Monthly Message

The Wutherich & Co. Composite was down 2.2% in January. This compares with the S&P/TSX up 0.8%, the BMO Small Cap Index up 2.0%, S&P 500 (US$) up 1.9%, the DJIA (US$) up 0.6%, while the NASDAQ (US$) was up 4.3%.
The weakness experienced in the Wutherich & Co. Composite during January happened in the last few days of the month. Two forces may have been at work. Many of the stocks in our portfolio that had a strong run from August to December saw heavy selling, on no news, towards the end of January. We also had one company get hit severely on company specific news. New Gold announced that a large development project is running behind schedule and is over budget. So much over budget that the company may face a liquidity crisis later this year. We have eliminated this position after suffering a negative impact on the portfolio of about 1.2% during the month. Our position in Directcash Payments was also eliminated during January, though this was due to the happy completion of its acquisition by Cardtronics.

We think it is very important to ignore day-to-day, month-to-month or even year-to-year movements in stock prices. Rather, we focus on company fundamentals and how we value the individual names in the portfolio. While we will have trouble stocks like New Gold show up in our portfolio from time to time, we believe we will have more happy endings like Directcash Payments to help generate positive long-term returns.

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