"Thom guarantees that this is for real, and that the amount of financing [Mr. Friedland] is getting -- and the contacts he has in China that are also investing -- tells me it's real," he says.
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IT specialist heeds stock broker's advice
globeandmail.com
TONY MARTIN talks to Bob Havlik, who got started through an employee-purchase plan
By TONY MARTIN
UPDATED AT 4:30 PM EST Saturday, Jan. 3, 2004
An information technology specialist, Bob Havlik, 46, owes his passion for stocks to his first employer, Samuel Manu-tech. The Toronto-based company, which makes industrial products such as steel and plastic packaging systems, steel tanks, and wire rope and chain, went public in 1985. Mr. Havlik, who is single and lives in Mississauga, bought into its employee stock purchase plan, watched his investment double, and basically thought, well, whoa!
How he does it
Mr. Havlik has gone against the tide of investors who use brokers to get their feet wet and then cast off the safety line and decide to sink or swim with a discount broker.
"I tried that, listening to my friends' recommendations, and trying to piggyback on them because they had full-service brokers." That strategy lost him money, so he decided the extra commission full-service brokers charge was more than worth it. "They do the research for you, they have the contacts and they are someone you can turn to and ask 'What's the history for this type of stock, and for this industry?' "
For example, when he was starting out, Mr. Havlik's plan was to go aggressive to build up his capital. But thanks to his broker, "I was advised it wasn't the right way to go, because if you have a small portfolio you can easily lose it all and you're back at zero."
His broker -- Bulent Pakdil of BMO Nesbitt Burns -- convinced Mr. Havlik to put about three-quarters of his portfolio into conservative investments. These include Lawrence Enterprise fund, a labour-sponsored fund run by Toronto-based Lawrence Asset Management. (Of note is the company itself will invest 20 per cent of its own money -- to a maximum of $7.5-million -- to underscore belief in its stock-picking prowess.) But Mr. Havlik's risk-friendly nature even shows up here -- his two bond funds are high-yield and hold more risky bonds. "It's that player in me that wants to take the risk for the reward," he says. "My broker constantly reminds me of wins and losses and cautions me strongly."
Lately, Mr. Havlik has become a big fan of Thom Calandra. The founding editor of CBS Marketwatch and Marketwatch.com, Mr. Calandra writes Stockwatch, an on-line column and free e-newsletter.
Mr. Havlik began reading it about two years back, and tracked Mr. Calandra's recommendations in a "what-if" portfolio. He liked the results so much that three months ago, he signed up as a subscriber for Mr. Calandra's paid investment newsletter, The Calandra Report.
Two of Mr. Calandra's picks were right up Mr. Havlik's alley -- Ivanhoe Energy and Ivanhoe Mines. The common name is no coincidence. They have another name in common, one Robert Friedland, who sold Diamond Fields Resources' Voisey's Bay nickel deposit to Inco Ltd. for $4.3-billion in 1966, personally pocketing about $600-million in Inco stock.
Mr. Friedland is chairman and president of Ivanhoe Mines, which is developing the gold and copper discovery at the Turquoise Hill project in southern Mongolia. He is also deputy chairman of Ivanhoe Energy, which focuses on natural gas plays. Mr. Havlik bought Ivanhoe Mines (IVN-TSX) at $8.37 two months back. The stock then spiked to over $15, but since early November has been falling back down, last closing at $10.20.
"Thom guarantees that this is for real, and that the amount of financing [Mr. Friedland] is getting -- and the contacts he has in China that are also investing -- tells me it's real," he says.
If his broker isn't fond of a stock, Mr. Havlik factors that in, and even if his own views win out, will often invest less than he had planned. Mr. Havlik also bought Ivanhoe Energy (IE-TSX) at $5, and was in and out of it a few times, as it too spiked, peaking at more than $9 before dropping back. It closed at $5.27 yesterday.
Mr. Friedland has been taking some heat, particularly in a recent Forbes Magazine piece that criticized his uber-promoter approach, and argued that the shares are overpriced not least as a result of Mr. Calandra's positive comments and his large audience.
Is it overpriced at 80 times cash flow? Absolutely, says Mr. Calandra, but he argues that's the wrong yardstick, saying what he and other fans are looking at is the potential for an ever-growing future cash flow thanks to Ivanhoe Energy's prospects in such politically dicey locales as Iraq.
Judging by the volume statistics, it looks like Mr. Calandra's audience is ready to click the buy button on his recommendations the moment his newsletter arrives. But that's something he argues against. "I'm trying to educate my audience not to buy just because I start writing about a stock," he says.
Best move
Back in the tech bubble, there were a few key phrases that just seemed to imbue the right to print money, and one of the favourites was "wireless networking."
That's just what Isco International (ISO-Amex), based north of Chicago in North Prospect, Ill., was involved in, making products that reduced or eliminated interference. On a chart, the company's stock looks like it ran into a brick wall at the end of 1999, shooting up from the single digits to over $30 before plummeting. Mr. Havlik made the most of it, buying in January at just $4.64 (U.S.) and selling out at $31.75 a month later.
Worst move
Mr. Havlik got just the same kind of rocket reaction after buying shares of Toronto-based cancer drug company Lorus Therapeutics (LOR-TSX). He bought many thousands of shares at 46 cents (Canadian) in late 1999, and the shares ran to over $8. Unfortunately, with this one he didn't sell. The shares last closed at $1.05.
Advice
"Avoid free advice from Internet bulletin boards. They are full of rumours -- they may be valid or fabricated -- but they're rumours nonetheless, [posted by] stock bashers and self-proclaimed experts. Just who do you think is behind that fictitious user name, the company's CFO?"
Tony Martin is the co-author of the book Investing For Canadians For Dummies, published by CDG. Interested in being profiled in Me and My Money?
tony.martin1@sympatico.ca
The investor
Bob Havlik
Age: 46
Occupation: IT director
Investment personality: Conservative
Portfolio:
Lawrence Enterprise Fund, Canada Dominion Resources Limited Partnership, C.I. Global Fund, Northwest Speciality High Yield Bond Fund, RBC Global High Yield Fund, Ivanhoe Energy, Ivanhoe Mines, Tahera Corp.
Portfolio size: Six figures
Rate of return: Not available |
