Taking Profits from Constellation, Selling Other Hodson Picks

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Back in early March I bought Constellation Software (CSU.TO) based on the recommendation of Peter Hodson.  The investment has done very well – up 12.7%.

I feel that this level of growth is not sustainable so it’s time to take profits.

  • Sell CSU.TO @ $135.27

My other Hodson picks – StanTec (STN.TO) and Winpak (WPK.TO) – have performed quite well.  They are both up 2% since purchasing them.  However, I am not really committed Screen Shot 2013-04-11 at 8.26.23 PMto them as part of my speculative portfolio.  I’d prefer to raise cash to invest in hotter, more speculative opportunities such as Lululemon (LLL.TO).

  • Sell STN.TO @ $43.69
  • Sell WPK.TO @ $19.74

Out of Brookfield, Into Winpak

Earlier this month I bought three stocks that are highly recommended (A-rated) by Peter Hodson of 5i.  Two of these stocks have done well but one, Brookfield Renewable Energy Partners (BEP-UN.TO) has done poorly.  It was down over 6% at one point.  Normally I would sell a speculative stock that was down 5% or more (i.e., stop loss) but I neglected to set alerts for BEP.  Today BEP was up 2% so I took the opportunity to sell it for a 4.5% loss.  My other speculative stocks are up so I am not too distraught about this one.

I might have made a mistake when I bought Hodson’s A-rated picks.  Some of his recommendations are months old.  Perhaps I should have gone with the three stocks he recommended on BNN recently.  Accordingly I am taking the funds from the BEP sale and putting them into Winpak (WPK.TO), which dipped today.

  • Sell BEP-UN.TO @ $29.92
  • Buy WPK.TO @ $19.35

Buying the Hodson Portfolio

I have decided to go ahead and build a small portfolio of Peter Hodson’s top recommendations.  His recommendations are Canadian small cap stocks so they will be bought using the money set aside for speculation.  Rather than buying his most recent picks I have decided to buy his most highly rated picks (those rated “A” in his research).  They are:

  • Buy Stantec (STN.TO) @ $42.72
  • Buy Brookfield Renewable Energy Partners (BEP-UN.TO) @ $31.34
  • Buy Constellation Software (CSU.TO) @ $120.02

POSTMORTEM

Writing today, 30th March, this looks like a profitable set of trades: a good call.  The three holdings are up an average of 1.75% in a month.

One of the stocks, Brookfield Renewable Energy Partners (BEP-UN.TO) has not performed well and I have sold it.  The postmortem on that decision will be conducted in a later post.

Ticker Name Price Paid Today’s Price % Gain
STN.TO Stantec Inc. $42.72 $44.81 4.89%
CSU.TO Constellation Software Inc. $120.02 $125.11 4.24%
BEP.UN Brookfield Renewable Energy Partners LP $31.34 $29.92 -4.53%
Average Increase 1.75%

Peter Hodson’s Picks

I am a subscriber to Peter Hodson’s 5i Research.  I have been analyzing his picks for the past year or so and I’m impressed.  If you had bought every one of Peter’s ten A+, A or A- rated picks on the day he picked them then you would have received a money-weighted return of 30%.  Here is a screenshot of a notional portfolio wherein roughly $10,000 is invested in each A-pick on the day the pick was published.

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This is very impressive.  Peter appeared on BNN yesterday with his top three picks:

  • Cineplex (CGX.TO);
  • Stantec (STN.TO); and
  • Winpak (WPK.TO).

I am giving serious thought to including these stocks (or some of Peter’s other A-picks) in the speculative portion of my portfolio.  (I consider these to be speculative as they are small cap companies.)