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A View From Here February 2011

February 8, 2011 • Print This Article

just came back from a 4-day music festival in the Caribbean where for that period of time, I thought of nothing else but music. It was a real cleansing and being able to interact with musicians who I hold in the highest honor was memorable. Because we were at an all-inclusive resort, it was a sort-of utopia for both the players and the attendees who worked together in seamless motion. However, as quickly as we found ourselves in this wonderful situation, we knew that we'd have to go back to our lives and a collective re-gathering of the things we know started to set in before the last show started.

It is during these times that I gain clarity into what we are doing in our investments and spent a lot of my flight back reflecting on our portfolio holdings. When I came back into the office and reviewed our investments, I still felt conviction in our holdings and continue to believe that we hold an excellent portfolio of investments on your behalf that should continue our upward trend.

2010 Performances Mailing

In January, we sent out mailings of your performance numbers for last year. We were delighted to see that all accounts achieved high double-digit returns in a year that saw the markets gain strength from autumn onward. January continued that trend for most accounts and we remain optimistic for our performance for this year as well. If you haven't received a performance review and would like one, please let us know.

It's RRSP Season

As January has now passed, we begin to focus on RRSP contributions which provide an important tax deduction for 2010. I would strongly encourage you to consider making this years contribution, as the deadline is March 1st 2011. I found this month's quote very apropos:

Life is full of uncertainties. Future investment earnings and interest and inflation rates are not known to anybody. However, I can guarantee you one thing . . . those who put an investment program in place will have a lot more money when they come to retire than those who never get around to it. — Noel Whittaker

Contributions can also be made to the Tax Free Savings Accounts (TSFA) to a maximum of $5000 per person 18 or over. These special investment accounts are going to be significant to any long-term investment stance and we can carry-forward unused contributions. The main benefit is that all growth in the account is sheltered from taxation and funds can be taken out at anytime without penalty.

Lastly, there is the RESP (Registered Retirement Savings Plan), which allows Canadians to save for their children's post-secondary school education. The government will grant up to $500 per $2,500 (the maximum annual contribution)per child and all growth in the account is sheltered from tax until withdrawn. However, you can only carry forward the contributions for 2 years. It is easy to set up these accounts, but the beneficiaries need a SIN (Social Insurance Number) to participate. Because it involves a process much like getting a passport, many do not participate due to their busy schedules. It is quite surprising given how important this program is and clients who use these funds for university and college know how easy it is to retrieve.

Our Investments Have Been Quite Strong

Over the past month we have seen earnings out of two of our holdings: Imvescor and Methanex:

Imvescor has been a relatively weak holding, and outside of the 10% dividend it pays, it has not performed strongly. Continuous corporate developments from senior management and the Board of Directors is reminiscent of our investment in Pet Valu a few years ago, but the underlying business continues to offer excellent value. We are currently researching the possibility of purchasing their bonds in an effort to receive over 7% plus an option to participate in what we believe will be growth in corporate valuation. The company released earnings in late January and on an operating basis, remains one of the cheapest companies we own.

Also late in January, Methanex reported what many believed to be disappointing earnings. They have just finished a 5-year construction of a methanol plant in Egypt, which had to go on hiatus, as the country appears to have gone into turmoil. We are unfazed at this point, as the company is well poised to have a strong 2011 and to replace its assets would almost have to be double the valuation. The share price has consolidated 10% since these two events have begun, but I believe that should be the most we see for the time being. Methanex has been one of our strongest performers in 2010.

In the next two weeks we will see earnings releases from two of our most passionate investments - Softchoice and FirstService and we hope that they will continue their upward trend.

I will be in touch over the coming weeks to secure any contributions for RRSP's and to discuss your accounts.

All Good Things,

Adam

Filed under: Uncategorized

The opinions, estimates and projections contained herein are those of the author as of the date hereof and are subject to change without notice and may not reflect those of Mackie Research Capital Corporation ("MRCC"). The information and opinions contained herein have been compiled and derived from sources believed to be reliable, but no representation or warranty, expressed or implied, is made as to their accuracy or completeness. Neither the author nor MRCC accepts liability whatsoever for any loss arising from any use of this report or its contents. Information may be available to MRCC which is not reflected herein. This report is not to be construed as an offer to sell or a solicitation for an offer to buy any securities. Member-Canadian Investor Protection Fund / member-fonds canadien de protection des épargnants.

Mackie Research Capital Corporation (MRCC) makes no representations whatsoever about any other website which you may access through this one. When you access a non-MRCC website please understand that it is independent from MRCC and that MRCC has no control over the content on that website. The content, accuracy, opinions expressed, and other links provided by these resources are not investigated, verified, monitored, or endorsed by MRCC.

 

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