Bargain hunter delivers the goods

Dynamic fund in top 1% of Canadian equity portfolios. For mutual fund manager David Taylor, the past 12 months have been very good indeed. His Dynamic Canadian Value Class Fund turned in a 37.8-per-cent this year, putting it in the top 1 per cent of all Canadian equity portfolios. What's more, its 29-per-cent average annual compound return for the three years ended Nov. 30, also put it into the top 1 per cent of the 663 mutual funds in the Canadian equity sector.

How does he do it? He buys stuff that other investors shun."I buy when others sell," he said. "If I can be reasonably confident that a company will revive, I will buy its stock even if it's being sold by others who are panicking. The world does not move in straight lines. That is just group think. Once other investors have played on their emotions, I am there to pick up money they have left on the table."

At the age of 43, Mr. Taylor wears success lightly. He dresses in what he calls casual, which at the Dynamic shop means black dress shoes, a striped shirt and slacks from Harry Rosen. "The better my fund does, the more casual I get. If I ever show up in a tux, it's time to redeem," he joked. His unit holders can relax, for Mr. Taylor said that he does not own one.

He figures that success confirms his method. The fund, which has a relatively small body count of 35 companies, holds 52-per-cent Canadian stocks, 36-per-cent foreign companies (27-per-cent U.S., 3-per-cent Israel, 4-per-cent Indonesia and 2-per-cent Australia) and 12-per-cent cash. He remains a bargain shopper. "We have found that in any year the losers among the 300 largest Canadian companies in any given year appreciate by 40 per cent in the next year."

Read the interview.