Benj Gallander, President, Contra the Heard Investment Letter

Focus: Contrarian and value investing

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Market Outlook

While there have been minor bouts of volatility over the past year, I suspect that it will ramp up dramatically over the next year. Investors should be aware of this, but not necessarily wary. Volatility can be a friend if one reacts selectively and does not get swayed by the noise.

Top Picks

United Security Bancshares (USBI.O)
This small Alabama-based bank pays a dividend of $0.02 quarterly. At one point it paid $0.30 quarterly. The current stock price is under $10 and further recovery is likely. It used to trade above $30.

Innodata (INOD.O)
This is my second time that I have owned this stock. The first time it was bought at $2.50 and sold at $6.44. The balance sheet features a reasonable amount of cash and nominal debt. Insiders own about 5 per cent.

First United Corporation (FUNC.O)
FUNC sells for less than book value and did not dilute the share count during the recession. I suspect that the company will likely reinstate a dividend before the end of next year. It used to pay $0.20 a quarter. A double in share price is not out of the question as the stock used to trade above $25.

Past Picks: September 18, 2015

Extendicare (EXE.TO) - Still hold

• Then: $8.05
• Now: $9.15
• Return: 13.66%
• TR: 20.03%

Rona Preferred Share A (RONa.TO) - Still hold

• Then: $13.87
• Now: $23.99
• Return: 72.96%
• TR: 73.80%

Jinpan International (JST.O) - Sold in April on the takeover at $6.00

• Then: $3.76
• Now: $5.94
• Return: 57.98%
• TR: 57.98%

Total Return Average: +50.60%

Website: www.contratheheard.com