Jim Letourneau's Blog

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Stock Market Superstars - Allan Jacobs

As promised, we are posting updates on Canada's Stock Market Superstars.

Allan Jacobs left Sceptre Investment Counsel Ltd. in 2007 to join Sprott Asset Managment. His recent performance was updated by Shirley Won of the Globe and Mail:

When Mr. Jacobs was wooed over to Sprott, his move created expectations because his new employer has what one analyst then described as a “performance culture.” Despite performance fee incentives, Sprott Small Cap Equity's 53-per-cent loss barely differed from Sceptre Equity Growth's 54-per-cent decline.

While most of are more than capable of losing over 50% of our money in the market, it is guys like Jacobs who have a better than average chance of clawing back some gains down the road. We can glean where Jacobs' is headed by reading the Q4 Market Comment for the Sprott Small Cap Equity Fund:

We share our clients’ frustration with the Fund’s performance in 2008, but believe that our portfolio offers very good value to investors. With valuations considerably cheaper than three or six months ago, Canadian Small Cap stocks have underperformed the market for 5 consecutive years and offer excellent value in many cases. Not only are Small Caps unlikely to underperform in perpetuity, but we have historically shown an ability to add significant value through superior stock selection over many years.

The fund recently blew out 16 positions (mostly in energy and base metals), while adding three new ones:

  • Dorel Industries Inc (TSX:DII.A, DII.B)

  • 5N Plus Inc. (TSX:VNP)

  • Semafo (TSX:SMF)

According to the fund, Dorel is a consumer products manufacturer which trades at a very low Price:Earnings multiple, 5N Plus is a fast growing producer of high purity specialty materials for the solar industry, and Semafo is a growing gold producer with a modest valuation.