Peter Hodson finally hung up his hat in 2011 after wrangling up tremendous returns in the Sprott Growth Fund. “It was a high-risk, small-cap growth fund, like a cowboy fund,” he says. After a disagreement with Eric Sprott over the fund, followed by a 62% drop in 2008, Peter finally decided it was time to ride out into the sunset. During the resource bull run from 2002 to 2007, Sprott Asset Management was a high-flying firm. As Peter quipped, his experience at Sprott Asset Management could be a book on its own.
Today, Peter Hodson is CEO of 5i Research Inc., an independent research network that provides conflict-free advice to individual investors. The five Is stand for integrity, independence, individuals, investments, and insight. “We’re just trying to use our experience to help people,” as Peter puts it. Through 5i Research, investors can get access to many easy-to-understand research reports, written for the average investor, with a simple rating system from F to A-plus. Additionally, the company offers over 28,000 questions that have been answered by Peter, as well as three model portfolios to follow. And it seems that Peter got trigger-happy again, because he recently announced the introduction of the Growth Portfolio model, in addition to the Income and Balanced-Equity models. Once a cowboy, always a cowboy.
Peter’s still got a good shooting hand, judging by his ability to pick off new high-flying stocks in today’s market. For example, Peter picked Amaya Gaming before many investors even knew it existed on the exchange. It was April of 2013 when Peter said, “Three very good acquisitions have set Amaya up for excellent growth, and it is well-positioned to benefit from legalization of online gaming. Revenue growth will be big this year, and the company is becoming profitable. It is well-managed, has excellent shareholder support, and is a relatively unique name in Canada.” Following that recommendation, Amaya went on to post a whopping 500% gain through 2015.
It will be interesting to follow Peter’s new growth stock picks. The Growth Portfolio holds 22 securities and is initially biased toward the technology and health care sectors, two areas that Peter expects will remain strong in the near term. As Peter explains, “these are also usually the more growth-oriented sectors.” Peter is also the owner of Canadian MoneySaver, a fully independent financial magazine, published since 1981, which is chock-full of quality investment features written by Canadian experts in the industry.
Peter and I arranged to meet for the interview at Coffee Culture in uptown Waterloo. Memories of my University of Waterloo days flooded over me as I drove down King Street. When I arrived, I ordered an iced coffee, secured a table, and waited for Peter. When he entered the coffee shop wearing a tan leather jacket, black shirt, and jeans, it felt almost like a scene from a cowboy flick, the lead walking in through the swinging saloon doors seeking either a drink or a showdown. Our conversation was as entertaining as it was insightful, although no one was thrown through a saloon window. Peter is a funny guy who has a fun and compelling way of presenting his stories on the market.
Dilution: when management issues large equity offerings, increases the amount of shares outstanding, and effectively diminishes the existing shareholders’ share values.
Overbought: having a price that has been pushed unjustifiably high by demand, some assets may become overbought and then be driven to unsustainably high price levels, after which they may come down to more historically sustainable levels.
Oversold: having a price that has been pushed unjustifiably low, some assets may become oversold and then be driven to unsustainably low price levels, after which they may rise back up to more historically sustainable levels.
Portfolio: a collection of assets in which investors or portfolio managers have invested.
Put Option: a contract that gives you the right, but not the obligation, to sell a stock at a specified price within a certain time frame.
Yield: the income derived from either the coupon on a bond or the dividend on a stock.