As ETFs grow, smaller companies ignored

As ETFs grow, smaller companies ignored

DAVID BERMAN

Friday, December 15, 2017

Exchange-traded funds are attracting a lot of money, but is their rising popularity among investors leaving some areas of the Canadian stock market unexplored and rife with buying opportunities?

Stephen Takacsy believes it is.

The chief executive and chief investment officer at Montreal-based Lester Asset Management has been discovering a lot of cheap stocks and takeover candidates in Canada's small- and mid-cap spaces and he figures that ETFs just might have something to do with it.

"Despite a very expensive market, we have been seeing better and better opportunities in the past year," he said.

Why? A lot of the money flowing into ETFs is coming out of actively managed mutual funds. And since ETFs tend to focus on popular or well travelled areas of the stock market, there may be less money looking for a home in some of the market's nooks and crannies.

It's an interesting theory. According to ETF Insight, assets under management among Canadian ETFs totalled nearly $131-billion at the end of June, up 27 per cent over last year. The increase was driven by estimated net inflows of $15.5-billion in the first six months of this year.

The popularity of ETFs is easy to explain. They trade on stock exchanges throughout the day, making them easy to buy and sell. They're cheap, with management-expense ratios a fraction of what most actively managed mutual funds cost. And they are completely transparent and passive, since they tend to track indexes or follow well-defined investment methodologies.

There are now hundreds of ETFs to choose from, but the most popular equity funds tend to provide diversified exposure to major Canadian indexes, such as the S&P/TSX 60 index, and important sectors such as financials and energy.

But their popularity does make you wonder about how many stocks are being ignored by inflexible ETF mandates.

"It's creating great opportunities for small, active managers like us," Mr.Takacsy said. "We're not the only ones, but there aren't a lot of us out there any more."

Active fund managers aren't the only ones seeing untapped potential here.
Cheap stocks are also being picked off by acquirers.

Among the stocks in the Lester Canadian Equity Fund - historically, about twothirds of its holdings are small- and midcap stocks - two companies have been acquired in the past week, bringing the total to five companies in 2017, on top of seven companies in the fund that were acquired in 2016.

On Dec. 11, Pure Technologies Ltd., which develops technology to monitor critical infrastructure, announced that it had agreed to be acquired by Xylem Inc.
for $9 a share. The deal gives existing Pure Technologies shareholders a 103 per cent premium over the stock's closing price on the previous trading day.

On Dec. 4, NAPEC Inc., which builds electrical transmission systems, announced that global investment manager Oaktree Capital Management Inc.
will acquire the company fors $1.95 a share. That's a premium of more than 35 per cent over the previous day's closing price.
Neither NAPEC nor Pure Technologies are included in the S&P/TSX 60 or the broader S&P/TSX composite index, which means that Canada's biggest ETFs wouldn't have noticed these companies.

Some ETFs track small-cap indexes, but they're not particularly large compared with more mainstream funds. For example, the iShares S&P/TSX Small Cap Index ETF has assets of s$136-million - compared with more than $11-billion in the iShares S&P/TSX 60 Index ETF.

Active fund managers such as Mr. Takacsy also believe that the lesser known areas of the stock market - which can receive little attention from the media and financial analysts - are less efficient and therefore can benefit from the expertise of good stock pickers.
His track record suggests he may be onto something. To the end of November, the Lester fund has outperformed the S&P/TSX composite index over one-, three- and five-year periods. Results will no doubt get a boost in December from the gains in Pure Technologies and NAPEC.

As for what to expect next, Mr. Takacsy said he believes that Andrew Peller Ltd., Plaza Retail REIT and Ten Peaks Coffee Company Inc. are good opportunities that fit with his theme: Small companies that don't usually get much attention.
Perhaps more importantly, these stocks also aren't members of the S&P/TSX composite index, so the biggest ETFs are oblivious to them.

© The Globe and Mail

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Investment is a Process in Time

Investment is a Process in Time

and time can do so much…

Hy Zaret


I borrowed the title of this post from Hyman Minsky…and in that vein I will quote a few author/investors who were aware a long time ago that...that proper investment is a process in time.

Stocks, also called equities, are shares in a company’s assets and profits. Chosen well, they can provide both growth and income. Over long periods time periods, stocks have been extremely rewarding, generating on average about 9 or 10 percent yearly returns. After adjusting for price inflation but not taxes, the return has been between 6 and 7 percent, depending on the starting and ending points. At that rate, money doubles every 10 to 12 years…The risk of owning stocks declines with time. For example, over intervals of 10 years, investors on relatively few occasions have experienced net losses and these have been small. Over much shorter periods, however the losses can be huge…At the 10-year mark, Treasury bills and bonds have more downside risk than stocks and less upside potential after adjusting for inflation. 

J Anthony Boeckh


The difference between true investment risk and apparent riskiness or market risk is a function of time. yes, stocks can be very risky if time is short...but when time is long enough, the apparent riskiness of stocks evaporates and the favourable long-term returns become increasingly evident. For investors, the risk in investing can be divided by time into short-term and long-term risk.

The real risk in the short term is that the investor will need to sell – to raise cash – when the market happens to be low. That’s why, in the long term, the risks are clearly lowest for stocks, but in the short term, the risks are just as clearly highest for stocks...

To the extent you know your investments will be held for the very long term, you have automatically self-insured against the uncertainty of short-term market price fluctuations, because as long as you stay invested, the price fluctuations of Mr. Market just won’t matter to you. The investor’s best answer to short-term market riskiness is to ignore the interim fluctuations and be a long-term investor.

Charles D. Ellis


Stocks are traded daily, but they are long-term assets. Over the short term, stock market prices are random. Over the long term, they are ruthlessly efficient. If you want to invest for the long term, you should never purchase a stock unless you intend to hold it forever.

Dividends are a prime source of return for long-term investors…The power of long-term dividend growth can be significant.

Compound interest tables show the fallacy of using volatility as a measure of risk. Superior results produced by an additional 1 or 3 percent return per year over the market averages can be obscured by volatility over shorter time periods…But when viewed over long periods of time, superior incremental returns produce stunning differences in performance.

Frederick K. Martin

Diversification

Diversification

Intuitively most people can see the advantage of holding a diversified group of stocks as opposed to holding just one or two. Because randomness plays just a huge role in investing, most investors realize the need to spread their risk in order to avoid bad luck or bad judgement on their part. The problem is the financial industry has taken the concept of diversification and used it as an intimidating weapon to club their customers into submission for their own benefit.

Even if you took the precaution of buying and owning all the stocks in all the indexes (9,000?), you would still be at risk for the up and down movement of the entire market. This risk, known as market risk, would not have been eliminated by your “perfect” diversification

While simply buying more stocks can’t help you avoid market risk, it can help you avoid another kind of risk …“non-market risk”. Nonmarket risk is the portion of a stock’s risk that is not related to the stock market’s overall movements. This type of risk can arise when a company’s factory burns down or when a new product doesn’t sell as well as expected. By not placing all your eggs in one basket, you can diversify away that portion of your risk that comes from the misfortunes of any individual company.

Statistics say that owning just two stocks eliminates 46 percent of the nonmarket risk of owning just one stock. This type of risk is further reduced by 72 percent with a four stock portfolio, by 81 percent with eight stocks, 93 percent with 16 stocks, 96 percent with 32 stocks, and 99 percent with 500 stocks.

Points to remember concerning diversification

-          After purchasing six or eight stocks in different industries, the benefit of adding even more stocks to your portfolio in an effort to decrease risk is small.

-          Overall market risk will not be eliminated merely by adding more stocks to your portfolio.

To properly diversify one should put his money in other asset classes like your home, gold if you like, bonds, life insurance policies and my personal favourite…hard cold cash…The cash I hold in my bank account allows me to ride out the volatility of my stock holdings in my RRSP. 

Resources

You Can be a Stock Market Genius

Joel Greenblatt

Investing Ideas from the Neighborhood

Investing Ideas from the Neighborhood

We're looking for the prospect of an accelerating rate of positive change. That means we're naturally drawn to management changes, turnarounds, or, more generally, to situations in which changes in the macroeconomic, competitive or regulatory landscape require a company to remake what it does or how it does it. Sometimes it's even more straightforward, where we see unrecognized assets that can generate significant value, or when a company blew something like an acquisition or a product rollout and we believe the fix will happen more quickly and with less pain than the market expects.

That strategy is particularly tailored to small caps. Simpler business models are easier to analyze and cross-check, while at the same time change happens faster in small companies, making for more investable inflection points. One or two people can also make a big difference, quickly.

Mariko Gordon, Daruma Capital Management

(Comments made by Stephen Takacsy (Lester Asset Management) on BNN's Market Call, over the past few months…)

Rogers Sugar…RSI

Former income trust which owns two sugar refineries in Canada (Rogers in the west and Lantic in the east). Rogers runs a duopoly with Redpath Sugar, and generates strong recurring free cash flow, most of which is paid out in the form of dividends (5.7 per cent yield). Although Rogers has increased its volumes and revenues over the past few years, refined sugar is a low-growth industry, and the stock was considered a “sugar bond." The new CEO has recently initiated an aggressive growth strategy by diversifying into higher growth ingredient businesses, and recently completed the acquisition of Maple Treat for $160M. Maple Treat is the largest exporter of maple syrup-based products in the world with 20 per cent market share. We expect Rogers’ new focus on growth to lead to a re-rating of the stock and a high valuation. Market cap is around $650M.

Logistic…LGT.B

Leading Montreal-based marine cargo handler and environmental services company. Owns marine terminals in over 30 ports in Eastern Canada and the U.S. Environmental division provides site remediation and trenchless water pipe repairs (AquaPipe). Logistec is an infrastructure play on two fronts: port facilities, which are currently commanding huge valuations by pension funds, and the repair of aging North American drinking water systems, which will benefit from increased government stimulus spending. Recently acquired their main water pipe contractor in Ontario to lead the North American expansion of AquaPipe. Site remediation and Aquapipe backlog are at record levels, while container volumes at its recently expanded Montreal terminal have picked up significantly. We expect earnings to be up this year and even stronger next year, so the pullback from the stock’s high of $48 represents an excellent buying opportunity. Increases dividend yearly and regularly buys back stock. Strong management. No analyst coverage.

BAYLIN TECHNOLOGIES (BYL.TO)
Market cap: $110 million. NEW HOLDING

We recently acquired five per cent of the company, a world leader in wireless antenna design for mobile, network and infrastructure applications. Huge growth opportunity for the next 25 years with increasing wi-fi coverage (DAS), wireless LTE network densification with small cell systems, and new antennae/components needed for 5G-connected devices.
Baylin’s new CEO reduced costs by moving R&D to Ottawa, expanded product lines from the mobile segment (where Samsung is largest customer) and the company is now profitable. It also just announced the acquisition of Montreal-based Advantech, which has complementary RF and microwave products for satellite and wireless base stations. We expect significant sales and cost synergies, with revenues reaching more than $120 million and an EBITDA of $23 million plus. Our Target price is $6 within 12 to 18 months based on 9-times 2019 EBITDA.

PLAZA CORP (PLZ_u.TO)
Market cap: $450 million. CORE HOLDING
Plaza Corp is a strong internalized developer of retail properties with holdings in Quebec, Ontario and the Maritimes. It has tenants resistant to e-commerce, like Shoppers Drug Mart (25 per cent of gross leasable area), KFC, Dollarama, Sobeys and Canadian Tire.
It has a strong pipeline of 25 projects, including acquiring old Sears sites for redevelopment. Plaza Corp is the only REIT to consistently increase AFFO/share and increase dividend every year for 15 years. Retail real estate is out of favor, so it’s a good time to buy this undervalued stock. Insiders own 21 per cent and are buying shares (Michael Zakuta). We recently bought more at $3.30. Nice safe dividend yield of 6.5 per cent.

GUARDIAN CAPITAL (GCGa.TO)

Market cap: $800 million. CORE HOLDING 

Guardian Capital is a Canadian asset management firm with $26 billion in assets under management (AUM) and $17 billion in assets under administration. It specializes in institution portfolio management and financial advisory services, such as selling life insurance policies and mutual funds.
Guardian has been expanding internationally by acquiring asset managers to broaden its investment products offering. It recently purchased Alta Capital in the U.S. with US$3.2 billion in AUM. Roughly half of Guardian’s market cap is comprised of BMO shares, so it’s also an indirect way to own the bank. Using a sum of the parts analysis, we get $18+ for the Net Asset Value of the securities portfolio plus at least $14 for the investment management business for a value of at least $32+. We believe the company is worth much more on a takeout.

DIAMOND ESTATES WINES (DWS.V)
CORE HOLDING
Diamond is the only publicly traded wine company in Canada besides Andrew Peller and the third-largest VQA producer in Ontario. Sales growth has accelerated thanks to new legislation allowing wine to be sold in grocery stores in that province. Diamond now has the largest supermarket wine shelf space at over 12 per cent market share. Currently, 70 grocery stores sell wine and this will quadruple to 300 over the next few years.
Diamond’s export sales to China are booming. It also owns an agency that imports wines, beer and spirits. We expect Diamond to make acquisitions and consolidate the fragmented wine market. The Beutel family owns 21 per cent and we own just under 10 per cent, having bought our last block at $0.28. Enterprise value is around $60 million or 1.7 times trailing-twelve-month sales, cheap for a fast-growing beverage company. As sales and profits grow and multiple expands, the stock should double over next two years.

BAYLIN TECHNOLOGIES (BYL.TO)
NEW HOLDING
We acquired 5 per cent of the company last December. Baylin is a world leader in wireless antenna design for mobile, network and infrastructure applications. They have a huge long-term growth opportunity, with increasing wi-fi coverage (DAS), wireless LTE network densification (small cell systems) and new antennae and components needed for 5G and connected devices (micro cells).
Baylin’s new CEO has really turned around the company by reducing costs and expanding product lines to lessen reliance on the mobile segment (where Samsung is largest customer). The company just announced a large acquisition of Montreal-based Advantech, which has complementary RF and microwave products for satellite and wireless base stations. We expect a significant sales increase and cost synergies, with revenues reaching more than $120 million and EBITDA of $23 million plus. Our target price is $6 within 12 to 18 months based on 9 times 2019 EBITDA.

SIENNA SENIOR LIVING (SIA)
NEW HOLDING
Sienna Senior Living owns over 100 long term care facilities and retirement homes in Ontario and B.C. It’s the second-largest publicly traded retirement residence owner after Chartwell. The stock has great defensive characteristics in this volatile market. The dividend yield is 5 per cent.
Rising interest rates should not impact this stock as rental leases are short-term in nature and can be adjusted for inflation. It should be steadily increasing its net operating income and adjusted funds from operations (AFFO) per share, and growing dividends over the long run. Sienna was recently added to TSX Composite Index.

GRANDE WEST TRANSPORTATION (BUS.V) – New position in 2018
B.C.-based developer of North America’s only single-frame heavy-duty medium-sized transit buses (30 to 35 feet) sold to public (municipalities) and private (airports) markets. The “Vicinity” bus was designed from scratch with BC Transit Authority and is cheaper, lighter, more fuel efficient and sturdier than competing buses, which are made by modifying larger ones. (New Flyer CEO raves about the Vicinity bus). Business model is “capital light” with manufacturing in China and final assembly in Vancouver and Atlanta. Stock came down due to some deliveries being delayed by one quarter, providing a great entry point. We visited the company in May and were very impressed. Backlog is strong at 240+ buses with potential to grow as municipalities “right-size” their fleets by replacing larger buses with medium-sized ones. Several catalysts should drive share price higher in next few months such as large orders from Atlanta Transit Authority and other U.S. customers. Market cap is around $100 million, and we expect the stock to double as order flow grows. Recently purchased more around $1.35.

ALTUS GROUP (AIF.TO) – Core holding since mid-2016
Global provider of software for commercial real estate management and consulting services for property taxes and appraisals, used by banks, pension funds, insurance companies and real estate owners. Altus is transitioning from a consulting services company to a technology company as it migrates clients to its analytics software and integrates more of its services onto its platform in order to cross-sell these. Strong organic growth from acquisitions. We expect multiple to expand as recurring licence revenue from their software platform grows. The stock has pulled back as Altus is investing heavily in growth. Market cap is $1.2 billion. Altus pays a two-per-cent dividend. We recently added to our position at under $30.

SOLIUM (SUM.TO) – Core holding since early 2017
Global provider of software services for the administration of employee stock option and share purchase plans for private and publicly-traded companies. In 2017, Solium signed “white-label” agreements with Morgan Stanley and UBS and has been migrating their customers to its own platform. Solium has also been acquiring companies that offer complementary services such as employee-compensation data and business- valuation analytics. While expenses have risen, sales are growing quickly, comprised of one-time set-up fees, recurring revenue and transaction charges. Market cap is $650 million. We recently bought a block at $10.

Past Picks

K-BRO LINEN (KBL.TO) – Core position since March 2017
Canadian leader in laundry and linen services to the growing health-care and hospitality industries. High barriers to entry and limited competition. K-Bro has 30 per cent market share in Canada with long-term contracts at high renewal rates. It is the lowest cost producer and is nearly finished a major capex program to build new plants in Ontario and B.C., which will increase capacity and lower costs and allow K-Bro to widen its lead over the competition. Recently acquired Fishers Topco in Scotland. Stock has come down due to transition costs of new plants and minimum-wage increases, which the company can pass on to most customers within a year. We expect improving margins as costs are absorbed and K-Bro wins more business. It is now a great buy at 9x 2009 EBITDA. Pays a 3.3 per cent dividend. We recently added to our position at $35.

EQUITABLE GROUP (EQB.TO) – Core holding since early 2015
Now Canada’s largest alternative-mortgage lender having gained significant market share from Home Capital.  Announced record profits in 2017 and increased dividend four times since we recommended it last year. Very strong management team and board. Despite what the U.S. short sellers portend, non-performing loans are at record lows. New B-20 mortgage rules stress tests may slow originations, but Equitable is still expecting to grow and generating strong EPS and high ROE (15 per cent+). Stock is trading at 0.8x book value ($67 and growing to $74+) and only 6.5 x 2018 EPS. We recently added to our position in the low $52s.

TEN PEAKS COFFEE (TPK.TO) – Core holding since mid-2015
Based in Burnaby, B.C., the company is the world’s only third-party producer of decaffeinated coffee using a 100-per-cent chemical-free Swiss Water process. Also provides coffee storage and handling/logistics services. Customers are large chains like Tim Horton and McDonald’s, specialty roasters/coffee chains and global importers. Decaf is growing faster than coffee, and methyl chloride used to decaffeinate most coffee is being increasingly shunned worldwide. Competition is shrinking as two older chemical-free CO2 plants have recently closed in the U.S. and Europe. TPK is forecasting double-digit volume growth in 2018, and is opening a European office to meet additional demand there. It is currently building a new plant to increase capacity by 50 per cent, which will be ready in 2019. Stock is very cheap at 14x trailing P/E and 0.6x sales for a consumer-product company with high barriers to entry, strong free cash flow generation and global growth potential. Also pays a 4.1-per-cent dividend. We recently added to our position in the low $6s, and now own eight per cent of the company.

In Closing...

Investing in the stock market should not only be profitable, it should be fun and stimulating as well. When investing in the small-cap realm (the neighborhood), the individual investor is partnering up with innovative, entrepreneurial business types. I would rather invest with them than the big protected institutional banks where creativity is stifled and the bureaucratic status quo is maintained.  

This list of stocks is not meant to be recommendations for investment (some of the comments made are from last year), but rather an example of how one small cap fund manager approaches his craft and lays out his investment thesis. Notice the recurring theme of 'change' operating under the hood of these small capitalization stocks. Money is made in the dark, not the light.


Resources

https://www.bnnbloomberg.ca/

https://www.lesterasset.com/Home

Hidden Inflection Points and Small Cap Stocks

Hidden Inflection Points and Small Cap Stocks

Hundreds of public companies are likely to find themselves in an exciting place at any given time: They are experiencing a major positive inflection point in their businesses. While the past may have been one of stagnation or operating losses, the future for these companies looks bright. Whatever the scenario, a positive inflection point produces a hockey-stick improvement in operating performance, creating a potentially rewarding situation for investors.

Unfortunately, the market is pretty good at anticipating inflection points, and valuations reflect this fact. Disciplined investors resist the impulse to invest when everyone else anticipates an inflection point. The challenge is to uncover situations that remain underappreciated or misunderstood. Naturally, these kinds of situations are most often found in the arena of small public companies.

The rewards are substantial, but how do we find such opportunities? We may be able to uncover hidden inflection points by scouring the small cap landscape for companies with two or more businesses, one of which is typically a large, declining legacy business. If the other business is a profitable growth business, we may have found a gold mine. The reason is that, at a company level, operating performance appears lacklustre. As most investors find small underfollowed companies via quantitative stock screens, a company that at the corporate level shows stagnant revenue growth and poor earnings will fail the test, often resulting in a low market value (actually I did this last year with some of my small cap stock ideas). But by reading the earning releases and regulatory filings of small companies, we put ourselves in a position to find stocks that look like duds but actually hide a valuable growth engine. If we are lucky, the market will price the entire company less than our estimate of the value of the most promising business segment alone.

And of course, dissecting companies with multiple business segments isn't the only way to uncover hidden inflection points. Occasionally, simply reading the public filings of a small-cap company can yield surprising insights.

Resources

The Manual of Ideas, The Proven Framework for Finding the Best Value investments

John Mihaljevic

Be a cockroach in the Small-Cap (Mid-Cap) World

Be a cockroach in the Small-Cap (Mid-Cap) World

The problem with investing is often too much to choose from. Eliminate the huge dinosaurs where all the institutional money goes and be a cockroach investor who seeks out the market inefficiencies in the small cap world. To eliminate some of the risk in this part of the investing market, insist on buying theses companies on the cheap but don't buy into value traps or companies with dying assets.

To avoid value traps I like to see revenue growth over the last few years and a strong balance sheet to help assure me that the company will be able to navigate periods where credit may be hard to obtain. I also like to see some free cash flow (I use the cash return metric to track this) and finally a strong motivated management team that holds a significant stock ownership in the company. A proven track record of capital allocation is also preferred...In addition, I also check out the price to sales ratio of the likely candidates, if it is below say 1.5 times, it is a confirming indicator of value (margin of safety) and thus makes the qualifying stocks all the more valuable.

Once you have found a small cap with that satisfies the above criteria, the key phrase to focus on is…an accelerating rate of positive change…that might be a management change (which would have a more of an impact on a smaller cap stock), it might be a strategic acquisition that might harm earnings in the near term (hurting the stock price) but might also be accretive to cash flows and earnings in the longer term. (that would also indicate that the present management team isn’t afraid to build the business for the future benefit of the shareholders…a good thing)…it might be an investment in the business itself  (growth capex, research and development, marketing etc…) 

When one or more of the changes above occurs within the framework of a small or mid-cap company it can accentuate the profit potential of the investment. Couple this with the fact that smaller firms are easier to understand and have fewer product lines to cloud your analysis and suddenly small cap investing starts making a lot more sense...This is comforting stuff to a cockroach.

Game Theory as it applies to Investing in the Stock Market

Game Theory as it applies to Investing in the Stock Market


“To be nobody-but-yourself — in a world which is doing its best, night and day, to make you everybody else — means to fight the hardest battle which any human being can fight.”
- e.e. cummings

Investing is not a game. But in some respects, it is a game. There is a goal, there are rules, and there is a way to tell whether or not you succeed. And, as we shall see, there are strategies for success that come right out of Parker Brothers.

Here is the game:

1) The name of the game is investing in the stock market.

2) The object of the game is to make as much money as you can without suffering material adverse effects on your standard of living.

3) Players start with limited amounts of capital, making decisions to buy and sell stocks.

4) Players who lose their money are eliminated from the game.

Here are the considerations that will form the basis of our strategy:

1) In playing the game, we will employ our experience and ability to reason. If we utilize them well, we expect to have an edge, that is, an advantage in playing the game.

We recognize that the markets are efficient at many things and therefore, it is difficult to obtain an edge and all the more so if we are going to act like everybody else. Therefore to have an edge we must strive to think and act differently from the rest of the market.

2) The nature of the game is such that our edge notwithstanding, the outcome of any particular purchase is highly uncertain.

The markets are a social process and, therefore we are dealing with a largely imponderable phenomenon. We also recognize that the world is full of surprises and that anything can happen to us at any time. Any number of random occurrences may intervene to disrupt the outcome within the time horizon we operate in. We can lose because we were wrong. We can lose because we were unlucky. However, the uncertainty that creates aversion is the same that creates opportunity.

3) There is a direct relationship between the risk we take and the amount of reward we receive when events go in our favour. There is also a direct relationship between the risk we take and the likelihood that we will be eliminated.

We can manipulate our risk by adjusting the amount of capital we place at risk on a particular investment or series of investments and by adjusting our strategies (choosing among those that have a higher probability of success but provide a smaller reward and those which have a more remote likelihood of developing in our favour but that reward us most handsomely when they do.

Prime Directive: Never do anything that is attended by the risk of elimination (don’t let them kick you out of the game!).

Resources

The Speculator's Edge
Albert Peter Pacelli