Financial Post - FP Innovators - Chad Wasilenkoff, Fortress Paper Ltd.

This video originally appeared in Financial Post - http://innovators.financialpost.com/2011/11/14/contrarian-investing/ © 2011 National Post, a division of Postmedia Network Inc.

Chad Wasilenkoff is no ordinary investor. When others are investing in popular stocks and commodities, the chief executive of Vancouver-based Fortress Paper Ltd. is investing in businesses that would -- and do -- make bankers run in the opposite direction. Most recently, he invested in a paper mill in Thurso, Que., stumping up money after banks refused to back him. He is banking on that mill to transform his business and prove the naysayers wrong. The key to his process is dissolving pulp, using a new method of production that enables mills to produce higher-margin materials that form the basis for viscose fabric products -- in particular, rayon, which he sees as a burgeoning market. The following is an edited transcript of his interview with Danny Bradbury.

Q: How did you start out?

A: It all dates back to when I was a young child, buying and selling things in the paper, always looking for a deal. Negotiating, and not wanting to overpay. I was looking for deep discount investments.

After school, I went to university and got involved in the stock market, selling a few shares. I got caught up in the technology and the dot-com boom. I found some very good valuations, but they were compared with overvalued companies. I realized that wasn't the way I wanted to go, and became more of a contrarian investor.

Q: What does contrarian investing mean?

A: I look at the media for areas that are going through tough times. Very challenged, and very depressed, with no blue sky whatsoever, and where people aren't looking for investment opportunities. That's how I started building several of my previous companies, investing in gold mines when gold was $2.75 an ounce. I bought and sold oil and gas properties, copper deposits, and uranium, which we got when it was $8 a pound. That's what led me to the forestry sector.

Forestry is heavily depressed in North America and Europe, with lots of layoffs. Mills are being dismantled. These are mills that in the past couple of decades took hundreds of millions of dollars in retrofitting just to try to remain globally competitive.

My view is that you just have to find the right product mix. That's what we do, looking at it from outside the box, and coming at it from entry points that are so attractive we can still afford to put some growth capital in. Even if we can only use 80% to 90% of the equipment, it still becomes very beneficial.

Read the rest of the story here :
http://innovators.financialpost.com/2011/11/14/contrarian-investing/

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