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This investor seeks to buy a dollar for fifty cents

Brian Langis, 29

Occupation

Investment manager and consultant

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The portfolio

Positions in American International Group Inc., Bank of America Corp., Citigroup Inc., SNC-Lavalin Group Inc. and other companies.

The investor

Brian Langis manages a private investment company and serves as a consultant for a frontier (or "pre-emerging") market fund. He is a candidate for the Chartered Business Valuators membership exam in 2014.

How he invests

Mr. Langis uses his business valuation skills to estimate how much a company is worth. If the amount is greater than the company's stock-market capitalization, Mr. Langis may be interested in buying its shares (after factoring in a margin of safety).

"The one particular metric I really put emphasis on is free cash-flow generation," he adds. "With excess cash, they can pay me a dividend, reinvest in the company, pay some debt, or acquire a company. In general, if a company can increase their excess cash capabilities, that can translate into higher stock prices."

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At the moment, his portfolio is mostly concentrated in U.S. financial stocks – one of the "few sectors that remains undervalued." As for SNC-Lavalin, the "ethics scandal is keeping the company down, but underneath there's a going-concern company with great assets."

"As you can see, I have a penchant for companies that make it on the most-hated list," sums up Mr. Langis. "To find value, you sometimes have to look where others are not, and usually you end up in undesired places."

Best move

Mr. Langis recently "hit a home-run" with World Wrestling Entertainment Inc., registering a 100-per-cent return over a seven-month holding period. He had read the company's filings and "knew that if somebody wanted to buy the company" they would have to pay a lot more than the market capitalization. Also, there was no debt, and a stable 5-per-cent dividend yield.

Worst move

"With the bull market over the last couple years… [it was] not pulling the trigger at certain opportunities that I found undervalued."

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Advice

"Focus on the value of a company and its relation to share price."

Want to share your strategies? E-mail mccolumn@yahoo.com

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