Contra the Heard's Contrarianism Takes a Drubbing

The third-quarter edition of the Contra the Heard investment newsletter came out recently and the editors, The Contra Guys, report no activity once again. Their lack of buying and selling, they say, is reminiscent of their trading “slowdown” around the millennium, when the tech bubble and high stock markets nudged them into cash preservation mode.

As for their existing holdings, they seem to be taking a bit of a drubbing. Four stocks on which they averaged down are bucking their normally positive experience with this contrarian technique. The four are: AbitibiBowater (A), Kelman Technologies (KTI), Cygnal Technologies (CYN), and Analysts International (ANLY),

Kelman Technologies and Analysts International are still listed as buys by the advisory. AbitibiBowater and Cygnal were moved from buys to holds. They have soured a bit on Cygnal; in fact, they say they wished they had sold Cygnal when the last financing deal was arranged with last-resort lender, Laurus.

Have the Contra Guys lost their touch? Time will tell. But if the past is any guide, a lackluster year will usually be followed by a “boffo” year. The out-of-favor, small-cap companies in their portfolio are quite volatile and can shoot up (or down) darned fast.