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Tax-Loss Season Buys

Originally published in TDV December 2018 issue

'Tis the time of the year when investors engage in portfolio pruning - taking tax losses on their losing positions, in order to offset the gains in the rest of their portfolio. This time often presents bargains since prices diverge from value for non-fundamental reasons (Thank you, IRS & CRA for creating yet another distortion in the market). I have been observing the price action on the following stocks and believe they are oversold, and due for a rebound once the selling pressure abates. To lock in a tax loss, investors need to get done with their sale in the next two days - i.e. 26th and 27th. This is the window for buying the bargains. For the tax loss to count, the stock cannot be purchased again in the subsequent 30 day period ("wash sale rule"). Our tax loss buy list stocks are a short-term trade, expected to be closed anytime within the next 30-60 days based on the strength of the rebound.

Ensco plc (ESV:NYSE) and Tidewater (TDW:NYSE) - these companies have followed the price of oil downwards. Ensco is an offshore drilling contractor and Tidewater provides offshore support vessels (OSV) for the oil industry.

Fission Uranium (FCU.TSX, FCUUF:OTC) - Athabasca Basin uranium explorer with a PFS due early 2019.

Aurion Resources (AU.TSXV) - explorer with interesting drill results from its gold property in Finland.

Continental Gold (CNL.TSX) - the company is building a gold mine in Colombia, expected to reach first pour by H1 2020. Newmont took a 19.9% stake in this company at a price of C$4/share. We can buy in at almost half that price.

Note:The Canadian exchanges are closed for Boxing Day; 27th is the only tax-loss selling day left.

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