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Occupation Entrepreneur

The portfolio Includes shares in coal companies such as Walter Energy Inc. and Arch Coal Inc.

The investor Vladimir Zernov started out as a day trader in 2007. After noticing "some stocks rallied from certain technical setups while others failed from the same setups," he got interested in longer time frames and fundamental analysis. Now he spends a great deal of time researching companies with the potential for sizable stock gains.

How he invests "Typically, I look for a sector that is on the move, either up or down," Mr. Zernov says. "Then I study the companies inside this sector and make up my mind about their prospects."

Coal mining companies currently have his attention. Of note is an industry leader, Walter Energy, whose shares he bought in October.

The company mines metallurgical coal in Canada and the United States for use in the global steel industry. Squeezed by low coal prices and a heavy debt load, its shares are very depressed.

Yet, the first major debt repayment is more than a year away and there is enough cash on the balance sheet to keep operating through 2015. Management is also focused on raising more cash through cost cuts and asset sales.

That buys time for coal prices to rebound, which should come about as mine closings take supply off the market. Demand could also get a lift from an upturn in steel production. And now that the Republicans control Congress, the U.S. regulatory environment should be more benign.

Still, Walter Energy shares are high risk, Mr. Zernov acknowledges. But with high risk comes the potential for high reward.

Best move "My best move was to buy Avis Budget Group in 2009 at $1.05 [U.S.]."

Worst move "Buying Orexigen Therapeutics in 2011 for $3.15 just before the shares tanked under $2." (The shares have since recovered.)

Advice "Books could be great and articles can be insightful, but the stock market is the best teacher. Study your own decisions. Chess players always analyze their games and learn from them; investors should be doing this too." Special to The Globe and Mail

Want to share your strategies?E-mail

© 2007 The Globe and Mail. All rights reserved.

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