Who:
Sheldon Liberman, portfolio manager with Castlemoore Inc.
My Best Investment:
One of my best investments was in a technology company named Tundra Semiconductor. It was a Canadian company that went public in 1998. They had huge dealings with Newbridge Networks, and a few other high-growth computer firms at the time - and we were in a hot technology market.
One of the ways you know you're in a pretty good market - whether it's technology or the overall market - is the number of IPOs [initial public offerings]that you see coming across your desk.
As the saying goes: If you can get as many shares of an IPO as you want, then you don't want any, and if you can't get any, then you want as much as you can get. If you can't buy any, or buy very little, then you want to buy it, because usually, that means it's going to open up trading at a much higher price. I ended up getting a good fill from the various brokers I deal with.
The Return:
The issue price was $9.25. It opened up at $13.10, and closed the first day of trading at $13.24, so right away you're looking at a 40-per-cent gain on the position. The technology market was going so well, I just decided I'd hold on to it, and if it ever dropped 10 per cent from its peak, then I might sell it at that point, but it ended up going to more than $70. It hit an all-time high of $78 on March 8, 2000.
I didn't get it at the top, but I got enough of it to make my mother happy, anyway, because she was one of my clients. I sold it all in the high $60s.
Earlier this year, it was trading around something like $6. And it's been taken private, since.
The Takeaway:
I look for sectors with momentum and then I check the numbers. The deals that cross your desk on a day-to-day basis will reflect exactly what sector is getting the most attention. And the prices will reflect that. For instance, in 2009, the deals I saw coming across my desk, almost all of them were in metals and mining, and lo and behold, the metals and mining index was up something like 250 per cent over the last 10 months of the year.
So part of the investment philosophy we use here is: You identify the sectors gathering momentum and you invest accordingly. You put greater weighting in the hotter sectors and when they cool down, you rebalance.
Identify upward-trending sectors and buy IPOs from them. Of course, you still need to do your homework to make sure you're getting quality.