Aecon and Zenn – Mesburis' Manager Picks

Photo by Colin O’Connor for National Post

http://network.nationalpost.com/np/blogs/tradingdesk/archive/2008/07/29/aecon-and-zenn-mesburis-manager-picks.aspx
Posted: July 29, 2008, 4:30 PM by David Pett
Market Call, Manager picks
Manager: Paul Mesburis, Mavrix Fund Management
Style: Growth and value
Fund: Mavrix Sierra Equity
Strategy: All capitalization, bottom up focus. Integrating environmental, social and governance factors with fundamental investment analysis.
Buy recommendations:
Aecon Group Inc.
ProMetic Life Sciences Inc.
Zenn Motor Company Inc.
Sell recommendation:
Duvernay Oil Corp.
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Commentary:
"Aecon Group, Canada’s largest construction company, and is one of the few companies capable of undertaking large and complex construction projects in Canada. On July 24, 2008, the federal and Ontario governments announced infrastructure funding for Ontario that could total over $15 billion over the next seven years. We expect the company to report a 20% increase in second quarter earnings on August 7, 2008 of $0.29 per share versus $0.24 in 2007."Prometic Life Sciences is a biotech company based in Montreal that is developing a novel drug to treat patients with anemia, PBI-1402, and is in partnership discussions with major pharmaceutical companies. Pharmaceutical companies face an empty drug pipeline at a time when their financial position has never been so strong to shop for new drugs. Big pharma generated $50-billion of free cash flows last year and with patent expirations coming closer, more drug acquisitions should be expected and further support the case for biotech investing in 2008. The market for all anemia treatment drugs is valued at US$8-billion and is forecast to increase to $15-billion by 2015. As well, the company’s drug portfolio has multiple product partnership opportunities that are likely to be crystallized in the short-term. "Zenn Motors is targeting the launch of cityZENN, an all-electric (zero emission), highway capable vehicle powered by EEStor in the fall of 2009. EEStor’s energy device, the EESU, possesses characteristics that are transformational for the auto industry and the environment – the cityZENN is planned to be a fully certified, highway capable vehicle with a top speed of 125 km/h and a range of 400 km. The car will be rechargeable in 5 minutes if it is charged with another EEStor device and feature an operating cost that is 90% less than a conventional car. Zenn Motors is awaiting third party accreditation from EEStor in the fall of 2008, which is the most critical element that the entire battery industry is focused. Zenn Motors has exclusive global rights to EEStor’s EESU for all vehicles under 1,400 kg (excluding battery weight) and has a 3.8% equity ownership interest in EEStor."We recently sold Duvernay Oil Corporation after it accepted a takeover offer of $5.9 billion from Royal Dutch Shell PLC. We believe that Shell’s offer fully values Duvernay and do not expect a competing bid."
Selected holdings:
Teck Cominco Ltd.
Mosaic Corp.
Alter NRG Corp.
Terra Industries Inc.
Barrick Gold Corp.
One-year return: -1.7%
Three-year return: 11.6%
(Through June 30, 2008)
Morningstar rating: Four star
All data provided by Morningstar unless otherwise noted
*Data provided by company
David Pett

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