian dollar and the prospect of reduced oil well drilling in Western Canada this year. In comparison to the quarter ending September 30, 2006, revenue decreased by 3%, EBITA decreased by 4%, net earnings decreased by 16%, diluted EPS decreased by 25% and cash flow from operations decreased by 6%. The key question is whether the outlook for McCoy warrants a 40% reduction in the stock price over the past year.

McCoy has an excellent financial presentation here which outlines the company's fianancial performance as well as the opportunities and threats going forward.

McCoy's web site is here. They are releasing their most recent financial results on March 11.

Taking My Own Advice. Almost.

My US timer went short on March 04. Anticipating that would happen once I updated my timer with the end-of-day data that evening, I decided to purchase Proshares Short Russell2000 in the afternoon of March 04. So I took my own advice. Kind of. I didn't sell my regular US stocks (AMX, HNR, KEG, OMG, SIM and TSM).

Late yesterday, I decided to increase my short position on the US market by purchasing Proshares Short QQQ.

I am now 25% short the US market. In other words, my US stock holdings consists of 75% regular stocks and 25% Proshare Shorts. When my timer goes long again, I'll determine if I should have sold all my regular stocks and only held Proshare Shorts.

As an aside, the RiskGrade of my portfolio of Canadian and US stocks is at an all-time low of 69. In late 2007, my stock portfolio RiskGrade was usually in the high 80's.

Selling Covered Calls on Grupo Simec

 

I will try to sell covered calls tomorrow on the shares of Grupo Simec that I own.  Following is an analysis of the sale.

 

STOCK SYMBOL	SIM
STOCK PURCHASE PRICE	$11.35
STRIKE PRICE	$12.50
DATE OF CALL EXPIRATION	04/18/08
PREMIUM RECEIVED	$0.45
THEORETICAL CALL PRICE	$0.32
DELTA	0.30
DAYS TO EXPIRATION	43
BREAKEVEN PRICE	$10.95
DOWNSIDE PROTECTION	3.96%
ANNUALIZED DSP	33.65%
RESULTS IF OPTION IS EXERCISED
RETURN	14.16%
ANNUALIZED (If-Called) RETURN	120.17%

Interview with Associated Press

I was contacted by AP reporter Tim Paradis today and asked for commentary on how I am handling the stock market volatility.  I expressed my opinion that we are in a sideways market and I am both long and short.  For the type of stocks that I focus on (small cap Canadian and US), it appears that I am getting the best performance out of my strategies that are based on short (typically two month) holding periods.

The article has started to appear on the internet, the first sites being Sign On San Diego,  Marin Independent Journal, ChicoER.com, The Boston Herald and The Mercury News.

US Timer Goes Short

My US stock timer has gone short  and so I have purchased some Proshares Short Russell 2000 (RWM) but I have not liquidated my US stocks.  From the Proshares web site, "the Russell2000 seeks daily investment results, before fees and expenses, that correspond to the inverse of the daily performance of the Russell 2000^® Index".

 

My three US shorts have worked out well but I am considering closing them out very soon.

Options Update

I tried to short sell some US stocks today but as usual my broker didn't have inventory of the stocks I wanted to short. I chose to do the next best thing - buy puts. At this point, I am trying my hand at buying puts to determine if it can be profitable for me. I bought LCC June $10.00 puts for $1.20 (LCC = US Airways Group) and ODP Apr $10.00 puts for $0.45 (ODP = Office Depot).

Earlier I sold the following calls on stocks that I own (covered calls):
America Movil (AMX Apr $65.00)
OM Group (OMG June $70.00)
Usec (USU April $10.00)

Actually, I don't own Usec as it was sold when my 10% trailing stop was hit.

My short selling of US stocks has worked out well thus far. I am up an average of 5% on the stocks that I shorted on February 21. Now comes the tricky part - deciding when to cover!

Stock Picks

US Stocks

If you absolutely want to buy US stocks in the current environment, my picks for a two month holding period are AFSI, AIRT, KEG, MRB, SIM and TSM.

If shorting US stocks is your fancy then I would suggest FHN and LCC.


Canadian Stocks

Likewise, if you absolutely want to buy Canadian stocks in the current environment, my picks for a two month holding period are AGU, MCB, RBI, TOG and VRO.

The usual caveat applies - I own some of the above mentioned stocks and would therefore benefit from increased demand for them. Do your own homework before investing your hard earned money.

Berkshire Hathaway's Annual Shareholder Letter

Berkshire Hathaway has just released its latest annual shareholder letter. Click here to go to their site where you can download the pdf file.