When Alaris Royalty Corp (TSX: AD) announced their 2013 results on Monday morning, I couldn't believe the market reaction to the company's fantastic results - the stock fell over 5% on record earnings! Granted, Alaris is currently in the midst of sorting out a non-material (in my estimation) tax issue with the Canada Revenue Agency ("CRA"), but I knew that Mr. Market was over-reacting by beating down the stock.
With the stock down 5%, the dividend yield (which has a history of growing strongly) at around 5%, and with my stash of 'hedge fund' cash in my TFSA ready, I bought 200 shares at the end of the day at $29.50. Then it was just a matter of waiting for investors to come to their senses and realize Alaris's stock had been unfairly beat down due to a minor dispute with CRA.
In less than 48 hours, I decided the stock had bounced back enough, and sold my 200 shares at $30.40. After subtracting the $20 in transaction fees, I netted a $160 profit (2.7% of my investment) in less than two days.
Not all trades with my 'hedge fund' money will be this easy, but I'm extremely happy to get off to a positive start with my side project for 2014.