For those who like stocks to have good stories (points finger at self), check out Clearwater Seafood, which trades on the Canadian Exchange under CLR and CSEAF domestically (though if you avoid grey markets, you'll avoid this). Full disclosure, my fund is long this stock and it is thinly traded but, it's a very well positioned company with a lot of stars aligned correctly. From our Q2 newsletter...
During the quarter we established a position in Clearwater Seafoods (CLR CN, $4.95C). The company is a vertically integrated harvester, processor and distributor of lobster, clam, scallop, and shrimp in the North Atlantic. No new licenses have been issued in their area of operation for the past 20 years. Barriers to entry are high at the same time demand is growing. Insiders own 70% of the shares and have attempted to take the company private twice while an outside entity tried to buy it and failed at a higher price. We think the company is worth between $7 and $8 in a transaction but hope they remain public and grow it organically and by acquisition. There are approximately six private companies which fish the North Atlantic for alternative species and could be appropriate acquisitions at the right price. In the meantime, China’s beef imports have jumped 10-fold in the January – April period versus last year and prices are up 33% year over year, suggesting to us that competing seafood protein exported into China has upside as well. Further, CEO Ian Smith ran Asian operations for Campbell Soup and should be able to expand margins with value-add product while cost per pound has fallen steadily for the past three years. We hope the company is allowed to grow – if not, a transaction will garner a good return. Averaging down is seldom a prescription for capital gains, but this is one we would add to at lower prices.
Keep in mind many of my picks have been horrendous performers, but I like this one, own it personally, put my mom into some shares recently and think it's got very little downside risk.
