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Alpha Pro Tech: An Antifragile Stock That Gains From Disorder

Jan. 22, 2020 11:41 AM ETAlpha Pro Tech, Ltd. (APT)CAH, JNJ, KMB, LAKE, MMM12 Comments
Philip MacKellar profile picture
Philip MacKellar


  • Alpha Pro Tech has been a Contra the Heard holding since 2012.
  • The stock met many of our regular investment criteria but also appeared to gain during health emergencies and outbreaks making it antifragile.
  • What does antifragile mean?
  • In 2014, most of the position was sold in October during the West African Ebola epidemic.
  • Today the Coronavirus (nCoV) is driving APT higher and the trading activity reminds us of 2014.

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Introduction & Thesis:

Alpha Pro Tech (NYSE:APT) has been a holding here at Contra the Heard Investment Newsletter since 2012. It was purchased at $1.17 and met many of the criteria we look for in an investment. At the time (and indeed today) the balance sheet had no debt, and cash on hand was high. Dilution wasn’t an issue, valuations were low, and insiders owned roughly 18%. Profitability and sales were also on the mend after being battered during the Great Recession. One of the company’s primary business lines is Building Products, like housewraps, roof underlayments, and other weather barriers. The housing crunch hurt this unit in 2008 and onwards, but by 2012 it was returning to form.

Source: corporate website.

Alpha Pro Tech is also in the Protective Apparel and Infection Control industries. These two business units were of particular interest to us, and really sweetened the idea of owning shares. This is because these segments tend to sell more during public health emergencies and outbreaks, which makes Alpha Pro Tech antifragile.

What is antifragile?

Although the idea is old (think Hydra old), the term antifragile can be linked to a 2012 book of the same name written by Nassim Nicholas Taleb. It is part of his five volume (so far) intellectual series called Incerto: Fooled by Randomness; The Black Swan; The Bed of Procrustes; Antifragile; and Skin in the Game.

Source: Wikipedia for every head chopped off, the Hydra would regrow two.

Taleb describes antifragile objects or ideas as “things that gain from disorder.” For something to be antifragile, it needs to strengthen as the situation gets worse. This is counterintuitive. It’s easy to

This article was written by

Philip MacKellar profile picture
Philip MacKellar is an analyst, portfolio manager, and investor at Contra the Heard Investment Newsletter. He has been with the company since 2011 and has been investing since 2004. The newsletter’s primary focus is on contrarian and value-oriented investment opportunities traded in the United States and Canada. In addition, Philip sometimes engages in M&A, other special situations, and holds bonds, preferred shares, and convertible securities. Contra the Heard is a Toronto based company and was founded in 1995. Philip also blogs about personal finance topics on his own website called mymoneymoves.ca in his free time. You can also follow Philip at the Globe & Mail, on Twitter @Rallekcam, and catch him on YouTube at Contra the Heard.

Analyst’s Disclosure: I am/we are long APT. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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