As lead manager ofAll-Canadian CapitalFund, Stefan Spicer hasn't wavered from the gold-digging strategy that he began to implement when he took over the fund in June 1999. "We really began to focus the fund more on precious metals because of those excessive valuations within the market," he says. "And I believe we have moved into what will become a multi-year bull market for gold and silver bullion."
Using the $10.4-million All-Canadian CapitalFund as his core fund, Spicer also managesAll-Canadian Compound,All-Canadian ConsumerFund andAll-Canadian Resources Corp. As of the end of August, his precious-metals weightings ranged from 13.3% in All-Canadian ConsumerFund to 81% in All-Canadian Resources. By comparison, gold shares made up less than 6% of the S&P/TSX Composite Index.
Spicer, 38, is responsible for approximately $13 million in total assets under management. He is chairman and chief investment officer of the five-employee All-Canadian Management Inc., based in the small Southwestern Ontario community of Ancaster. (The All-Canadian funds are sold only in Ontario.)
Portfolio decisions are implemented by the three-member investment committee whose other members are co-manager Michael Parente and Spicer's sister, analyst Michele Spicer. The team goes out and kicks the tires of companies and regularly meets with management.
As a third-generation money manager, Spicer was immersed in finance early on. During the Christmas break in 1982, after his first semester at the Rochester Institute of Technology in New York State, he knew the financial industry would become his career home.
Prompted by his father to get a job, Spicer started off in the mailroom in late 1982 at Walwyn Stodgell Cochran Murray Ltd. in Toronto. Working his way up, he was 20 when he was asked to join the corporate finance team at the firm. Six months later, in 1985, he was appointed an associate.
In December 1985, he moved to Johannesburg, South Africa, as a research and financial advisor for corporate and retail clients (contracted through his firm Spicer Investment Consulting), for Hayes Kilroe and Co.
In 1990, he left Hayes Kilroe to join Toronto-based Allenvest Group Ltd. as a stockbroker and sub-branch manager. In 1992, he moved over to Pollitt and Co. Inc., where he held similar responsibilities. Then in 1997, he joined All-Canadian Management Inc. to co-manage the All-Canadian funds with Parente.
Spicer's stock-picking approach is bottom-up. He focuses on companies whose shares are trading at or below book value, with good cash flow and with price-earnings ratios below 15. He also favours low debt-to-equity ratios and a solid management team.
His sell discipline is triggered by the value recognition of a security in the marketplace. If he feels he needs to, he will exit gradually. "On the way out," he says, "we'll typically feed the appetite within the marketplace, rather than do block sales."
Spicer holds about 25 stocks and 25 short-term bonds in All-Canadian CapitalFund. His recent high cash position in excess of 25% enables him to take advantage of value opportunities, he says. No more than 10% of the portfolio is concentrated in any one investment.
Spicer's low portfolio turnover of 7.9%, for the year ended in 2001, reflects his long-term philosophy. On average, he tends to hold a stock from three to five years. Goldcorp. Inc. ( G/TSX) is a prime example of his value-driven style and his belief in letting his winners run. Recently trading at $19, the stock was originally bought for $3.62 in 1997.
Spicer judges his performance against his peers and the S&P/TSX Total Return Index. Since his tenure began, the three-star All-Canadian CapitalFund has a three-year annualized return of 12.4%, compared with the median loss of 5.3% in the Canadian Equity category as of Aug. 31.
According to Spicer, the recent heavy weighting of 32% in gold shares in All-Canadian CapitalFund is a reflection of stock values rather than a sector play. "I know that the markets have been rallying for about five months now," he says, "but I do not think that we have seen the last of the lows." Spicer believes that the markets are currently in the midst of a bear-market rally, "and gold has proven itself as a safe haven in times of uncertainty and volatility."
