AutoCanada Inc. (ACQ.TO)

His second largest holding. It is plateauing. Run by an extremely industrious man in Edmonton. There is an endless stream of opportunities. He would buy it but not go hog wild.

Mostly western Canada. Auto dealerships. SUV purchases greater there and margins are higher so they are in the sweet spot. Average age of autos is over 10 years and people are starting to buy them again. Buy private dealerships and cut costs. They are going to up their acquisitions to 5 per year as well as to go into other dealerships than Chrysler. They have enough capacity on the balance sheet that they don’t have to go to the market to make an acquisition. Every quarter they raise their dividend 1 cent. 1.9%

Stock has done really well. This is a rollup strategy where they go out and acquire other dealerships. It typically acquires them at multiples that are significantly below where the stock is trading so has been very accretive. This is generally what has driven the big increasing cash flow and, more importantly, there has been a big increase in North American auto sales, specifically truck sales in Western Canada. Thinks they will continue to consolidate the market but feels the stock is approaching Fair Value. He would start to pare back at about $45 and if it gets back down to mid $30, it would be a pretty good entry point.

Basically an auto dealership play that has had quite a bit of success.

Stock is done incredibly well and yet earnings multiple is still 17-19 times earnings in spite of what the forecast is. They now have the ability to buy dealerships from the manufacturers. Have basically created a new market that did not exist before. Doing a great job. Have continually raised their dividends. Growth profile. Looks really good over the next 3-4 years.

Have been in Chrysler dealerships and now are into GM. Each acquisition adds about 5 cents to their earnings. If you see them go from 4 to 8 acquisitions per year or if they bought an auto dealer group it could go up substantially. Dealers are baby boomers and now are interested in selling their dealership to Auto Canada.

A consolidator of car dealerships. They look for ones where they can add value through their experience. When they take over a dealership, they add their online expertise in marketing and services. There are many dealerships without management succession plans. Could probably double their business looking 3 years out. 2.19% yield.

Has been favored by money managers, so it is a self-fulfilling prophesy. When these managers decide it is over, the exit door is not big enough. Be careful with it. It might go a little higher. If there is any bad news they will all run for the door.

Raised their dividend every quarter for the past 10 quarters. Doing way better than the industry in general. Have a new growth opportunity in buying dealerships from the OEMs. Earnings growth rate is 61% in the last quarter. Good balance sheet. Trading at 16 or 17 times earnings with a growth rate of 61%.

Struggling when markets were going higher recently. Some clear signs that weakness in the markets in general will be stronger in this security.

(A Top Pick July 30/12. Up 121.21%.) Forecasts make this a double from here, whether or not that will be, it is a splendid company.

Consolidator of dealerships (predominantly truck sales) in Canada. Management has done an excellent job. In this recent quarter, their EBITDA was up over 37%. EPS should be over 30% this year. Trading at around 12.5X this year’s earnings. Dividend yield of 3.4%.

Run by a very enterprising man whose expertise is in auto dealerships in Edmonton. He buys up family-owned dealerships. Good dividend flow. Yield of just over 4%.

He is very impressed with the company but hasn’t heard any news lately. They are capable of being awarded more dealerships. Motor dealerships are probably the best thing since sliced bread. 4.7% dividend.

Auto dealerships. 4.3% dividend.