Clearwater Seafoods Inc. (CLR.TO)

Clearwater (CLR-T) or High Liner (HLF-T)? She owns High Liner, so it is her preference. Growing by acquisition.

Largest owner of shellfish quotas in North America, with monopolies on a lot of their quotas, at least in Canada. We are becoming increasingly conscious of proteins and benefits from sea foods. Conversely, supply is limited to declining, so it is great from a fundamental perspective. There is also a scarcity factor of consumer names within Canada, so it should probably trade at a higher valuation than it does. He likes that it has started to become an institutional stock and has picked up in coverage since he has been an owner. Has some very favourable tailwinds coming in because of higher shellfish prices. Also, they do a lot of sales into the US, so will be the beneficiary of the stronger US$.

Chart shows a nice little base with an upward trend. There is a little bit of resistance in the $14 range. His analysis shows that there were quite a few sellers at that point.

This is the time when food is the right thing in this dismal market. It is an amazing company in that it is in the niche of shellfish and pretty well commands the east coast of North America. Good management.

The number 1 player in North America in terms of quotas for shellfish. Also, not a well covered name with only 2 analysts covering it right now. There is a growing trend towards shellfish, both in North America and globally. Making significant inroads in Asia. Also, there is the scarcity value. In some of the species they are in, they “actually have 100%” in Canada. The fishing industry is generally a “mom and pop” industry, in this company it is now of a sufficient size that they can afford to make some of the investments in large boats that dramatically improve their efficiency. Trading at about 9.5 X EBITDA. Dividend yield of 1.08%.

Stock has been kind of wobbly in the last 3-4 days, but he has not been given any insight as to why. This is a great consumer product company, so if people are worried about the economy, this should do well. One frustration for him is that the accounting is really obtuse and complex. He wouldn’t read too much into the selloff in the last couple of days.

They have the licenses to harvest lobsters, crabs and clams on the East Coast. Have an edge, because countries globally are beginning to clamp down on the amount of seafood that is being harvested and are beginning to bring in licensing. There is likely to be a supply constraint in this area. Stock has been doing very, very well.

A very interesting consumer staple name in Canada which has good upside. Pricing has been very firm on shellfish. This company has a very defined growth strategy, looking for new quotas or companies they can buy to get more supply, to be able to sell more. In the meantime, you are getting a company that generates a reasonable amount of cash. They pay a little dividend, and it is not a bad business to be in. Defensive in that they sell globally. Demand for seafood is picking up. He would wait for a bit of a pullback.

Has liked this story for a while. The supply/demand dynamic is great. Raised a bunch of money at $8.50 and got hammered because of that. They didn’t do anything with the money. It is very clear that they are looking around to buy more quotas globally.

Decided to pass on this one. Have a huge amount of Cap-X. Well managed company. Buy when it gets really, really cheap.

Clearwater or High Liner (HLF-T)? Sold this earlier in the year. When he looks at the returns to the common shareholder, the returns on High Liner are better. Both of them are Buys, but he prefers High Liner.

Chart shows a bit of a topping consolidation that looks like it might have been broken. Broke the neck line at around $8 and is trying to consolidate again. He doesn’t like stocks that have fundamentally broken their topping pattern. There are better looking charts out there.

Likes this company. A high quality company that is in a niche seafood business that has good growth. Have done a lot of things right. Recent drop in share price is a buying opportunity.

(Market Call Minute.) Great company. Stock has run up a lot and he finds it very expensive at these levels. They need a lot of money to keep refurbishing their ships. He would buy this a couple of dollars lower.

(Top Pick Jan 3/13, Up 93.38%) It will go on. The two east coast sea food companies seem to be doing well with acquisitions. They are global in their awareness. Strong far east marketing.