Do you like gambling?

I occasionally sift through the dregs of the Canadian exchanges for treasures. Most of the time I turn up jack squat.

Someone who knows about turning up jack squat.

Today I stumbled upon Senvest Capital (TSX:SEC), which is among the oddest public issues I've ever seen. It's a holding company. From their Q3 2018 filing:

"Some of the largest holdings as at September 30, 2018 were, Paramount Resources (POU), Tower Semiconductors (TSEM), Mellanox Technologies (MLNX), Radware (RDWR), and TrueCar (TRUE)."

That's a great start. A lil energy, mostly tech. But that's as specific as the disclosures get. Yep, if you invest in Senvest you're basically tossing your money in a black box and hoping for a good quarter. This is at once ridiculous and sort of interesting. I appreciate a good troll job and tip my cap to this one.

SEC doesn't attempt to track any indexes but most of its investments are in the U.S., so the S&P 500 might be a reasonable-ish yardstick. SEC is about 30 percent below the index this year.

You could gamble on worse things. A sheet of scratch tickets or three hours at a blackjack table.

I'm surprised that SEC's lack of disclosure is even legal. The more you know, I guess.

Watching: STEP Energy Services

This stock is getting absolutely throttled today for no good reason. If they hadn't added a quarter-billion in debt last quarter (!!) I'd probably be buying. Nevertheless I think there are worse places to invest your spare doubloons if you don't mind a little in-flight turbulence.

New buy: TAG Oil Ltd.

Fifty cents for 36 cents is not a terrible deal.

Hot diggity. I've been trying to liquidate my Canadian positions so that I can start from scratch in 2019 and share my trades as I go, but sometimes an opportunity comes along that I cannot refuse. Today is one of those days.

TAG Oil has many excellent things going for it. Price to tangible book of 0.3, no debt, 5 percent insider ownership. And, despite trading on the TSX, it is not affected by Canadian pipeline capacity because its operations are largely in New Zealand.

Or were.

Yesterday TAG announced that it was selling all of its NZ operations to Tamarind Resources in a deal that will bring in US$30 million at closing:

"Following completion of the Transaction, TAG expects to have over C$0.50 per share in cash and working capital, continued exposure to the current operations and upside of the NZ Assets."

There are some risks, of course. Shareholders could reject the deal (it represents a loss for long-term shareholders) or it could fall apart for other reasons. The company doesn't pay a dividend, so I could potentially baghold without income. (Memories of the eBay fiasco of 2008-2010 dancing through my head).

Other risks are the general aversion to the energy sector right now and the sort of mild antipathy that some investors feel for companies that cross hemispheres to finance their ventures.

But there are other upsides too. The deal comes with a 2.5 percent royalty on the sold properties, which could theoretically free up the company to further explore its Australian lease. We shall see what the future holds.

EDIT: Added 6000 more on November 8 at 32 cents.

Sleep Country Canada

Why buy a mattress anywhere else? If you're anything like me, you may have been put off by Christine Magee's hollow sales pitches. I always imagined her as a zombie queen preaching to a flock of lobotomized sheep. Even they seemed disinterested.

Mattresses have never been hard to come by. And with the internet revolution, you can now buy mattresses online. I don't know if you've heard of Amazon or not, but they sell them.

I was shocked when I learned that ZZZ trades at 3.5 times book value. I bought my last mattress at Canadian Tire (3.4), and the one before that was Wal-Mart (4.1). I realize p/b isn't the end-all, but I think you'll agree that one of these names is not like the others. On what grounds does it trade at such a high multiple? (Some Canadian value investors like Reitmans in the retail sector because it has no debt; it trades at 0.7)

I suppose some people might enjoy the service that ZZZ offers. You know, walking into a mostly empty store and being stared down by a commissioned sales person who sees you as a meal. Whorls of dust rising in the columns of light slanting in the window. Still air. Sweat. Confusion. Silence except for the $28 Oxfords galloping towards you.

True, ZZZ owns about a quarter of the market today. How does that improve when you can buy a cheaper bed online? Who wakes up and decides that they want to spend their day off visiting mattress stores?

Other considerations include the notion that we may be approaching a recession, when people don't buy as many mattresses. And that with the rise of passive investing, stocks outside the indexes are going to get hurt. ZZZ is not in the S&P/TSX 60.

Shorting, especially for retail investors, is generally a loser's game. But this one is tempting. (I looked at writing naked calls but the options market for this company is tepid.)