Trading note

As discussed previously, I finally made my second RRSP purchase of the year. I'm now the proud, only marginally anxious, owner of $3000 worth of American Capital Strategies, a Nasdaq-listed diversified investment manager. I liked the the company's track record of steady performance in good and bad markets, so I'm confident of modest capital gains. Plus the firm boasts an impressive dividend yield of nearly 10% -- so I'll get paid while I wait.

I'm sure U.S. equities have a ways to fall yet as this subprime / real estate mess plays out, but I like ACAS's odds of standing up better than most (what was it Benjamin Graham wrote about a margin of safety?) and over the long term, the U.S. is going to remain a powerhouse of the global economy. Running away and hiding simply isn't an option.

The fact that my loonies go further than they ever have before is the icing on the cake.

Trading notes

Bought some stocks this week for the first time in a while. To me they're both value plays, but time will tell, I suppose, if they'll be good turnarounds or if I've fallen into a couple of value traps.

Friday's sell-off gave me an excellent opportunity to take a stake in a long-term holding I've been waiting for an entry point for a while now: Brookfield Asset Management. (BAM.A on the TSX) I love -- love-- the management of this company, and the fact that their strategy is to make money from managing other assets (hence the name.) I also like the new focus on infrastructure assets, which I think are going to be great cash generators in the coming years. The stock took a 7% haircut on Friday due to fears about subprime exposure. So I jumped in. But the stock is already back up above where it was before the market got rattled. I'm predicting this will be a long-term holding.

The other move was to double up my stake in Biovail. I outlined my reasons why I was tempted in this post last week. In short, everyone's scared by the pipeline of drugs drying up, but I think that's only temporary. The FDA mess will get sorted, and the new drug plans unveiled this morning were an unexpected surprise. In the mean time, I'm more than happy to sit on that fat yield of more than 8%. The sell-off in the stock this morning after underwhelming financial results gave me the opportunity to buy in. I don't think Biovail's going to be a base of my portfolio for years to come ( I know all too well how volatile it tends to be) but I dunno -- the market has shaved off more than a quarter of the market cap in about a month, and that seems like an over-reaction to me. With all that cash on hand, that dividend seems safe for a long while.

That's it for now.

As always, do your own homework before making any investment decisions.

That's it for now.

I'm tapping out, CWM.UN

First trading note in a while around here, as I finally pulled the trigger on a move I've been mulling for a while now.

So long, CanWest MediaWorks Income Fund (CWM.UN on the TSX) -- don't let the door hit you in that @$$ on the way out.

Essentially, I have zero faith in the fund's sustainability -- much less its potential to eke out capital gains. The newspaper industry is notoriously bad in Canada, and while I'm confident it will survive in some form over the long term (I'm looking at a few other stocks to keep an exposure, actually) I just don't think CanWest is the stock to ride the wave on.

The payout ratio has never been below 90% since the fund's inception in late 2005, and it's even gone above 100% occasionally.

In short, my gut tells a suspension of distributions is coming. So I'm out, and grabbing whatever I can on the way.

Now let's see. Initial investment? 200 units at the IPO price of $10 = $2000 book value. 14 months' worth of distributions = $231.30. Gains from selling out at $7.57 per unit = $1485. Bringing my total loss to $284 (14%) in a little over a year.

Damn.

Lesson learned, I hope.

Stay tuned to see what I plan on replacing that position with.