A drum roll please for our 2003 numbers -- our portfolio of Canadian and U.S. stocks was up a total of 68.4 per cent. That increases our five-year annualized returns to 29.8 per cent but knocks down the 10-year number to 24.5 per cent.
Copper was a major highlight of our Canadian portfolio, with the metal shooting up in value while copper producing companies scored strong stock-price gains. We owned shares in two. We featured A ur Resources Inc. (AUR-TSX) a couple of years ago, when its stock price was $3.45. The stock finished 2003 at $6.75. In August, we wrote about Corriente Resources Inc. (CTQ-TSX), while its stock was a tad north of a buck. Unfortunately, we sold 70 per cent of our Corriente stock prematurely in October at $1.69. By year-end, the price was $3.30.
Another stock that performed well is hardware distributor and retailer Sodisco Howden Group Inc. (SOD-TSX). Featured at $1.60, it capped off 2003 at $2.98. Sodisco is looking to merge or be acquired. If a suitable partner can be found, more upside is likely in store.
Writing last April about Legacy Hotels REIT (LGY.DB-TSX), we recommended investing in its debentures rather than its units. The units have since eliminated their payout, while the debentures continue to pay 7.75 per cent.
Shares in thinly traded fish and pasta retailer High Liner Foods Inc. (HLF-TSX) briefly jumped after we reported on the company. The surge from $9.50 to $12 was not maintained, with the stock settling back to $10.50.
In October, in an article titled Guide for the Young Contrarian, we highlighted Pantorama Industries Inc. (PTA-TSX) and mining and exploration company TVI Pacific Inc. (TVI-TSX). We wanted to examine stocks higher on the risk scale, but worthy of youthful investors who can afford to shoot higher and further, and can recover if the hunt comes up empty. Both of these stocks have performed admirably. Pantorama stock rose more than 100 per cent on management's takeover volley, while TVI also more than doubled.
Alas, drawing us back to reality have been some unsuccessful forays. Stelco Inc. (STE.A-TSX) was a twice-purchased disaster on which we took a tax loss, retrieving about a third of our investment. But since we sold, the stock has doubled in value, tossing additional egg on our face. Magna International Inc. (MG.A-TSX) looked like a good short to us when its stock was at $92. We are under water on this one.
Interesting to watch will be the flight of Air Canada after it emerges from protection from its creditors. In January, 2002, our column about the airline was less than complimentary, and a recent missive could not be defined as "nice." Here's an update. Depending on the refinancing deal and who pilots the operation, Air Canada could offer some tremendous recovery potential. But until additional turbulence is navigated, our Air Miles will be cashed as passengers, not investors.
As for U.S. stocks, we wrote in October, 2002, about funeral home operator Service Corp. International . (SRV-NYSE). Its stock was then trading on the New York Stock Exchange at $2.50 (U.S.), well below the $4.51 we paid for it. Although we considered taking the tax loss and buying it back after 30 days, we ended up simply hanging on. Good thing. The stock recovered to $5.39 at year-end on the strength of a settlement of an outstanding class action lawsuit.
Another funeral home operator, Stewart Enterprises Inc. (STEI-Nasdaq) was written about last April. We bought in just after a profit warning sank the stock price. We paid $3.11 on the Nasdaq Stock Market. However, our timing proved to be a bit early. Often selloffs get overdone when news is bad but really not that awful. This was a classic example of that pattern. So when the stock fell to $2.74, we reckoned it was an even-better bargain. Even though business has remained slow, the stock rose to $5.68.
During the dark days of the bear market when many investors sought stocks with a good margin of safety, we suggested children's shoe maker Stride Rite Corp., (SRR-NYSE), then trading at $7.40 on the NYSE. Although the shoe industry has not been as exciting as gold or copper in the interim, this well-run enterprise kept chugging along, generating healthy profits and a welcome dividend. The capital gain to the year-end close of $11.38 is a comfortable fit, too.
A stock opportunity that we missed was Xerox Corp. (XRX-NYSE). Although we kicked the tires on this venerable outfit, we decided it wasn't quite ready to photocopy its past success. Wrong! Its stock, which traded at $8 on the NYSE in December, 2002, closed 2003 at $13.80. Benj Gallander and Ben Stadelmann are co-editors of Contra the Heard Investment Letter. This column first appeared on GlobeinvestorGOLD.com.