Fund manager Daniel Bain holds a fairly upbeat view of the Canadian and U.S. stock markets, but he is playing it very conservatively with the Thornmark Alpha Fund.
The $6-million pooled fund, which has only been in operation since December, 2005, currently has about 25 per cent cash; yet it returned 11.57 per cent in the three months to April 30 and 30.98 per cent in the six months. Its one-year return was 23.01 per cent.
The fund, which makes concentrated bets on individual stocks and as such only holds only 17 stocks spread across six sectors, has been helped by its emphasis on commodities issues.
Mr. Bain, who is the president and chief investment officer of Toronto-based Thornmark Asset Management Inc. and also runs several other funds as well, believes that the backdrop to global markets remains supportive of those markets. He expects that the global economy will grow by about 4 per cent plus this year, with leadership coming from Asia and continued strength in Europe.
If the U.S. economy continues to hold in with growth around 2.5-per-cent plus, he thinks the Canadian and U.S. markets will likely produce a 10-per-cent total return in local currency between now and the end of the year.
Among his current favourite stocks is Altius Minerals Corp.(ALS-TSX ). Mr. Bain noted that over the past 10 years, the St. John's, Nfld.-based company has evolved from a minerals exploration firm into a holding company and a venture sponsor. It currently holds equity and royalty interests in a number of public companies' properties including a 0.3-per-cent net smelter royalty in CVRD Inco Ltd.'s Voisey Bay project and it is a 37-per-cent shareholder in the Newfoundland and Labrador Refining Corp. (NLRC). NLRC plans a 300,000-barrel-a-day oil refinery in Newfoundland. Altius shares are trading at $12.90 on the TSX.
Petrobank Energy and Resources Ltd. (PBG-TSX) is a Calgary-based energy business operating through three units: conventional oil and gas exploration and production in Alberta and Saskatchewan, production contracts and exploration opportunities in Columbia and heavy oil technology being tested at its Whitesands development in Alberta. Mr. Bain thinks Petrobank's patented THAI (toe-to-heel air injection) heavy oil sands recovery technology will leap frog other oil sands technologies. He has a target of $30 on the shares but believes there is significant upside beyond that because of the THAI technology. The shares ended yesterday's session at $26.05.
Mr. Bain has a target of $50 on shares of Teck Cominco Ltd. (TCK.B-TSX), which closed yesterday at $48.50 on the Toronto Stock Exchange. He is drawn to the stock by a number of factors, not the least of which is that Teck is the world's second largest zinc concentrate producer and the world's production leader in metallurgical coal. It also is a major supplier of copper and gold and has interests in the Fort Hill oil sands project. He also notes Teck has close to $5-billion in cash. He considers Teck a play on the global economic outlook and in particular, the continuing strength in Asia.
© 2007 The Globe and Mail. All rights reserved.
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