Trevor Scott, 25
Portfolio: KWS Inc., Urbana Corp., Fairfax Financial Holding Ltd., ADF Group Inc., Asta Funding Inc.
Not all finance types live the straight-and-narrow Bay Street lifestyle. When he's not crunching numbers mountainside for Whistler Blackcomb, Trevor Scott, who spent two years working in Australia for value-based Peters MacGregor Capital Management, is carving up the powder that's literally just outside his office door.
How He Invests
Mr. Scott is a value investor because, as he puts it so succinctly, "Nothing else really worked."
His Assessment Process
Mr. Scott determines the present value of the future cash flows and compares it to the current share price. "I am looking to buy stocks for less than 70 per cent of their fair value. I also avoid companies that have highly leveraged balance sheets as that reduces the margin of safety."
How He Stays Disciplined
With help from a fund manager Mr. Scott says he learned to do his analysis right the first time and then believe in it. "Part of the solution," Mr. Scott says, is to understand and guard again our "fight or flight" response mechanism that affects our investing behaviour.
His Asset Allocation
Currently, Mr. Scott's weighting is 65 per cent North American equities and 35 per cent cash.
Mr. Scott found a "fallen angel" in Mississauga-based Drive Products, which makes components for trucking, marine and industrial users. The IPO price was close to $10, but the units had fallen to $1.30. "The company was trading for five times its long-term earnings, and it had a balance sheet to see it through to better times." Management obviously agreed as within three months they took it private at $2.50 a share.
A big fan of smart phones, Mr. Scott says he initially overestimated the potential impact of the new BlackBerry Torch, launched in August, which led to him buying Research In Motion. He sold RIM after only holding it for about a month, and missed out on a subsequent rise of 25 per cent.
"Determine the value of the stock and compare it to the price, it's that's simple."
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