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Professor focuses on out-of-favour stocks

Andrew Delios, 48


Professor of business strategy

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The portfolio

Short-term trades in value stocks (mostly in cash now).

The investor

Andrew Delios graduated with a PhD from Ivey Business School at the University of Western Ontario, and now works as a professor at a university in Singapore. He is also an owner in a business engaged in the international franchising of brands such as Sarpino's Pizza and Chili's.

How he invests

Prof. Delios seeks to buy stocks when "unusual news" causes their prices to fall below intrinsic values. With the market's focus on quarterly financial reports, for example, there can be sharp selloffs when earnings expectations are missed, even though the company's competitive position and other fundamentals remain unchanged.

He shoots for above-average returns by maintaining a concentrated portfolio of just two to five value stocks. Also, his holding period varies from a day to one year, the goal being to own stocks when much of the reversion to intrinsic value occurs.

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"Using this strategy, I have achieved an average annual gain above 30 per cent for four years running," Prof. Delios says.

He got a big lift from buying Bank of America Corp. and Citibank Inc. stocks when they were priced as if they were going out of business. But the government wasn't going to let them go under because they were too important to the financial system.

Recent moves

Prof. Delios recently moved his portfolio to 80 per cent cash because he does not see "any particular value opportunities" in the stocks he follows. He is content to "sit and wait" while uncertainty over the global economy and U.S. economic policy plays out.

Best move

He successfully played the uptrend in Las Vegas Sands Corp. stock from 2009 onward. He no longer holds the stock.

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Worst move

"Buying BlackBerry [Research In Motion] in early 2012. … I knew the company was in trouble, but anticipated there might be an acquisition bid."


"Do not expect strong returns from a diversified portfolio as it always returns to the mean. Aggressive growth means selecting only a few stocks and having the discipline to stay with your strategy, even when the dips are severe."

Special to The Globe and Mail

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