The stock market is challenging right now as it undergoes great volatility in what I believe will ultimately be a change of leadership like I saw in the periods 1987-1990 and 2000-2007. Whether I’m right or whether I’m wrong about the market the thing that I’m focusing on right now is continued learning. I believe that most successful investors, and in fact most successful (and interesting) people never stop their pursuit of learning. For example, many successful investors have advocated the benefits of extensive reading. I try to emulate these investor’s habits and in addition to the day to day reading I do in my business I generally have three books on the go at the same time. Right now I’m simultaneously reading about the… Read More »


Date Added: November 23, 2018 | | Filed under: Blog


From time to time there are circumstances that could cause one to consider investing in a Company that has a significant amount of debt or a weak balance sheet. Let’s look at a couple of examples. Let’s say a Company has a large amount of debt relative to the equity in the business. Generally this would be perceived as “risky”. However, what if the debt had been issued by a government agency whose mandate was both earning a return on their investment as well as promoting jobs in their region, and what if the Company in question was a major employer. Furthermore, what if the debt had a maturity date 8 to 10 years down the road (enough time for a full business cycle). Given the time to maturity… Read More »


Date Added: November 8, 2018 | | Filed under: Blog


Please note the date on this article. Could it happen again?- in Canada this time? Be Warned: Mr. Bubble’s Worried Again By DAVID LEONHARDT AUG. 21, 2005 ABBY JOSEPH COHEN, the Goldman Sachs strategist then making a name for herself as Wall Street’s optimist in chief, sat directly to Alan Greenspan’s right. One chair away was Robert J. Shiller, a largely unknown Yale economist. As they ate lunch in a stately dining room at the Federal Reserve that day in December 1996, Mr. Shiller argued that the stock market had risen to irrational levels. In a soft, Midwestern-tinged voice, he asked Mr. Greenspan, the Fed chairman, when the last time was that somebody in his job had warned the public that the stock market had become a… Read More »


Date Added: November 2, 2018 | | Filed under: Blog


Why avoiding a deeper financial crisis had a cost – and why a return to a more normal environment should be to our benefit In the depths of the financial crisis, with the financial system at risk of going completely off the rails, monetary authorities (in the US: the Feds) tried to avoid a freezing of the financial system (which would have caused a collapse of the economy) first by lowering interest rates drastically and then, with interest rates at zero and that not being enough, by the Feds buying government and corporate assets in the market to directly inject new cash into it, to an extent never tried before. The “artificial” condition of making available plenty of cash at low interest rates lasted for… Read More »


Date Added: October 23, 2018 | | Filed under: Blog


Market Contradictions The first contradiction is the divergence between rather positive economic forecasts and, in a buoyant market, the depressed stock prices of companies in sectors needed to achieve those forecasts, as if the market did not believe those companies would benefit. The second contradiction is the divergence opposing an optimistic market view of US economic performance and prospects to a rather pessimistic view of developments elsewhere, seen mostly from a US-centric perspective which these days tends to be through a Trump lens (and for Europe an additional Brexit lens). It’s as if the continuous barrage of aggressive but often ill-informed and ill-considered pronouncements and actions coming from the US monopolizes so much attention that it colours all perspectives, in the US and abroad. Given… Read More »


Date Added: October 13, 2018 | | Filed under: Blog


The beaten up shares of the following three companies have 10 Bagger Potential (i.e. in certain scenarios the share price could improve by a multiple of 10X or more) and they are not pot stocks or crypto currency companies. Each has its owns unique set of strengths and weaknesses. Investors should not view this blog as a recommendation to invest in any of them without consulting their investment advisor. Takota owns each of these securities in our Classic and Premium Value Managed Accounts as well as in our Premium Value Partnership. We may buy more or sell some or all of any of these securities at any time without notice. Acerus Pharmaceuticals: (ASP.T) Pharmaceuticals Strengths: Leadership Product/Science Skin in the Game Weakness: Balance Sheet U.S. Distribution Partner Fortress Global: (FGE.T) Dissolving Pulp… Read More »


Date Added: October 2, 2018 | | Filed under: Blog


At Takota as at our predecessor company we practise “bottom up” value based investing. This means that we search for attractive and inexpensive opportunities one at a time and our portfolios are the sum total of these opportunities. In the lead up to the financial crisis I engaged in many conversations with customers about the growing risk of derivatives and what that might ultimately mean for the economy. However, our investing activity was only impacted by these discussions in that it reinforced our discipline to not pay up for securities and insist that they only be bought at attractive prices. The financial crisis arrived at a time when I had not been doing much travelling and so was not as aware of the slipping standard… Read More »


Date Added: September 19, 2018 | | Filed under: Blog


According to Statistics Canada in 2013 there were 3,634,815 Canadians who were 70 years of age or older. By 2017 this number had grown to 4,198,454 an increase of 563,639. This number will continue to grow as the baby boomer bulge ages. What are the implications of this for the asset class known as residential housing? For most (but not all) Canadians, their family home is their primary asset. In order to fund the cost of housing or accommodation in retirement, most Canadians whether they are just downsizing, living independently in some sort of retirement community, or whether they will require some sort of assisted living care or memory care will sell their home to fund these requirements. Therefore, one could expect an accelerating “surge” of home sales… Read More »


Date Added: September 13, 2018 | | Filed under: Blog


At Takota we take the “active” part of active investment management seriously. Active management to us is not active in the sense of actively trading securities. No, for us, active investment management is the act of trying to always dig a little further and enhance our understanding of the businesses that we own and taking those actions to protect, and advance the real value of those businesses. Let me give you some examples of what I mean by recounting a typical week at Takota which saw us: 1. Negotiating and signing a lock up agreement in support of a forthcoming merger between a portfolio company and another public company which will bring value to our holding in the form of cash, other assets, projects, and importantly share… Read More »


Date Added: September 7, 2018 | | Filed under: Blog


Just back from another great summer holiday with family, extended family and friends. Perfect weather, and cool Muskoka waters. As someone who travelled extensively and lived abroad once said to me, “it is hard to beat an Ontario summer”. The BBQ, fresh August peaches and corn, were all enjoyed at progressively later and later lunches and dinners. Lazy days of swimming, paddle boarding, Kan Jam, and badminton were followed by lazy nights of movies, conversation and games. Even when one controls his/her own schedule and therefore creates a life of balance, the occasional vacation can work wonders, creating some distance from everyday business issues, helping to regain perspective, and creating a reservoir of patience, tolerance, and resolve. I highly recommend it and need to remember to… Read More »


Date Added: August 21, 2018 | | Filed under: Blog


Yesterday I attended my first Wolfpack rugby game at an event organized by an investor relations firm I had one of my portfolio companies engage to help promote the opportunity in that portfolio company to the brokerage community. See my blog Stock Ownership Begets Stock Promotion First off let me say that the rugby was fast paced and violent and very enjoyable for even a novice fan to watch. In attendance in my group were about 20 broker (advisor) types, a couple of whom I enjoyed talking to because they had been in business long enough, and had enough market sophistication to have some practical knowledge of the areas of market inefficiency that had allowed me to compound money at an approximate 20% rate for approximately… Read More »


Date Added: July 22, 2018 | | Filed under: Blog


We actually got ourselves up to 70% invested in our Income Value Portfolios for a brief period early this summer. This was the heaviest invested weighting we have achieved in the approximate 2.25 years that we have been running these portfolios. Alas, profit taking and risk management have now reduced our current invested position back down to 55%. Sold were positions in AutoCanada (-2%), Element Fleet Management (+10%), Medicure (+12%), and National Retail Properties (+20%). Each of the above was a dividend paying common share or in the case of National Retail Properties an income distributing REIT with the exception of Medicure which was simply a value arbitrage position (i.e. at purchase the Company had sold down to a price that was equivalent to the cash on its balance sheet… Read More »


Date Added: July 10, 2018 | | Filed under: Blog


As I enjoy our Canada Day weekend, I must say I’m feeling pretty good about being a Canadian right now. With our Prime Minister showing a little bit of the spirit of his late father, with the intelligent and fiery Chrystia Freeland as our Minister of Foreign Affairs, and with Canadians rallying behind the PM in our dispute with the imbecile who currently stains the White House , I’m feeling pretty positive and proud of being Canadian. Sure we’ve got our problems which in my view include a real estate and related industry (construction, real estate finance) that is responsible for far more of Canadian GDP than is healthy, and far too many shootings in Toronto, but this weekend I’m reflecting on the positives about… Read More »


Date Added: July 2, 2018 | | Filed under: Blog


On May 30 Sherritt held an Investor Day at its Fort Site refinery in Fort Saskatchewan, Alberta. We thought it would be a good opportunity to meet and talk with Sherritt’s executives beyond the formal presentations (available online ) as well as meet with some of the local management. I asked J Dominique from our office to fly to Alberta and attend the presentations. This is his report. Our overall impression is that Sherritt is showing, following a number of decisive actions, renewed strength. The march from cycle peak in 2007 to cycle bottom in spring 2016 has been painful – for the company as well as shareholders. Sherritt had the misfortune (together with many other mining companies) to enter the commodity down cycle with… Read More »


Date Added: June 18, 2018 | | Filed under: Blog


Good investment ideas can come from anywhere. They can come from your own experiences as a consumer or business person. They can come from reading both history and current events and they can come from simply observing the world around you. Often, they come from other people. Aspiring investors are often advised to watch the actions of successful professional investors for ideas as to where they should invest. I don’t disagree with this advice. However, I think it is also limiting. The fact is that almost everyone you know will have an investable idea at some point in their life, some situation within their particular expertise that they identify as an opportunity. Your job is to know when that idea is within your own circle of competence and therefore whether… Read More »


Date Added: June 8, 2018 | | Filed under: Blog


As many of you are aware, on the internet there are chat rooms or so called “bull boards” on which the pluses and minuses of stocks are discussed by posters. The quality of the posts is widely variable from chat room to chat room and also for each specific stock discussed. From time to time I will take a look at the posts for any stock in which we are involved just in case there happens to be someone knowledgeable offering a real opinion, or whom has dug up some interesting information. For example, a poster on Stockhouse wrote about a new patent application for the drug delivery system of a company in which we are involved prior to the company releasing that information. However, be forewarned. If you… Read More »


Date Added: June 1, 2018 | | Filed under: Blog


I’ve been spending time recently thinking about the central principles on which Takota was founded with respect to our investing, our relationships, and our decision making, and how we are doing in terms of living by those principles every day. I’ve always wanted to have a different kind of investment company, one which is similar to the way in which Warren Buffett ran his original investment partnerships. We got much of the way there at my predecessor firm Aquilon Capital. However, we still went down some paths that most young investment companies will go down as they try to build their businesses, paths which I have no intent of going down again at Takota. Here are a few central principles that guide our actions: Principle… Read More »


Date Added: May 23, 2018 | | Filed under: Blog


Today, as I look at our portfolios (which as always are a collection of out-of-favour, abandoned, or simply undiscovered securities) I can make the following observations: 1. By design, we prefer to build our portfolios with the types of securities that have been shown to produce superior rates of return historically, such as: – securities that are “cheap” by various fundamental metrics which outperform because of the concept of “reversion to the mean”; – securities that are smaller in market capitalization because fewer “eyes” watch them and therefore they tend to fall through the cracks and therefore to be mispriced. Finding mispriced securities is the value-add that an active investment process should provide (see “What Has Worked in Investing” – Tweedy Browne” for an extensive elaboration… Read More »


Date Added: April 23, 2018 | | Filed under: Blog


As many of you know we started a newer strategy to complement our legacy capital accumulation business approximately 2 years ago, a strategy meant to provide investors who require income with an alternative to the low yields available in today’s low rate market.  From time to time I have commented on the progress of my own Takota Income Value Account. I am pleased to report that the gross* return for my own account is 34.4% over its first 2 years + 50 days of operation (March 1, 2016 – April 18, 2018).  What’s more – this extraordinary return was accomplished with a broadly diversified portfolio (maximum 5% weighting in any security with no averaging up or down) and with fully 50% of the portfolio on average sitting in cash… Read More »


Date Added: April 19, 2018 | | Filed under: Blog


In a previous blog which you can see here I pondered the possibilities for a Company called Melior Resources which we own at Takota. Could it become as promising as our holding in Acerus Pharmaceuticals (which I wrote about here). We bought Melior as a simple corporate liquidation when it had more cash than market value and lobbied for the liquidation of the Company (see The Fight) but rather than liquidate the Board bought a previously producing but at the time idled ilmenite mine and processing facility in Queensland, Australia for pennies on the dollar. Fast forward several years and finally, and just now, the Company has completed a series of financings and offtake agreements that will provide them with the funds and the surety to recommence production in… Read More »


Date Added: April 10, 2018 | | Filed under: Blog


Now that Acerus Pharmaceuticals is receiving some initial attention from investors including its first research coverage in years, I’m getting calls and social media messages from interested investors asking what we think. I guess that many of these people remember that I wrote several blog posts on Acerus (nee Trimel) founder and former largest shareholder Eugene Melnyk and ultimately wrote about the company itself. In answer to your queries, yes we like the Company and yes we like the stock (see disclaimer at the end of this blog). I personally traded Acerus shares in large quantities between .10 and .20 cents for much of 2016 and into 2017. There was a significant change in share ownership at that time and therefore the liquidity to trade large blocks. At… Read More »


Date Added: March 26, 2018 | | Filed under: Blog


I learned long ago from a very successful investor that once I become the owner of a security, it is in my best interest to then become a promoter of that same security. Spreading the word and encouraging incremental buying is good for my position, and therefore good for my economic well- being. Such promotional activities might range from providing information on the opportunity to other investment professionals, introducing the Company to analyst coverage through established relationships, and encouraging the Company to find and engage an effective investor relations firm/professional. As we have seen with many hedge funds, other opportunities to promote a holding occur in speaking engagements at investor conferences, in making appearances on the business news, coordinating articles in the press, making comments through… Read More »


Date Added: March 21, 2018 | | Filed under: Blog


As a value investor I find myself wading through discarded or unknown securities looking for that rare cheap item that doesn’t belong in the junk pile, or that won’t remain unknown forever. After identifying such a security, studying it, and buying it begins the part of the process I dislike the most – the waiting! These cycles, these changes to investor sentiment can take a long time. I’m no Warren Buffett, and so just because I buy something doesn’t mean it immediately increase in popularity (or price).  Once an owner, I find myself becoming a promoter of the security purchased, spreading the good word to other potential buyers, and also a willing assistant to the corporation in the removal of any impediments to having my vision of inherent value… Read More »


Date Added: March 13, 2018 | | Filed under: Blog


Back in the dark days for commodities, in March of 2016, we purchased the Sherritt 8% 2021 senior bonds at $47 per $100 of face value for a running yield of 17% and a yield to maturity of 26.6%. This past week we tendered our bonds to a buyback initiated by the Company at $95 per $100 face value for a total return of 135%. Thanks bond market for remaining inefficient!  Thanks Sherritt for misallocating capital to an unnecessary debt reduction (my view). Why did we tender with the bonds still providing a new owner with a running yield of 8.4% and a yield to maturity of approximately 9.6%? 1. I’m generally happy to achieve liquidity in my distressed debt holdings at 95 cents on the $1.00. 2. More importantly, when Sherritt successfully extended the maturity of these bonds… Read More »


Date Added: February 23, 2018 | | Filed under: Blog


Takota Asset Management had an issue with Sherritt International’s [TSX:S] efforts to raise capital to firm up its balance sheet, co-founder W. Scott Leckie told Activistmonitor. “It was poor judgement,” he said. “Their recent decision to raise equity at current share prices was an example of poor capital allocation where they diluted shareholders of 20% of their interests in exchange for a modest reduction in debt of about 10%.” In May 2017, Sherritt entered into aggreement with Sumitomo and Korea Resources to eliminate USD 1.4bn in debt, in exchange for part of its stake in the Ambatvy nickel mine in Madagascar. Sherritt retains a 12% stake and operates the mine until at least 2024. Leckie is pushing for “management to make good capital allocation decisions” so shareholders can “fully… Read More »


Date Added: February 9, 2018 | | Filed under: Blog



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