When it comes to Canadian small caps, a lot of gems are outside the mines. Acclaimed stock picker Guy Gottfried made that point in October 2011 at the New York Value Investing Congress. In his presentation, Gottfried asserted that investors in the Canadian market are “obsessed with resource stocks.” That means attractive equities outside the resource realm are often ignored.
Gottfried has followed his own advice – with exceptional results.
In 2011, Guy Gottfried threw The Brick at investors, and they thanked him when the retailer’s shares climbed 118% over the next year.
The Brick illustrates how Gottfried examines stocks. The furniture and appliance chain is a Canadian institution. However, it nearly went bankrupt before being recapitalized in 2009 by outside investors.
Yet even as its turnaround was clearly succeeding, Gottfried felt The Brick was “stigmatized by investors.” Gottfried was impressed by the company’s new management, capital allocation and balance sheet, not to mention its bargain valuation. From those criteria and more, Gottfried concluded he Brick (TSE:BRK) was a “high-quality and extremely well-run business that trades at an undeservedly cheap price.”
He was right about that – and many other small cap stocks. The six stocks that Gottfried has recommended at his various VIC appearances have gained an average of 63%.
Guy Gottfried is the founder and head of the Toronto-based Rational Investment Group. He’ll share his latest high-conviction ideas at the 8th Annual Spring Value Investing Congress in Las Vegas, on May 6th and 7th.
The Congress is expected to sell out, and people are encouraged to register early. Those who sign up by Monday, February 18th will save $1,700. Go to www.ValueInvestingCongress.
