Nick Waddell
Nick Waddell 39
Occupation: Investor relations consultant
Top Holdings: Serenic Corp., Bank of Montreal put options, Glentel Inc., Sierra Wireless Inc.
Where he got his start
Nick Waddel, who majored in English and minored in economics at the University of Guelph, says the career bridge between the two is working in communications, which is how he got into the investor relations field. Despite living in Vancouver, though, he isn't interested in metal or mining stocks. Instead, he favours that once-famous but now shunned sector, technology.
More recently he has begun publishing an online magazine about tech stocks, "DVC Smalltech Letter." Referring to the years since the tech wreck as the "Lost decade," he says the publication is one way to network with other fellow tech fans, an at-times lonely pursuit. "The few of us who follow it are true believers huddled against the wind."
His Discovery
After 10 years of investing, Mr. Waddell says, he discovered he was going about it all wrong. "Top down is the way most people invest, but it did nothing for me except give me losses," he says. "People say things like 'In China there's a billion people and they'll all be buying these things so you've got to get into that sector.' But I don't know anything about China, and it's hard to predict macro trends."
Why He's a Value Investor
"If you know the basic value tools, you can understand if something is historically cheap or not," he says. "I'm just trying to minimize my losses, one of the tenets of value investing."
His Stock Filters
Mr. Waddell begins by looking at all the TSX companies and comparing their market capitalization to their sales. He's looking for those trading at under one-times sales, which he says gets rid of three-quarters of companies. "That valuation is where the conversation begins for the private sale of a company," he says.
He also looks at the debt-to-market-capitalization ratio. "For most companies we look at, that number is zero." A third measurement is cash compared to market cap to see what safety margin that provides. For instance, he points to International Datacasting, whose cash position is 46 per cent of its market cap. "If the company had to close down, I know I'm getting at least 50 per cent of my money back if everything goes haywire," he says. "Like Warren Buffett said, invest with the assumption the market could close down for two years."
Best Move
Concord, Ont.-based Aastra Technologies Ltd. met all of Mr. Waddell's screens last November when it was trading at just under $9. The company makes and sells technology for building and accessing communication networks such as servers, gateways and voice over Internet protocol endpoints. "The normal price was much higher but it had taken an extra large hit when the market fell, so the numbers on it were just crazy." He sold when the stock hit $32 in June, and it last closed at .
Worst Move
Last fall, Intrinsyc Software International Inc., a mobility software and services company, also satisfied Mr. Waddell's screens. But while at 20 cents a share it looked cheap, it has gotten a lot cheaper, last closing at .
Advice
"Read Benjamin Graham's The Intelligent Investor. To me, it really shows you how to invest without emotion and forgo all the noise in the market."
Special to The Globe and Mail
Want to share your strategies? E-mail tony.martin@sympatico.ca