Monthly Message

The Wutherich & Co. Composite was up 2.6% in January. This compares with the S&P/TSX down 1.4% and the BMO Small Cap Index down 2.5%.

Nice to see another gain in January in the Wutherich & Co. Composite, and nary a pot stock in sight (which you will never see in the portfolio)! We do not focus on particular indexes, macro-economic themes or momentum investing and so performance has been more difficult to achieve over the last few years. However, the portfolio is full of firecrackers that are set to go off. We just don’t know when. At one point, we believe investors will pay attention to the fundamentals of individual stocks and this should allow our names to get recognized over time. The recent acquisition of Pure Technologies by Xylem Inc is one example, where we doubled our money in this position overnight. As we write this note, we have a take-over offer for another name in our portfolio: Motorola Solutions has made an offer to buy Avigilon at $27 per share, up from $23 before the deal’s announcement. We would hate to see all of the names in our portfolio get taken out by US companies at premiums, but it could happen. Many of our names represent good value and have been neglected by the market for years.

One interesting new story that we have recently added to the portfolio is Baylin Technologies. The Toronto based company makes antennas for wireless communications, both for cellular handsets and cellular base stations. New fifth generation, or 5G, networks will require the installation of far more antennas than currently exist. Potentially, every lamp post or every flower pot (perhaps growing marijuana) along city streets will house an antenna. This “densification” of the network is required to bring wireless transmission speeds to much faster levels and Baylin is an important supplier to this market.

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