Look who's beating the market

When Murray met Lesley stock picking faceoff

Globe Investor magazine online, March 10, 2008
By Paul Brent

North American stock markets have given investors a rough ride over the past six months, but you wouldn’t know that from the virtual portfolio performances of the Globe’s Investor Faceoff contest. Both of them are in the black.

At the half-way point of Faceoff’s year-long stock struggle, it’s 64-year-old active do-it-yourself investor Murray Soupcoff that is prevailing so far over 24-year old financial consultant Lesley Scorgie.

Click here to view Lesley's portfolio
Click here to view Murray's portfolio

As of the Feb. 29 market close, Mr. Soupcoff’s $100,000 virtual portfolio has gained $16,424 while Ms. Scorgie’s holdings have risen $7,184. The S&P/TSX composite is down more than three per cent over the same time.

Basing his investment strategy on a troika of gold, agriculture and oil sands holdings since Faceoff’s end-of-September kickoff , Mr. Soupcoff held as much cash as possible in February, while retaining his three-sector core investments which he believed were least vulnerable to mortgage chills.

Mr. Soupcoff’s hunkered-down, defensive stance did not preclude him from trading during the month. On Feb. 22, he sold 600 shares of Golden Star Resources (GSC-TSX) at $4.12 apiece for total proceeds of $2,472 and a net gain of $360. “Junior gold mining stocks are not keeping up with the rising price of gold bullion,” he explained. “So (it is) time to take profits in Golden Star while I'm still ahead and buy more gold bullion later.”

He also took interest in a less lustrous metal when on Feb. 22 he purchased 1,000 shares of Sprott Molybdenum (MLY-TSX) at $4.24 , adding to the 800 shares he already owned. “Base metals like molybdenum are again in short supply and are on what I think is a temporary roll,” he said. “In my opinion, there will probably be another correction in their prices in a couple of months. So time to fatten up my molybdenum holdings for now, ride the wave, and then get out when base metals prices start to pull back again.”

Not yet done, on Feb. 26, Mr. Soupcoff bought 100 more units of the StreetTRACKS Gold ETF (GLD-NYSE) at 93.71 each, doubling his investment in the U.S. fund. “I'm still a long-term bull on gold,” he explained. “And I wanted to buy a "large-cap" gold-bullion holding to replace the Golden Star junior gold holding I sold. I sold Golden Star because gold juniors don't seem to be keeping up with the rising price of gold bullion itself. So time for more gold bullion shares. I hope.”

A believer in “stuff in the ground” investing since the contest began, Mr. Soupcoff is, if anything, more interested in buying tangible assets amid U.S. economic weakness. “As the U.S. dollar continued to fall during the month and the threat of inflation grew, I wanted to add to my commodity-related holdings,” he said.

Ms. Scorgie, the author of Rich by Thirty: A Young Adult's Guide to Financial Success, used February to prune her portfolio. On Feb. 20, she sold her 271 shares in RBC Royal Bank (RY/TSX) for $49.89 per share after originally buying the shares at $47.71 on Jan. 18. She netted a total of $2,286 in gains from the trades.

Anticipating that silver will follow the trajectory of gold, Ms. Scorgie made a $25,500 bet on silver mining firm Silver Wheaton Corp. (SLW/TSX), buying 1,500 shares at $16.33 apiece. “I bought [Silver Wheaton] because silver prices are heading upwards,” she explained. “I think it will be a short (term) position and then I will get rid of it.”

Along with Silver Wheaton, core holdings for Ms. Scorgie include: children’s media company DHX Media (DHX/TSX), molybdenum producer Thompson Creek (TCM/TSX) and GMP Capital Trust (GMP/TSX).

With a sizeable chunk of her portfolio in cash ($23,052.21), Ms. Scorgie believes that she is in a strong defensive position. “The market is a little uncertain so I plan on preserving capital,” she said. “However, I’m also on the hunt for some undervalued shares that have turnaround potential given our time frame. I like bargain shopping for shares.”

Mr. Soupcoff, meanwhile, expects more of the same in March. He holds $26,000 in a money market fund to buy discounted stocks. “I'm still anticipating a continued drag on the equity markets from more spillovers from the mortgage-backed-securities meltdown, a continued economic slowdown in the U.S., and a continued declining American dollar,” he said. “ Based on their performance in the last six to 10 months, I'm still confident in the continued resilience and earnings growth of gold, agricultural and oil-sands stocks in contrast to most financial, tech and consumer stocks. So I want to continue to accumulate these kinds of equities on any dips, while still retaining some cash to pick up any bargains like in financial stocks, if the correction looks like it's going to end before mid-summer.”

Special to The Globe and Mail