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Mutual Fund News


Special to The Globe and Mail


Occupation Investment banking analyst

The portfolio Includes shares in BlackBerry Ltd., Yahoo Inc., Gilead Sciences Inc., and real estate investment trusts (REITs).

The investor As an analyst in the investment banking industry, Gonzalo Carrasco has participated in mergers, initial public offerings and other financial transactions. "This experience has taught me where to look when assessing a company's potential," he reports.

How he invests Mr. Carrasco seeks to invest in troubled companies with turnaround potential. "I look for companies that possess sustainable competitive advantages and a strong management team, regardless of their recent misfortunes," he says.

One-third of his portfolio is in BlackBerry stock. He believes the company has strong leadership under John Chen. Mr. Chen is taking BlackBerry in a new direction by outsourcing manufacturing operations and shifting to software-based services.

In some fast-growing softwarebased niches, BlackBerry is emerging as the leading provider. What's helped is its "sustainable competitive advantage in secure data transmissions."

According to Mr. Carrasco's calculations, the per-share value of BlackBerry's assets (excluding the patent portfolio) currently exceed the stock price - providing a margin of safety. Cash of about $7 a share on the balance sheet helps limit downside risk.

Mr. Carrasco also invests in REITs with "exposure to real estate assets that tend to appreciate even in bearish markets."

They smooth volatility and increase the odds of earning positive returns in bear and bull markets.

Best move "By being patient and knowing when to buy the dip, I have been able to generate strong returns on my BlackBerry shares [over the past 10 months]."

Worst move It was investing in Mexico Citybased Volaris Aviation Holding Co. He thought this low-cost airline was going to take market share away from its older competitor, but it ended up on the wrong side of a price war.

Advice Thoroughly do your homework before committing to a stock, and stick to your thesis through temporal fluctuations in price, says Mr. Carrasco.

Want to share your strategies? E-mail

© 2007 The Globe and Mail. All rights reserved.

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