Triple Play: Contrarian Values
As the name of his newsletter suggests, Benj Gallander—editor of Contra the Heard—is a contrarian investor, taking a patient approach to finding unpopular stocks expected to return to favor. Here, he explains his strategy and highlights a trio of investment ideas.
Steven Halpern: Joining us today is Benj Gallandar, editor of Contra The Heard, a leading newsletter focused on contrarian investing. How are you doing today, Benj?
Benj Gallander: I am doing just fine, Steven, how about yourself?
Steven Halpern: Very good. Thank you for joining us. As a contrarian investor, you concentrate, often, on turnaround situations and stocks which are currently unpopular but ones that you believe are likely to return to favor. Could you tell us a little more about this overall investment approach?
Benj Gallander: Well, effectively, what we’re doing is looking at companies that have been beaten up. I don’t buy into any companies that have not been around for at least ten years, so they have a track record to boot.
What I can do is look at how successful the company has been in the past, and then, by looking at things like the financial ratios, the statements, talking to management, I try to discern whether or not they can actually return to form.
Being a contrarian is not something that is for everybody because psychologically it isn’t easy to do in many ways, because you’re buying into the unpopular. Certainly, often, when we buy into something, especially in the past, going back a number of years, we were often highly criticized, like, “why would you buy into that, it’s not doing well?”
I find that those are the companies that you can get the best returns on and I’m always looking at companies that have a minimum of 100% upside, often 200%, 300%, 400%, but my initial sell targets are always where the companies have traded in the past.
Steven Halpern: Now, that strategy has proven to be all very successful.